[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]





  FINANCIAL ACCOUNTABILITY IN THE HEAD START EARLY CHILDHOOD PROGRAM

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             April 5, 2005

                               __________

                            Serial No. 109-6

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN A. BOEHNER, Ohio, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California
    Chairman                         Dale E. Kildee, Michigan
Howard P. ``Buck'' McKeon,           Major R. Owens, New York
    California                       Donald M. Payne, New Jersey
Michael N. Castle, Delaware          Robert E. Andrews, New Jersey
Sam Johnson, Texas                   Robert C. Scott, Virginia
Mark E. Souder, Indiana              Lynn C. Woolsey, California
Charlie Norwood, Georgia             Ruben Hinojosa, Texas
Vernon J. Ehlers, Michigan           Carolyn McCarthy, New York
Judy Biggert, Illinois               John F. Tierney, Massachusetts
Todd Russell Platts, Pennsylvania    Ron Kind, Wisconsin
Patrick J. Tiberi, Ohio              Dennis J. Kucinich, Ohio
Ric Keller, Florida                  David Wu, Oregon
Tom Osborne, Nebraska                Rush D. Holt, New Jersey
Joe Wilson, South Carolina           Susan A. Davis, California
Jon C. Porter, Nevada                Betty McCollum, Minnesota
John Kline, Minnesota                Danny K. Davis, Illinois
Marilyn N. Musgrave, Colorado        Raul M. Grijalva, Arizona
Bob Inglis, South Carolina           Chris Van Hollen, Maryland
Cathy McMorris, Washington           Tim Ryan, Ohio
Kenny Marchant, Texas                Timothy H. Bishop, New York
Tom Price, Georgia                   John Barrow, Georgia
Luis G. Fortuno, Puerto Rico
Bobby Jindal, Louisiana
Charles W. Boustany, Jr., Louisiana
Virginia Foxx, North Carolina
Thelma D. Drake, Virginia
John R. ``Randy'' Kuhl, Jr., New 
    York

                    Paula Nowakowski, Staff Director
                 John Lawrence, Minority Staff Director

                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 5, 2005....................................     1

Statement of Members:
    Boehner, Hon. John A., Chairman, Committee on Education and 
      the Workforce..............................................     2
        Prepared statement of....................................     4
    Castle, Hon. Michael N., a Representative in Congress from 
      the State of Delaware......................................     7
        Prepared statement of....................................     8
    Miller, Hon. George, Ranking Member, Committee on Education 
      and the Workforce..........................................     6
    Woolsey, Hon. Lynn C., a Representative in Congress from the 
      State of California........................................     9

Statement of Witnesses:
    Golden, Olivia, Ph.D., Senior Fellow, Urban Institute, 
      Washington, DC.............................................    30
        Prepared statement of....................................    32
    Henry, Pamela, Jr., Head Start Parent, Las Vegas, NV.........    27
        Prepared statement of....................................    29
    Horn, Hon. Wade F., Assistant Secretary, Administration for 
      Children and Families, U.S. Department of Health and Human 
      Services, Washington, DC...................................    21
        Prepared statement of....................................    22
    Shaul, Marnie S., Ph.D., Director, Education Issues, 
      Education, Workforce and Income Security, U.S. Government 
      Accountability Office......................................    11
        Prepared statement of....................................    13


 
   FINANCIAL ACCOUNTABILITY IN THE HEAD START EARLY CHILDHOOD PROGRAM

                              ----------                              


                         Tuesday, April 5, 2005

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The Committee met, pursuant to call, at 2 p.m., in room 
2175, Rayburn House Office Building, Hon. John A. Boehner 
(Chairman of the Committee) presiding.
    Present: Representatives Boehner, McKeon, Castle, Osborne, 
Kline, McMorris, Price, Fortuno, Foxx, Drake, Miller, Kildee, 
Woolsey, Hinojosa, Tierney, Wu, Holt, McCollum, Grijalva, and 
Van Hollen.
    Staff Present: Amanda Farris, Professional Staff Member; 
Kevin Frank, Professional Staff Member; Kate Houston, 
Professional Staff Member; Alexa Marrero, Press Secretary; 
Jennifer Daniels, Communications Staff Assistant; Jessica 
Gross, Legislative Assistant; Lucy House, Legislative 
Assistant; Deborah L. Samantar, Committee Clerk/Intern 
Coordinator; Mark Zuckerman, Minority General Counsel; Ruth 
Friedman, Minority Legislative Associate/Education; Lloyd 
Horwich, Minority Legislative Associate/Education; Ricardo 
Martinez, Minority Legislative Associate/Education; Alex Nock, 
Minority Legislative Associate/Education; Joe Novotny, Minority 
Legislative Associate/Education; and Tom Kiley, Press 
Secretary.
    Chairman Boehner. A quorum being present, the Committee on 
Education and the Workforce will come to order. We are holding 
this hearing today to hear testimony on the financial 
accountability in the Head Start Early Childhood program. I am 
going to limit opening statements to the Chairman and Ranking 
Member. Therefore, if other Members have opening statements, 
they can be included in the hearing record.
    And with that, I would ask unanimous consent for the 
hearing record to remain open for 14 days to allow Members' 
statements and other documents referenced during the hearing to 
be submitted for the official hearing record. Without 
objection, so ordered. Let me change my unanimous consent 
request to also include Mr. Castle and Ms. Woolsey's opening 
statements. Without objection, so ordered.

