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RSA Rules Again on Merit Scholarships
From the Editor: In the December 2003 issue we reported on the firing of Christine Boone as director of the Pennsylvania Bureau of Blindness and Visual Services (BVS). In passing we mentioned that Stephen Nasuti, director of the Office of Vocational Rehabilitation (OVR) and Boone's immediate supervisor, advised presumably by his general counsel, ruled sometime ago now that Pennsylvania residents receiving services from OVR should have the value of any merit scholarships subtracted from their VR funding allocations for education.
Chris Boone, a lawyer herself and a rehabilitation professional with many years of experience, warned Nasuti that, as far back as Nell Carney, Rehabilitation Services Administration (RSA) commissioners had been ruling that merit scholarships were not similar benefits and therefore could not be used to reduce state grants to individuals. We now have several documents that clearly lay out the Pennsylvania position and that of the current RSA commissioner. It remains to be seen whether the folks in the VR saddle in Pennsylvania will be deterred by this latest ruling. Not surprisingly, Chris Boone has been proven right yet again on a question of rehabilitation. Here are the documents in the case, beginning with a memo from the office of OVR's general counsel articulating her rationale for snatching away scholarship awards:
September 23, 2003
To: State Board of Vocational Rehabilitation
From: Catherine Wojciechowski, Deputy Chief Counsel
Re: Calculating OVR's Contribution Towards College Costs
Subject: Awards and Scholarships Based Upon Merit
This memorandum serves as follow-up and clarification with respect to an issue raised by State Board of Vocational Rehabilitation member Judith Jobes at the meeting held September 16, 2003 in Erie, Pennsylvania. You may recall, Ms. Jobes indicated that she had confirmation from the Rehabilitation Services Administration (RSA) that OVR [Office of Vocational Rehabilitation] improperly calculates its contribution toward the cost of college training for individuals with disabilities by considering awards and scholarships based upon merit as "comparable services and benefits."1
Initially, please note that the legal opinion of this office never indicated that awards and scholarships based upon merit should be considered comparable benefits and services. Moreover, in calculating its contribution toward the cost of college, OVR does not classify merit awards and scholarships as "comparable services and benefits." OVR does, however, utilize amounts received as an offset to its contribution, in the same manner as other financial aid and grants are offset.
While this may at first appear to be a distinction without a difference, the statutory exclusion merely prohibits OVR from requiring that individuals seek and apply for merit based awards and scholarships as a condition for providing college training services. It does not, however, prevent OVR from utilizing amounts received from merit scholarships and awards in the calculation of its contribution. To do otherwise would result in the expenditure of public funds in cases where the financial need has already been reduced.
This memorandum examines the language of the federal Rehabilitation Act (Act) and it[s] governing regulations and its applicability to the manner in which OVR calculates its contribution. This memorandum will also briefly address the validity of RSA-PAC-90-7.
Statutory and Regulatory Language
Section 101(a)(8) of the Act (relating to comparable services and benefits) provides in pertinent part:
A. Determination of availability
(i) In general
The state plan shall include an assurance that, prior to providing any vocational rehabilitation service to an eligible individual . . . the designated state unit will determine whether comparable services and benefits are available under any other program (other than a program carried out under this title) unless a determination would interrupt or delay . . .
(ii)Awards and scholarships
For purposes of clause (i) comparable benefits do not include awards or scholarships based upon merit.
Additionally, 34 C.F.R. § 361.5(10) reiterates the Act by providing that awards and scholarships based upon merit are excluded from the definition of "comparable services and benefits."
However, 34 C.F.R. § 361.54 (relating to participation of individuals in cost of services based upon financial need) permits OVR to consider the financial need of eligible individuals for purposes of determining the extent of their participation in the cost of services. Further, consistent with this provision, Section 10 of the State Vocational Rehabilitation Act of 1988 provides that services will be provided at public cost only to those individuals with disabilities found to require financial assistance. 43 P.S. § 682.10
Analysis of Statutory and Regulatory Language
Since both Section 101(a)(8) and 34 C.F.R. § 361.5(10) exclude awards and scholarships based upon merit from the definition of comparable benefits and services, OVR is prohibited from determining whether awards and scholarships based upon merit exist and from requiring that individuals apply for and secure such awards and scholarships prior to or as a condition of providing college training services.2
However, neither the Act nor the regulations contain any prohibition against utilizing amounts received by an individual in the form of merit awards and scholarships in the calculation of OVR's contribution.
