Problems in the Administration of Third-Party Funds under the Vocational Rehabilitation Program in Indiana

HRD-77-20: Published: Nov 26, 1976. Publicly Released: Nov 26, 1976.

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The purpose of the survey was to determine whether the provisions of the Rehabilitation Act of 1973 and applicable regulations and directives issued by the Rehabilitation Services Administration (RSA) were being followed in administering cooperative agreements in Indiana. To increase the number of rehabilitations, RSA guidelines allow state vocational rehabilitation agencies to make cooperative agreements with state or local public agencies to use third-party funds, which are reported as part of its matching share or as program costs eligible for federal reimbursement. Federal regulations and RSA guidelines specify that expenditures for services provided under a cooperative third-party agreement must be made under the control of the state agency and for new and unique vocational services.

Under cooperative agreements with 33 Indiana school corporations, the state agency was purchasing educational services which were the school corporations' legal responsibility, and was not controlling expenditures. At two school corporations visited, funds were being used for ordinary school programs which are required by state law. Funds were being used to purchase school supplies and equipment. Certification of use of funds for matching federal money was improperly given, and teachers were not made aware of the programs or that their salaries were paid by the funds. Other federal program funds were also being used for the same special education programs and, in some cases, funds obtained through certification of cooperative agreements were used for other programs.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Expenditures made under all cooperative agreements for fiscal years (FY) 1974, 1975 and 1976 should be reviewed and, if warranted, federal funds identified as improperly used should be recovered. Cooperative agreements involving improper use of federal funds for FY 1977 should be discontinued.

    Agency Affected:


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