   STATEMENT OF HON. JOHN A. BOEHNER, CHAIRMAN, COMMITTEE ON 
                  EDUCATION AND THE WORKFORCE

    High quality early childhood education is essential to 
closing the achievement gap that exists in our country between 
disadvantaged children and their more affluent peers. President 
Bush urged Americans to unite to eliminate this gap when he 
took office in 2001. Congress has responded by enacting two 
major overhauls of education law, the No Child Left Behind Act 
and the special education bill signed by the President just 
last December. Today, our Committee embarks on another phase of 
this process, strengthening the Head Start early childhood 
program. Head Start's mission is to prepare disadvantaged 
children for kindergarten, and this Committee has strongly 
supported Head Start in this mission over the years and 
particularly during the last decade. Federal funding for Head 
Start has nearly doubled since 1995, increasing from 3.6 
billion annually in 1996 to nearly 7 billion this year.
    I support Head Start. It is an important program that is 
entrusted with a vitally important mission and I believe that a 
vast majority of those involved with the Head Start program are 
honest individuals who are dedicated to making sure the poorest 
of our Nation's children have a chance to succeed in life. I 
believe we need to listen to these people and support them and 
support the children that they serve. And I know Chairman 
Castle agrees, I believe the President agrees, and I don't 
think there is a single Member of this Committee who would 
disagree with that.
    I also want to state that neither I nor the President nor 
Chairman Castle have called for turning Head Start into a so-
called block grant to the States or dismantling Head Start as 
some have claimed. As I said 2 years ago, as a conservative 
Republican, I know a block grant when I see one. And trust me, 
what the President has proposed for Head Start is no block 
grant program. There are, however, two critical problems in 
Head Start that I believe Congress has to address. One problem 
is the school readiness gap that continues to exist between 
some Head Start children and their peers when they reach 
kindergarten. There is no question most Head Start children are 
better off in the program than they would have been without it. 
That is not in dispute.
    But there is evidence that some Head Start centers could be 
doing an even better job of providing preschoolers with an 
academic foundation they need in order to succeed in school. A 
summary of research released in 2003 by the Department of 
Health and Human Services showed that while children in Head 
Start are learning, they are more than 25 percentile points 
behind the national average on many key learning indicators. 
And we need to listen to people who run the best programs in 
the Head Start system, get their input on what works and use 
that information to strengthen the weaker program. Last week 
our Committee launched a Web site to facilitate this project, 
and I would encourage parents, teachers, taxpayers and anyone 
else who has an interest in Head Start to check out this Web 
site and use it to share your own experiences.
    The second problem is that an unacceptable share of Federal 
Head Start funding never reaches the disadvantaged children the 
money is meant to serve. Instead, it is being lost to financial 
abuse and mismanagement, impropriety or outright theft within 
the Head Start system. And these abuses are happening at the 
expense of children served by the many law abiding grantees 
within the Head Start system, grantees that too often are put 
in a position of being forced to defend the actions of a few 
bad apples in the program.
    Between January of 2003 and the first months of 2005, media 
accounts in numerous U.S. cities alleged serious financial 
abuses and irregularities by those entrusted with the 
responsibility of managing Head Start funds meant to serve poor 
children. These incidents identified in these reports 
collectively involve the use of tens of millions of Federal 
Head Start funds that were intended to serve more than 10,000 
disadvantaged U.S. children. Such reports surfaced in 
Baltimore, Maryland; Baton Rouge, Louisiana; Charleston, South 
Carolina; Charleston, West Virginia; Cleveland, Ohio; Columbus, 
Ohio; Honolulu, Hawaii; Jamestown, North Dakota; Kansas City, 
Missouri; Las Vegas, Nevada, Little Rock, Arkansas; Lubbock, 
Texas; Madison, Wisconsin; Norwalk, Connecticut; Rapid City, 
South Dakota; San Antonio, Texas; and Stockton, California.
    And some reports involving financial mismanagement suggest 
that many Head Start grantees have good intentions yet lack 
strong financial controls and the skills needed to effectively 
manage complex multi million dollar not-for-profit 
organizations.
    As much as we all support Head Start, Congress cannot 
simply turn a blind eye to this problem. Financial abuse in the 
Head Start system cheats not only children and taxpayers, but 
also the many law abiding local Head Start grantees nationwide 
who find themselves in the position of being asked to defend 
indefensible practices by other grantees.
    A new report by the independent Government Accountability 
Office warns, the financial control system in the Federal Head 
Start Early Childhood program is flawed and failing to prevent 
these abuses. GAO has independently determined that unresolved 
financial management weaknesses among Head Start grantees are 
having a negative effect on some eligible children. It has also 
determined that the procedures of the Federal Government uses 
to collect data on grantee financial management performance 
have significant flaws as well. The GAO report recommends that 
the Federal Government take steps to allow the recompetition of 
grants awarded to Head Start grantees.
    And I am particularly interested in hearing from our 
witnesses today on this important issue. It is my view that by 
failing to promote competition for Head Start grants, the 
Federal Government has essentially granted monopoly power to 
some Head Start operators and, as often happens with 
monopolies, the power has been abused. Removing obstacles for 
competition of Head Start grants must be a top priority for 
Congress in reauthorizing Head Start, and if we fail to 
accomplish this goal, we will fail on our most basic 
responsibility to children and taxpayers.
    Also, some States are operating their own early childhood 
programs, programs that sometimes rival Head Start in quality. 
And I do think we need to help such States better integrate and 
coordinate these programs with Head Start to better serve the 
needs of our most disadvantaged children. When Head Start was 
first established 40 years ago, it was the only program of its 
kind, Federal or State. Now, there are many different programs 
across the country preparing children for kindergarten, and we 
need to make sure all of those children are getting the same 
quality education.
    In the last Congress, this Committee passed a bill that 
sought to address this need. But we know many things today that 
we didn't know then, particularly with respect to the financial 
control problems that exist in the program. And with this in 
mind, I think we have a responsibility to start from square one 
and build this year's legislation from the ground up. There 
were many elements of the 2003 bill that had bipartisan 
support. Those things may provide a good foundation. And in 
those areas where there was disagreement, I am more than 
willing to look at alternative routes that can be taken to 
reach the same goal if we can show that they may be effective. 
That includes the issue of coordination with State programs 
which generated the most disagreement 2 years ago.
    I am committed to passing the bill that promotes 
competition, strengthens academics, and restores fairness for 
children taxpayers and honest grantees. And I think we can 
produce a bill that does these things and does it in a 
bipartisan fashion. As the Head Start reauthorization process 
moves forward, this will be my goal.
    [The prepared statement of Chairman Boehner follows:]