It is the opinion of the Office of Chief Counsel that the PAC-90-2 does not affect OVR's college policy with respect to the inclusion of merit awards and scholarships in the calculation of OVR's contribution toward college expenses for a number of reasons. Initially, the PAC does not unequivocally prohibit the use of scholarships in calculating OVR's contribution. Secondly, it was issued many years before the enactment of the current statute. Finally, the PAC is considered an "interpretative" rule that merely provides guidance and is not controlling or binding upon the courts.
Language of PAC-90-2
PAC-90-2 was issued by the RSA in March 1990 as a means to provide "supportive guidelines" to state VR agencies with respect to treatment of monetary merit awards provided directly to VR customers. In essence, the PAC sets forth the Commissioner's opinion that VR customers should not be required to use monetary merit gifts from private organizations toward the cost of all needed VR services.3 However, the PAC does not prohibit the use of scholarships toward the cost of college expenses. In fact, the Commissioner acknowledges that these funds may reduce the extent of the customer's need for the service.
More importantly, the PAC was issued eight years prior to the current amendments to the Act. These amendments exclude merit based awards and scholarships from the definition of "comparable services and benefits." Accordingly, the opinion of the Commissioner was not based upon and pre-dates the current provisions of the Act. Moreover, the 1998 amendments did not codify the opinion expressed by the Commissioner in PAC-90-2. Therefore, the Commissioner's opinion cannot legitimately serve as the basis for an interpretation of the current Act.
Even if the amendments were an effort to codify PAC-90-2, the plain language of the statute controls pursuant to principles of statutory construction. While legislative intent may be persuasive, the express language may not be ignored. This is especially true in this case where there is no record of the legislature's intent.4 Since the express language does not prohibit the use of merit awards and scholarships in the calculation of OVR's contribution, OVR's policy does not violate the Act.
Even assuming that the PAC-90-2 is relevant to the 1998 amendments, it is a nonbinding agency statement with respect to what the agency believes the statute means. National Treasury Employees Union v. Ronald Reagan, President of the United States, 685 F. Supp 1346 (E.D.La. 1988). Interpretative rules are those that clarify statutory or regulatory terms, explain existing laws, and remind parties of existing duties under the law. Interpretative rulemaking merely provides guidance and is not controlling upon the courts. Daughters of Miriam Center for the Aged v. Matthews, 590 F.2d 1250 (3rd Cir. Dist. Ct. App. 1978). As such, it is a nonbinding statement and does not have the controlling authority of a law or regulation.5
To summarize, OVR has a statutory obligation to operate an effective, efficient, and accountable program. In adhering to this mandate, OVR may enact policies governing the provision of services and may consider the financial need of customers. Although awards and scholarships based upon merit are excluded from the definition of comparable services and benefits, the plain language of the exclusion merely prohibits OVR from requiring customers to seek and apply for such awards and scholarships as a condition of providing college training. However, there is no language in the Act or the regulations that prohibits the use of such funds in the calculation of OVR's contribution. In fact, the receipt of such funding reduces the individual's need for funding from OVR.6
cc: The Honorable Stephen M. Schmerin, Secretary
Roger H. Caffier, Chief Counsel
1. Although the Board did not discuss this issue, Ms. Jobes provided me with a copy of the alleged confirmation. The RSA indicated in its response that RSA Program Advisory Circular (RSA-P AC-90-7) continues to reflect current RSA policy and the law that awards and scholarships based upon merit are not considered "comparable services and benefits." (Please note the correct number for the PAC is 90-2).
2. Neither the Act, the regulations, nor the RSA has ever defined "awards and scholarships based upon merit" or attempted to reconcile the fact that Section 103(a)(5) requires that OVR and the individual use maximum efforts to secure grant assistance prior to expending any Title I funds for training at institutions of higher learning.
3. This opinion is based upon the Commissioner's belief that requiring customers to use unrestricted gifts to pay for VR services denies them the recognition and help intended and, in essence, defeats the purpose intended by the philanthropic group making the award.
4. A review of the Conference House and Senate Reports revealed no stated intent behind the amendment to Section 101(a)(8). Further, the Appendix to the regulations enacted in 2001, likewise set forth no reasoning, opinion, or intent related to the exclusion.
