	Introduction

Title I of the Rehabilitation Act of 1973, as amended, recognizes that individuals with disabilities face high levels of unemployment and poverty and authorizes the federal government to make grants available to states and territories for the purpose of providing vocational rehabilitation (VR) services to persons with disabilities to prepare for and engage in gainful employment. The authorization for VR grants to states and territories expired at the end of FY2003 and Congress has continued to make capped appropriations to fund the program under the provisions of an extension clause in the law. There was no action taken on the reauthorization of the VR program in the 110 th Congress, but a supplemental appropriation for the program was included in the American Recovery and Reinvestment Act of 2009 in the 111 th Congress. VR agencies generally work with clients until their selected employment goals are met. This authorization expired at the end of FY2003. These bills were part of larger packages of legislation that would have made technical changes to the VR program and re-authorized the Workforce Investment Act of 1998. FY2011 Budget Request

As part of a proposal to reauthorize the Workforce Investment Act (WIA), the President's FY2011 request includes provisions for consolidating several programs authorized under the Rehabilitation Act. Analysis of the Vocational Rehabilitation Funding Formula

A state or territory's VR allotment is based on its allotment in 1978, its per capita income, and its population. The size of a state or territory's population of individuals with disabilities, the varying costs of providing VR services, the ability of a state or territory to match allotted funds, and high population growth in certain states and territories are not fully factored into determining how much money a state or territory will have available for VR services. The Formula Does Not Account For Differences in the Costs of Providing Services Across States and Territories

The current VR formula fails to account for differences in the cost of providing services across states and territories. In addition, this report has shown that the current formula does not ensure that funding increases due to changes in the cost of living are passed along to individual states and territories. States with the largest increase in population since the mid-1970s have also had the largest reduction in VR funding due to the use of the FY1978 funding baseline in the allotment formula.
Title I of the Rehabilitation Act of 1973, as amended, authorizes the federal government to make grants to states and territories to provide vocational rehabilitation (VR) services to persons with disabilities who are interested in seeking and retaining employment. State and territorial VR agencies work with clients to determine their optimal employment outcomes and put together packages of services to help them meet these employment goals.
The authorization for the VR program expired at the end of FY2003; Congress has continued to make appropriations to the Department of Education to fund the program under the provisions of an extension clause in the Rehabilitation Act. Both chambers worked on bills in the 109th Congress that would formally extend this authorization through FY2011, but these bills did not result in the enactment of a law before the end of that Congress. Reauthorization bills were not taken up by either chamber in the 110th Congress, although the 111th Congress included a supplemental appropriation for the VR program in the American Recovery and Reinvestment Act of 2009. The President's FY2011 budget request proposes an extension of the VR appropriation as part of a reauthorization of the Workforce Investment Act of 2005.
Funds for the VR program are allotted to states and territories according to a formula that allocates money based on three factors: state allotments in FY1978, current state population, and current state per capita income.
However, a 2009 GAO report cited the VR funding formula as inequitable because the formula does not fully account for (1) the actual number of individuals with disabilities within a state or territory, (2) differences in the costs of providing VR services across states and territories, (3) the ability for a state or territory to meet its statutory fund-matching obligations to the program, and (4) varying population growth since the mid-1970s across states and territories.
Others have criticized the allotment formula for not ensuring that each state or territory is given an increase in funding to match increases in the cost of living. In addition, the formula has been criticized for not including measures related to a state's or territory's overall performance.
This report will be updated to reflect any major legislative activity.