Statement of Hon. John A. Boehner, Chairman, Committee on Education and 
                             the Workforce

    High quality early childhood education is essential to closing the 
achievement gap that exists in our country between disadvantaged 
children and their more affluent peers. President Bush urged Americans 
to unite to eliminate this gap when he took office in 2001. Congress 
has responded by enacting two major overhauls of education law-the No 
Child Left Behind Act, and the special education bill signed by the 
President last December. Today our Committee embarks on another phase 
of this process: strengthening the Head Start early childhood program.
    Head Start's mission is to prepare disadvantaged children for 
kindergarten. This Committee has strongly supported Head Start in this 
mission over the years, particularly during the past decade. Federal 
funding for Head Start has nearly doubled since Republicans assumed 
control of the House in 1995, increasing from $3.6 billion annually in 
fiscal year 1996 to nearly $7 billion this year.
    I support Head Start. It's an important program that is entrusted 
with a vitally important mission. I believe the vast majority of those 
involved with Head Start are honest individuals who are dedicated to 
making sure the poorest of our nation's children have a chance to 
succeed in life. I believe we need to listen to these people, and 
support them, and support the children they serve. I know Chairman 
Castle agrees. I think the President agrees. And I don't think there's 
a single member of this Committee who disagrees.
    I also want to state that neither I, nor President Bush, nor 
Chairman Castle, have called for turning Head Start into a so-called 
``block grant'' to the states or ``dismantling'' Head Start. As I said 
two years ago-as a conservative Republican, I know a block grant when I 
see one. And trust me-what President Bush has proposed for Head Start 
is no block grant.
    There are, however, two critical problems in Head Start that I 
believe Congress has to address.
    One problem is the school readiness gap that continues to exist 
between some Head Start children and their peers when they reach 
kindergarten. There's no question most Head Start children are better 
off in the program than they would have been without it; that is not in 
dispute. But there's evidence some Head Start centers could be doing an 
even better job of providing preschoolers with the academic foundation 
they need to succeed in school. A summary of research released in June 
2003 by the Department of Health and Human Services showed that while 
children in Head Start are learning, they are still more than 25 
percentile points behind the national average on key learning 
indicators. We need to listen to the people who run the best programs 
in the Head Start system, get their input on what works, and use that 
information to strengthen the weaker programs. Last week our Committee 
launched a website to facilitate this project. I encourage parents, 
teachers, taxpayers and anyone else with an interest in Head Start to 
check out this website and use it to share your experiences.
    The second problem is that an unacceptable share of federal Head 
Start funding never reaches the disadvantaged children the money is 
meant to serve. Instead it is being lost to financial abuse, 
mismanagement, impropriety, or outright theft within the Head Start 
system. These abuses are happening at the expense of children served by 
the many law-abiding grantees within the Head Start system-grantees 
that too often are put in the position of being forced to defend the 
actions of the ``bad apples'' in the program.
    Between January 2003 and the first months of 2005, media accounts 
in numerous U.S. cities alleged serious financial abuses and 
irregularities by those entrusted with the responsibility of managing 
Head Start funds meant to serve poor children. The incidents identified 
in these reports collectively involve the use of tens of millions in 
federal Head Start funds that were intended to serve more than 10,000 
disadvantaged U.S. children. Such reports surfaced in Baltimore, 
Maryland; Baton Rouge, Louisiana; Charleston, South Carolina; 
Charleston, West Virginia; Cleveland, Ohio; Columbus, Ohio; Honolulu, 
Hawaii; Jamestown, North Dakota; Kansas City, Missouri; Las Vegas, 
Nevada; Little Rock, Arkansas; Lubbock, Texas; Madison, Wisconsin; 
Norwalk, Connecticut; Rapid City, South Dakota; San Antonio, Texas; and 
Stockton, California. Some reports involving financial mismanagement 
suggest that many Head Start grantees have good intentions, yet lack 
strong fiscal controls and the skills needed to effectively manage 
complex, multi-million dollar non-profit organizations.
    As much as we all support Head Start, Congress simply cannot turn a 
blind eye to this problem. Financial abuse in the Head Start system 
cheats not only children and taxpayers, but also the many law-abiding 
local Head Start grantees nationwide who find themselves in the 
position of being asked to defend indefensible practices by other 
grantees.
    A new report by the independent Government Accountability Office 
(GAO) warns the financial control system in the federal Head Start 
early childhood program is flawed and failing to prevent these abuses. 
GAO has independently determined that unresolved financial management 
weaknesses among Head Start grantees are having a negative impact on 
some eligible children. It has also determined that the procedures the 
federal government uses to collect data on grantee financial management 
performance have significant flaws.
    The GAO report recommends that the federal government take steps to 
allow the ``recompetition'' of grants awarded to Head Start grantees. 
I'm particularly interested in hearing from our witnesses today on this 
issue. It's my view that by failing to promote competition for Head 
Start grants, the federal government has essentially granted monopoly 
power to some Head Start operators-and as often happens with 
monopolies, that power has been abused.
    Removing obstacles to competition for Head Start grants must be a 
top priority for Congress in reauthorizing Head Start. If we fail to 
accomplish this goal, we will fail in our most basic responsibility to 
children and taxpayers.
    Also, some states are operating their own early childhood programs, 
programs that sometimes rival Head Start in quality. I do think we need 
to help such states better integrate and coordinate these programs with 
Head Start, to better serve the needs of our most disadvantaged 
children. When Head Start was first established 40 years ago, it was 
the only program of its kind--federal or state. Now there are many 
different programs across the country preparing children for 
kindergarten, and we need to make sure all of those children are 
getting the same quality education.
    In the last Congress, this Committee passed a bill that sought to 
address this need. But we know many things today we didn't know then, 
particularly with respect to the financial control problems that exist 
in Head Start. With this in mind, I think we have a responsibility to 
start from square one, and build this year's legislation from the 
ground up. There were many elements in the 2003 bill that had 
bipartisan support. Those things may provide a good foundation. And in 
those areas where there was disagreement, I'm more than willing to look 
at alternative routes that can be taken to reach the same goal, if they 
might be effective. That includes the issue of coordination with state 
programs, which generated the most disagreement two years ago.
    I'm committed to passing a bill that promotes competition, 
strengthens academics, and restores fairness for children, taxpayers, 
and honest grantees. I think we can produce a bill that does these 
things, and does it in a bipartisan fashion. As the Head Start 
reauthorization process moves forward, this will be my goal.
    I would now yield to the senior Democratic member of our committee, 
Mr. Miller, for any opening statement he may have.
                                 ______
                                 