5. The PAC is also not a "legal opinion." Commissioner Carney, not the legal staff of the RSA, issued the PAC.
6. There is also the consideration of whether taxpayers should bear the costs of higher education for individuals who are able to secure funding from alternate sources.
Several members of the Pennsylvania legislature became concerned that Pennsylvania might cause problems for itself by deciding to reduce educational expenditures by the amount of any merit scholarships awarded to OVR customers. Here is a letter that Wojciechowski wrote to reassure one legislator:
October 7, 2003
The Honorable Matthew N. Wright
Dear Representative Wright:
Your letter of September 19, 2003, to Governor Rendell with respect to the Office of Vocational Rehabilitation's (OVR's) college policy has been referred to me for response. Your letter expresses your concern that there may be a potential conflict between the federal regulations and state policy with regard to college grants to people who are blind. Specifically, you reference OVR's practice of utilizing amounts received in merit-based awards and scholarships in the calculation of its contribution towards college training costs.
First and foremost, please be assured that OVR is committed to providing the vocational rehabilitation services to individuals with disabilities necessary to assist them in preparing for, securing, retaining, or regaining an employment outcome that is consistent with their informed choice. OVR is under a statutory mandate to operate an effective, efficient, and accountable program. Accordingly, it may establish policies governing the provision of services to ensure a reasonable cost to the program. For the reasons that follow, OVR's policy does not treat blind and visually impaired disparately. Moreover, the policy is not in contravention of federal law. Therefore, OVR is not at risk of losing federal funding.
OVR is under an obligation to provide a wide range of services to individuals with disabilities, not just assistance with college costs. OVR's policy is uniformly applied to all customers regardless of disability. Therefore, contrary to the information you received, the policy does not have a disparate impact on individuals who are blind or visually impaired. To the contrary, it treats these individuals the same as all OVR customers. Moreover, the policy ensures that the vocational rehabilitation program can serve the greatest number of individuals with its limited funds. Further, due to limited funding, the receipt of awards and scholarships reduces the customer's need for OVR assistance and permits OVR to serve more individuals with disabilities, including those who are blind or visually impaired.
When read in a vacuum, Section 101(a)(8)(A)(ii) of the Rehabilitation Act of 1973 provides that "for purposes of clause (i) comparable benefits do not include awards and scholarships based upon merit." However, when read in its entirety, it is clear that this exclusion merely prohibits OVR from requiring that customers seek and apply for merit-based awards and scholarships as a condition of receiving college-training services. It does not, however, prohibit OVR from utilizing amounts received in the calculation of its contribution. To do otherwise, would result in the expenditure of public funds in cases where the individual's financial need has already been reduced.
Although your letter indicates that the Rehabilitation Services Administration's Program Advisory Circular (PAC) 90-7 is still in effect, please note that it has no impact on OVR College policy for the following reasons: (1) the PAC, by its very terms, does not prohibit the use of scholarships toward the cost of college expenses; (2) the PAC is merely an advisory--it is a nonbinding statement, without the force of law carried by a statute or regulation, and; (3) the PAC was issued eight years prior to the 1998 amendments to the Rehabilitation Act. These amendments did not codify the language of the advisory. Even if the 1998 amendments were an effort to codify the language of the PAC-90-7, the express and plain language of the statute controls pursuant to principles of statutory construction.
In summary, since the express language of the Act does not prohibit the use of merit-based awards and scholarships in the calculation of OVR's contribution, OVR's college policy is not in conflict with the federal Act or regulations. Accordingly, OVR's funding is not in jeopardy. Furthermore, the policy does not discriminate against individuals who are blind or visually impaired--rather it has the effect of making limited funding available to more blind and visually impaired Pennsylvanians.
The Department appreciates your concern in ensuring that the needs of individuals with disabilities in this Commonwealth are met. If I can be of further assistance, please do not hesitate to contact me.