    Chairman Boehner. I would like to yield to my friend and 
the Ranking Democrat on our Committee, Mr. Miller.

 STATEMENT OF HON. GEORGE MILLER, RANKING MEMBER, COMMITTEE ON 
                  EDUCATION AND THE WORKFORCE

    Mr. Miller. Thank you Mr. Chairman. I want to thank the 
majority for holding this hearing and for GAO's work on fiscal 
accountability. Strengthening accountability and a shining 
bright star in any program is an important process. Head Start 
is this country's premiere early education program for low 
income children. It has helped millions achieve more in school 
and in life. We owe it to America's children and families 
living in some of this country's most difficult situations to 
provide them with the best programs possible. Making sure a 
program is working efficiently and effectively is one of 
Congress's most important jobs and it is particularly important 
in a program like Head Start, which research shows has strong 
effects on the cognitive and social development and almost 
closes the achievement gap by the time these kids finish 
kindergarten.
    So I welcome this opportunity today and hope that we can 
proceed in a constructive manner to do what is best for the 
children. I have recently been disappointed at some of my 
colleagues sensationalistic approach to today's topic, whether 
it is Head Start or millions of dollars in fraud and waste in 
higher education or billions of dollars by Halliburton, 
fraudulent behavior cannot be tolerated. But sensationalism 
only serves to heighten the rhetoric and distract people from 
the real reforms that need to be undertaken.
    Instead of resorting to gotcha attacks and rehashing risky 
ideas from 2 years ago I hope that we can use this hearing to 
start working together to strengthen Head Start. Head Start has 
some extremely rigorous standards and procedures that are the 
basis for its delivery of comprehensive services. It also has 
one of the most demanding monitoring programs. According to 
HHS, there are 1,797 program requirements covering areas of 
early childhood development, health services, family and 
community partnerships and program design and management. All 
1,800 get assessed in some manner in the triennial prism review 
by HHS. In addition to the prism review, grantees also submit 
monthly financial records to their governing board to submit 
audits to the ACF annually, and to report on program 
performance to ACF annually and resubmit their budgets and 
renew their grants to ACF annually.
    I want to thank GAO for their work and their 
recommendations. It is helpful to see that most programs are 
being effectively managed and how we need better to target our 
efforts on programs that are struggling. It seems clear that 
Head Start has the most of the proper tools for strong 
accountability, but they need to be better implemented. So I 
look forward to hearing from all of the witnesses today and 
listening to their recommendation. Head Start children and 
families deserve the very best we can give them, and I hope 
that we can work together today throughout the reauthorization 
to make sure that is exactly what is true.
    I am encouraged, Mr. Chairman, by your remarks that you are 
prepared to discard some of those ideas from last year and work 
together on a bipartisan solution for Head Start. That is very 
encouraging. That is the manner in which we have made 
continuous improvement in this program over the many years of 
its existence. That is why it continues to be the premiere 
program for the comprehensive development and education of 
these children in these most difficult situations. And again, I 
want to thank you for holding this hearing and look forward to 
hearing from the witnesses.
    Chairman Boehner. Thank you, Mr. Miller. The record will 
show I haven't discarded anything.
    Mr. Miller. I thought you said that there were some bad 
ideas you were getting rid of.
    Chairman Boehner. The Chair recognizes the gentleman from 
Delaware, the Chairman of the Education Reform Subcommittee, 
Mr. Castle.

   STATEMENT OF HON. MICHAEL N. CASTLE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF DELAWARE

    Mr. Castle. Thank you, Chairman Boehner. And good afternoon 
ladies and gentlemen. I read the report a little bit 
differently, perhaps, than Mr. Miller did in terms of some of 
the problems here and I think they are fairly significant. But 
I am pleased we are having the hearing and I am pleased that we 
will learn more today. And I think we should approach this 
constructively to try to deal with the issues of Head Start. I 
happen to believe very strongly in Head Start, which is one of 
the reasons I am frustrated by the problems that I have learned 
about. I think it is a lifetime benefit. There is some 
discussion about that, but I think it is a lifetime benefit 
that it provides to the children who go through it and to their 
families. And I think this hearing is important to make sure 
that we are off on a solid footing as far as this year is 
concerned.
    Approximately 2 years ago, I think it was a little bit less 
than 2 years really, we began to hear deeply concerning press 
reports of financial mismanagement in some Head Start programs 
across the country. Unfortunately we have heard of everything 
from embezzlement to the leasing of luxury vehicles with Head 
Start funds. I was particularly upset to hear of a director who 
chose to divert funds from Head Start children in order to 
operate a restaurant. As Chairman Boehner and I heard more and 
more stories like these, we decided to launch a study into 
these instances, specifically, why were they happening. We 
wanted to know if children were being shortchanged, if these 
were isolated incidents; if HHS has the tools necessary to 
catch them and how can we fix it? The impetus for asking the 
Department of Health and Human Services and the Government 
Accountability Office, GAO, to examine the procedures 
surrounding program management is simple, to ensure Federal 
dollars are going to the children participating in the Head 
Start program and not to fund lavish perks and blatant abuses.
    I am not only shocked at the number of reports that have 
filtered out from across the country, but the mere fact that 
they are happening. While it is true that these incidences 
represent a limited number of Head Start programs, I truly 
believe that one is too many. I commend the thousands of Head 
Start programs who do not sway from their goals of providing 
necessary services to the children and families in their 
programs. The fact remains, however, that there is a problem 
and the children at faulty programs do deserve better. I don't 
believe that my job is to point fingers or blame, but I do 
believe strongly that we have a responsibility to prevent any 
future abuses. It is in the interest of the more than 900,000 
low income children across the country that we identify areas 
where we can make sound change in order to strengthen the 
overall program.
    The GAO report, however, is quite clear that there are 
deficiencies in the manner HHS has monitored the program 
throughout the years. You will hear testimony from the GAO 
today that despite the numerous processes in place to monitor 
financial management, HHS has not utilized this information to 
assess overall program risks. Moreover, of the grantees 
reviewed by HHS in 2000, 76 percent were out of compliance with 
financial management standards, and 53 percent of the same 
grantees remained out of compliance at their next review. 
Disturbing stories presented about Head Start grantees and 
knowledge of the flaws at HHS allow us to move forward in a 
productive manner. The GAO report identifies key areas of 
reform and Assistant Secretary Horn will testify as to changes 
made at HHS to address management abuses.
    I am encouraged by the GAO's recommendations and do believe 
they will assist in this effort. I also look forward to 
learning what this Committee can do through the reauthorization 
process to complement what has and will be instituted. We have 
been deliberative up to this point making sure that we are 
identifying why this has happened. And I fully intend on 
continuing to monitor the program to ensure that there are not 
future abuses.
    Head Start is a program that is supposed to help our 
disadvantaged students by giving them the edge they need to 
come to school ready to learn. It is not supposed to be a 
program that benefits the executive directors by loading their 
pockets and satisfying their whims. The reality is some bad 
actors are shedding a bad light on the good programs that exist 
nationwide. And for the benefit of the program and all who take 
part in it, it is important to institute reform to ensure Head 
Start can continue to serve all needy children the way it is 
supposed to. It is unfortunate that it has come to this point, 
but I am hopeful this will be a catalyst for all of us to work 
together on critical reforms to restore the public's faith in 
Head Start programs nationwide and to create a strong program 
for years to come. And I yield back.
    [The prepared statement of Mr. Castle follows:]

Statement of Hon. Michael N. Castle, a Representative in Congress from 
                         the State of Delaware

    Good Afternoon. I am pleased to welcome all of today's witnesses, 
and look forward to hearing your testimony. I would also like to thank 
the Chairman for his leadership. I believe strongly in the Head Start 
program, and the lifetime benefits it provides to children and their 
families. This hearing is an important step in making sure this program 
maintains solid footing.
    Approximately two-years ago we began to hear deeply concerning 
press reports of financial mismanagement in some Head Start programs 
across the country. Unfortunately, we have heard of everything from 
embezzlement to the leasing of luxury vehicles with Head Start funds. I 
was particularly upset to hear of a director who chose to divert funds 
from Head Start children in order to operate a restaurant. As Chairman 
Boehner and myself heard more and more stories like these we decided to 
launch a study into these instances. Specifically, why they were 
happening. We wanted to know if children were being short changed, if 
these were isolated incidents, if HHS has the tools necessary to catch 
them, and how can we fix it. The impetus for asking the Department of 
Health and Human Services (HHS) and the Government Accountability 
Office (GAO) to examine the procedures surrounding program management 
is simple--to ensure federal dollars are going to the children 
participating in the Head Start program, and not to fund lavish perks 
and blatant abuses.
    I am not only shocked at the number of reports that have filtered 
out from across the country, but the mere fact that they are happening. 
While it is true that these incidences represent a small number of Head 
Start programs, I truly believe that one is too many. I commend the 
thousands of Head Start programs who do not sway from their goals of 
providing necessary services to the children and families in their 
programs. The fact remains, however, that there is a problem and the 
children at faulty programs deserve better.
    I don't believe that my job is to point fingers or blame, but do 
believe strongly that we have a responsibility to prevent any future 
abuses. It is in the interest of the more than 900,000 low-income 
children across the country that we identify areas where we can make 
sound change in order to strengthen the overall program. The GAO 
report, however, is quite clear that there are deficiencies in the 
manner HHS has monitored the program throughout the years. You will 
hear testimony from the GAO today that despite the numerous processes 
in place to monitor financial management, HHS has not utilized this 
information to assess overall program risk. Moreover, of the grantees 
reviewed by HHS in 2000, 76 percent were out of compliance with 
financial management standards and 53 percent of the same grantees 
remained out of compliance at their next review.
    The disturbing stories presented about Head Start grantees, and 
knowledge of the flaws at HHS allow us to move forward in a productive 
manner. The GAO report identifies key areas of reform, and Assistant 
Secretary Horn will testify as to changes made at HHS to address 
management abuses. I am encouraged by the GAO's recommendations, and do 
believe they will assist in this effort. I also look forward to 
learning what this Committee can do through the reauthorization process 
to compliment what has, and will, be instituted. We have been 
deliberative up to this point in making sure that we are identifying 
why this has happened, and I fully intend on continuing to monitor the 
program to ensure there are not future abuses.
    Head Start is a program that is supposed to help our disadvantaged 
students by giving them the edge they need to come to school ready to 
learn; it is not supposed to be a program that benefits the executive 
directors by loading their pockets and satisfying their whims. The 
reality is some crooked actors are shedding a bad light on the good 
programs that exist nationwide and for the benefit of the program and 
all who take part in it, it is important to institute reform to ensure 
Head Start can continue to serve all needy children the way it is 
supposed to. It's unfortunate that it has come to this point, but I am 
hopeful this will be a catalyst for all of us to work together on 
critical reforms to restore the public's faith in Head Start programs 
nationwide and to create a strong program for years to come.
                                 ______
                                 