Catherine N. Wojciechowski
Deputy Chief Counsel
President Maurer decided in November that the time had come to request the RSA commissioner to rule on this question again since the argument was now being made that following the 1998 amendments to the Rehabilitation Act the earlier advisory on merit scholarships was no longer in force. So he wrote the following letter:
November 13, 2003
Dr. Joanne Wilson, Commissioner
U.S. Rehabilitation Services Administration
Dear Commissioner Wilson:
Enclosed is correspondence from Catherine N. Wojciechowski, Deputy Chief Counsel for the Pennsylvania Office of Vocational Rehabilitation, which attempts to explain that clients of Vocational Rehabilitation in Pennsylvania are required to have vocational rehabilitation grants reduced by the amount of merit-based scholarships granted. Scholarships granted by the National Federation of the Blind are conditional. The condition is that, if the government attempts to appropriate such scholarships, directly or indirectly, the scholarships are withdrawn. The National Federation of the Blind is not interested in attempting to fund the rehabilitation program. To do this would be completely beyond our capacity. We are interested in promoting scholarships to students based upon merit. If these scholarships are simply used as a means to fund the rehabilitation program, we will cease to provide them.
Please consider the arguments proposed by Catherine Wojciechowski and provide an interpretation that can be distributed to blind college students and those administering scholarship material for blind college students. I understand that the state of Pennsylvania may wish to get its hands on money raised by the National Federation of the Blind and others. However, this practice will be detrimental to the blind clients it is established to serve.
Marc Maurer, President
National Federation of the Blind
That was Dr. Maurer's letter. Here is Dr. Wilson's reply. It certainly seems unequivocal.
December 15, 2003
Dr. Marc Maurer, President
National Federation of the Blind
Dear Dr. Maurer:
Thank you for your letter of November 13, 2003, in which you question the Pennsylvania Office of Vocational Rehabilitation (OVR) policy of using amounts received in merit-based awards and scholarships to reduce OVR's contribution towards college training costs for individuals with disabilities. You also enclosed a copy of an October 7, 2003, correspondence from Catherine N. Wojciechowski, OVR Deputy Chief Counsel, to the Honorable Matthew N. Wright in which Ms. Wojciechowski states that OVR's policy is not contravened by federal law or regulation. We respectfully disagree.
Section 101(a)(8) of the Rehabilitation Act of 1973 as amended in 1998 (the Act) requires a state vocational rehabilitation (VR) agency, prior to providing any vocational rehabilitation service to an eligible individual, to determine whether comparable services and benefits are available under any other program. Comparable services and benefits do not include awards or scholarships based on merit.
The exclusion of merit awards or scholarships from a determination of the availability of comparable services and benefits was originally a provision in Senate bill 1579. The Senate committee clarified this provision in its report with the following language:
"The committee also clarifies that comparable benefits do not include awards and scholarships based on merit. The committee feels that individuals with disabilities who achieve financial awards based on merit should not have awards used as basis to reduce publicly-funded assistance to achieve an employment outcome." S. Rep. No. 166, 105th Cong., 2nd Sess. 15 (1998). Emphasis added.
We also note that many individuals with disabilities, including individuals who are blind, receive benefits from the Social Security Disability Insurance program and/or the Supplemental Security Income program under Titles II and XVI of the Social Security Act, respectively. While a state VR agency may consider the financial need of eligible individuals in the provision of VR services, the agency may not apply a financial needs test or require the financial participation of any individual who has been determined eligible for Social Security benefits under Titles II and XVI of the Social Security Act (34 CFR 361.54(b)(3)(ii).
In summary, we do not believe that OVR's policy of considering the amounts of merit-based scholarships or awards to reduce its support for individuals with disabilities in college training is consistent with congressional intent that such awards should not be used to reduce publicly-funded assistance for these individuals. Consequently, OVR should not use merit-based scholarships awarded by the National Federation of the Blind as a basis for reducing its support for individuals with disabilities in college training. We hope that this response adequately addresses your concerns.
I am providing a copy of this letter to Dr. Ralph N. Pacinelli, the RSA regional commissioner in Philadelphia, with a request that he follow-up with the state agency and, as appropriate, that he provide you with a further reply on actions taken or planned by the Pennsylvania Office of Vocational Rehabilitation. Again, thank you for bringing this important matter to our attention.
Rehabilitation Services Administration
R. Nasuti, Executive Director
Pennsylvania Office of Vocational Rehabilitation
Ralph N. Pacinelli
RSA Regional Commissioner
The ball, as they say, is now in Pennsylvania's court. We will await Mr. Nasuti's next move with interest.
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