    Chairman Boehner. The Chair recognizes the gentlelady from 
California, Ms. Woolsey.

STATEMENT OF HON. LYNN C. WOOLSEY, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Ms. Woolsey. Thank you Mr. Chairman. I hope that today is 
the beginning of a process that will end up with a Head Start 
law with high standards, strong accountability, and more 
resources, so that the children who most need help to succeed 
in life get that help when they most need it. There is no more 
critical program for our Nation's children than Head Start, 
because there are no years more critical to their development 
than their early years. I am sure we all agree that the vast 
majority of Head Start programs provide comprehensive high 
quality services that help children make academic and social 
gains to close the achievement gap before they enter 
kindergarten.
    We were able to work last Congress on Title I to improve 
Head Start's accountability provisions to ensure high 
performance by Head Start programs. Of course, accountability 
in the law must be implemented in practice. And so I am pleased 
that we are considering this GAO report that calls for improved 
accountability through changes to the law and efforts by the 
Department of Health and Human Services to identify poorly 
performing programs so that we can help them improve, and for 
those that cannot or will not improve, force them out, as a 
last resort. Because any waste or fraud in Head Start is 
unacceptable, I believe that the GAO report will provide with 
us an opportunity to work together to make the Head Start 
improvements that we need.
    But it is important that we understand that this report 
does not say--and I have to say this louder than loud--that 
fraud and abuse are widespread in Head Start programs, because 
it just is not true. There are incidents, yes. But often a Head 
Start program simply needs more oversight and technical 
assistance to help it do what it is trying do in the first 
place, comply with detailed financial management requirements. 
Most importantly, Mr. Chairman, we must not allow the report to 
distract us from the fact that if we truly are concerned about 
getting Head Start dollars to children, we also must look at 
this President's and this Congress's minimal increases in 
support for the Head Start program.
    Those increases have barely kept pace with inflation, if 
that, which means that for Head Start programs, programs that 
should be getting more resources so that they can serve more 
children in the first place, the only way not to cut children 
from the roles is to decrease the quality of services. But 
again, Mr. Chairman, I hope we will be able to work in a very 
bipartisan way to reauthorize Head Start and to learn from the 
challenges that we met in the 108th Congress, and I look 
forward to the panel's discussion today. Thank you, Mr. 
Chairman.
    Chairman Boehner. We have a distinguished panel with us 
today. It is my pleasure to introduce them. Our first witness 
today will be Dr. Marnie S. Shaul. Dr. Shaul is the director on 
the Education, Workforce and Income Security Team at the 
Government Accountability Office. She is responsible for the 
studies that GAO undertakes for the Congress on early childhood 
programs and elementary and secondary education programs. Dr. 
Shaul has had a varied career that includes research, teaching 
project management and policy development. And prior to the 
Federal Government, she worked for the State of Ohio on 
community and business development issues at the Kettering 
Foundation. She holds a Ph.D. in economics from the Ohio State 
University.
    Then we will hear from the Honorable Wade F. Horn. Dr. Horn 
is the Assistant Secretary for the Administration For Children 
and Families At the Department of Health and Human Services. 
Prior to being appointed to the Assistant Secretary, Dr. Horn 
was president of the National Fatherhood Initiative, whose 
mission is to increase the number of children growing up with 
involved committed and responsible fathers. During the first 
Bush administration, Mr. Horn served as the Commissioner For 
Children, Youth and Families and chief of the Children's Bureau 
At the Department of Health and Human Services and as a 
Presidential appointee to the National Commission on Children 
from 1990 to 1993. From 1993 to 2001 Dr. Horn served as an 
adjunct faculty member at Georgetown University's public policy 
institute and an affiliate scholar with the Hudson institute.
    Then we will hear from Ms. Pamela Henry. Ms. Henry is a 
proud parent of 4 adopted children, all with special needs, all 
of whom participate in the Head Start program. She is a 
licensed nail technician and an active member of her community 
in Las Vegas, Nevada. She is the president of Foster Parents of 
Southern Nevada, a local affiliate for the National Foster 
Parents Association, and president of the West Neighborhood 
Care Centers.
    As a Head Start parent, Ms. Henry served as a center 
representative for the Head Start Policy Council of the 
Economic Opportunity Board during the 2001/02 school year and 
as vice chair and community representative for Foster Parents 
from 2002 to 2004. Over the last several years, Ms. Henry 
served as policy council chair. She credits Head Start with the 
parenting and leadership skills she has developed during her 
tenure on the policy council.
    And last we will hear from Olivia Golden. Dr. Golden is a 
senior fellow at the urban institute and from 2001 to 2004 she 
served as the director of the Child and Family Services Agency 
of the District of Columbia. During the Clinton administration, 
she served in two positions within the U.S. Department of 
Health and Human Services, first as Commissioner for Children, 
Youth and Families, and then as Assistant Secretary for 
children and families.
    In these roles she was responsible for over 60 Federal 
programs, including Head Start and early Head Start. Dr. Golden 
also held previous positions at the Childrens Defense Fund, the 
Kennedy School of Government at Harvard University and the 
Office of Human Services in the Commonwealth of Massachusetts.
    I am sure someone has explained to you how the lights work 
many times. We would like to keep all of your comments to 5 
minutes and then Members will ask questions. And with that, Dr. 
Shaul we are glad you are here. You may begin.

   STATEMENT OF MARNIE S. SHAUL, DIRECTOR, EDUCATION ISSUES, 
   EDUCATION, WORKFORCE AND INCOME SECURITY, U.S. GOVERNMENT 
             ACCOUNTABILITY OFFICE, WASHINGTON, DC

    Ms. Shaul. Thank you very much. Mr. Chairman and Members of 
the Committee, I appreciate the opportunity to present the 
findings of the report we did for this Committee on financial 
oversight of the Head Start program by the Department of Health 
and Human Services. As you pointed out, Head Start has provided 
services to low income children for 40 years and at about $6.8 
billion is the largest Federal investment in early childhood 
education and care. So it is important that program management 
insures that children receive the services they deserve. My 
remarks today focus on three issues: First, risk assessment, 
the extent to which the administration for children and 
families, the part of the department responsible for Head 
Start, connects information to make an assessment of financial 
risks. Second, information quality, the quality of the 
information in ACF's processes. And third, correcting financial 
problems, the effectiveness of ACF's approaches in insuring 
that grantees with financial weaknesses correct their problems. 
Let me turn first to risk assessment. ACF does not bring the 
information it collects together to comprehensively assess the 
financial risks the program faces. Now, we have a chart over 
here and all those different bubbles represent different 
processes that are already in existence at the Agency.
    Ms. McCollum. Dr. Shaul, do you have a copy of that chart?
    Ms. Shaul. It is in your testimony statements. Both charts 
are in the statement. So although there are all these 
individual processes and they are collected by the different 
offices, that chart is in your statement over there. Those are 
the offices. The information is not integrated. And instead, 
Head Start sometimes relies on more of an ad hoc approach, ad 
hoc responses. For example, it responds to calls made to 
regional offices about grantee problems or to questions from 
the Congress. This type of response is useful but it cannot 
substitute for a comprehensive approach to determining where 
Head Start faces the highest risk. Second, regarding 
information quality, we found problems with ACF's process, and 
again, I am talking about the ones that are in that chart. For 
example, different onsite review times have had inconsistent 
findings about the status of the same grantee.
    Another example. The information provided in ACF's annual 
surveys is not verified, and some critical information such as 
enrollment has been inaccurately reported by grantees. Third, 
with respect to correcting financial problems, we found that 
ACF is not fully effective in insuring that grantees correct 
their financial problems. As was mentioned, in 2000, 76 percent 
of the grantees ACF reviewed onsite were out of compliance with 
one or more financial management standards. And since then, 
when ACF did a follow-up visit, more than half of these 
grantees still were not compliant with financial management 
standards. A small percent of Head Start grantees have a level 
of noncompliance that ACF determines deficient, a status that 
brings corrective action beyond self-certification. However, we 
found that ACF regional offices did not use common criteria to 
determine deficiency. In our review of 20 grantee files that 
contained similar financial problems and where we would have 
expected similar results, half were deemed deficient and half 
were not.
    Finally, when ACF finds that a grantee has very serious and 
continuing problems that may impair services to children, its 
corrective action may be limited. Over the past decade, a 
relatively small percentage of grantees relinquished their 
grants or were terminated. ACF generally agreed with GAO's 
recommendations to strengthen the tools it uses for financial 
management. However ACF disagreed with GAO's interpretation of 
its authority to recompete grants. ACF said that it must give 
current grantees priority at renewal time which effectively 
eliminates its opportunity to replace grantees. We believe that 
when grantees reapply for their grant, ACF has an opportunity 
to change grantees, if a grantee fails to fulfill program and 
financial requirements. For that reason, we suggested that the 
Congress might want to consider clarifying the circumstances 
under which ACF can recompete a Head Start grant.
    Mr. Chairman, that concludes my remarks. I would ask my 
full statement be placed in the record and I would be pleased 
to answer questions. Thank you.
    [The prepared statement of Dr. Shaul follows:]

   Statement of Marnie S. Shaul, Ph.D., Director, Education Issues, 
       Education, Workforce and Income Security, U.S. Government 
                 Accountability Office, Washington, DC

    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss our recent report on 
oversight of the Head Start program by the Department of Health and 
Human Services (HHS) to ensure that federal funds are used to achieve 
Head Start's goals. Head Start is the federal government's single 
largest investment in early childhood education and care for low-income 
children. HHS's Administration for Children and Families (ACF) manages 
Head Start and relies on hundreds of different grantees throughout the 
country to provide services to more than 900,000 children and their 
families. Head Start funding increased three-fold in real terms during 
the 1990s. Currently, ACF disburses about $6.8 billion annually to Head 
Start grantees. As you can imagine, managing a program of this size, 
with this many grantees and beneficiaries, can present many challenges.
    The reauthorization of Head Start presents an opportunity to 
discuss some of these management challenges. Although Head Start is a 
popular program and millions of low income children have benefited from 
the program over the past 40 years, it is important to ensure that all 
grantees are held accountable for achieving program results and 
properly managing their federal funds.
    My testimony today will focus on how well ACF manages the financial 
risks associated with the Head Start program. Specifically, I will 
discuss (1) ACF's processes to assess financial risks, (2) how those 
processes can be improved to ensure the accuracy and reliability of the 
information ACF collects on its Head Start grantees, and (3) the 
effectiveness of the approaches ACF uses to make sure Head Start 
grantees address any financial management weaknesses in a timely 
manner.
    My written statement is drawn from our recent report on Head Start 
risk management, which was completed for the Committee in accordance 
with generally accepted government auditing standards.\1\
---------------------------------------------------------------------------
    \1\ GAO, Head Start, Comprehensive Approach to Identifying and 
Addressing Risks Could Help Prevent Grantee Financial Management 
Weaknesses, GAO-05-176 (Washington, D.C.: Feb. 28, 2005).
---------------------------------------------------------------------------
    In summary:
      ACF does not have a comprehensive risk assessment process 
it can use to collect information on how well grantees are performing 
and managing their federal grant funds. Such an assessment should be 
able to provide ACF with the information it needs to target its 
oversight activities, reduce the risks inherent in managing a large 
federal grant program, and help prevent grantees from failing 
financially, through earlier intervention. While ACF has many processes 
it uses to collect information on its grantees, these efforts are 
conducted by different organizations within ACF, and ACF does not have 
a process in place to systematically bring the information together in 
one place to do an assessment of how well the program is operating.
      When we looked more closely at ACF's oversight processes, 
we identified flaws that limit the quality, accuracy, and reliability 
of the information ACF collects on its grantees. For example, ACF does 
not have a quality assurance process that could validate the findings 
of the reviews it conducts of its grantees at least every 3 years; it 
does not verify the accuracy of the data it asks its grantees to submit 
on key performance indicators each year; and it does not reconcile a 
grantee's actual withdrawals with its reported expenditures until all 
of the funds have been spent. These flaws limit the information ACF has 
on Head Start grantee's financial status and operations and, as a 
result, many program specialists in ACF regional offices that we 
visited told us they most frequently learn that a grantee is having 
trouble through a call from a parent or teacher reporting a problem. 
Program specialists said that such calls were a routine part of their 
day-to-day monitoring activities. Over-reliance on this approach to 
identifying problems can result in missed opportunities to help 
grantees address management challenges before they become problems. As 
a result, unchecked problems may worsen. Although infrequent, there 
have been cases in which grantees have furloughed employees or 
temporarily closed centers--thereby disrupting services to children and 
their families--because they spent their grant funds too quickly and 
did not adequately manage their grants to ensure that there would be 
funds available throughout the school year.
      When ACF identified grantees with financial management 
problems, we found that it took limited actions to ensure that grantees 
quickly corrected their problems and made lasting changes to their 
programs so the problems would not surface again. This is a concern 
because ACF's data show that more than 76 percent of Head Start 
programs that were reviewed in 2000 were out of compliance with 
financial management standards, and more than half of these grantees 
were still out of compliance during their next review. When we looked 
at the approach ACF takes to ensure that grantees correct their 
problems, we found that ACF most frequently relies on grantees to self-
certify that they have corrected their problems without ever visiting 
the grantees for verification. One of the more aggressive approaches 
ACF can take to address long-standing problems is to require the 
grantee to develop and implement a quality improvement plan, but first 
ACF must declare the grantee ``deficient''--a term it uses to identify 
grantees with severe problems. Yet, we noted inconsistencies in the 
process used by the ACF regional offices to determine the severity of 
the problem. As a result, one grantee could be deemed deficient while 
another, with similar problems, would not. We also found that ACF makes 
limited use of its authority to terminate its relationship with poorly 
performing grantees. ACF does not seek competition for a grant until 
after the current grantee has exhausted all its appeals or it has 
convinced a poorly performing grantee to voluntarily relinquish its 
grant. The process to remove a grantee that fails to perform up to 
standards is protracted, and that grantee can continue to receive funds 
long after financial management weaknesses have been identified. In the 
meantime, the community has no other option for Head Start services and 
low-income children may not receive the quality or intensity of 
services that they need.
    We made a number of recommendations in our report and ACF agreed to 
implement many of them. Implementing these recommendations will go a 
long way towards ensuring that those responsible for overseeing the 
Head Start program and its 1,680 grantees have the information they 
need to target oversight resources effectively and reduce the program's 
risks. More importantly, however, these improvements should help ACF 
prevent grantee financial management weaknesses before the problems 
become too severe. We also recommended that ACF make greater use of its 
authority to seek competition by taking steps to seek qualified 
applicants where the current grantee fails to meet program 
requirements. While such a step should be taken after carefully 
considering all available options, competition would help to ensure 
that children are no longer served by poorly performing grantees. 
Ultimately, enforcing all the program's requirements--especially 
financial management requirements--strengthens the federal commitment 
to poor children and their families by effectively managing scarce 
federal resources and making sure as many eligible families as possible 
can participate in the program.
Background
    Begun in 1965 as part of the Johnson Administration's War on 
Poverty, Head Start offers poor children and their families a range of 
services, including preschool education, family support, health 
screenings, dental care, and assistance in accessing medical services. 
The program may either provide the services directly or facilitate 
access to existing services. Eligibility for Head Start is generally 
limited to children who are below the age of school entry and from 
families with incomes below the federal poverty level or receiving cash 
assistance from the Temporary Assistance for Needy Families program. To 
accomplish Head Start's goals for these poor children and families, the 
Congress last year provided $6.8 billion in federal funds, which HHS 
awards directly to nearly 1,700 grantees nationwide. As funding for 
this longstanding program has grown, so has the risk associated with 
any mismanagement of program funds.
    While effective oversight of federal funds is always a guiding 
principle in managing the various federal government programs, 
accounting scandals in the private sector in 2001-2002 reinforced the 
need for organizations to have stronger financial oversight. Since that 
time, both public sector and private sector organizations--including 
many not-for-profit organizations--are paying closer attention to 
managing the risks in their operations. Indeed, the Office of 
Management and Budget (OMB) recently revised its guidance for federal 
agencies' financial managers to better integrate and coordinate their 
risk assessments and other management activities.
    The primary goal in managing any federal program is to provide 
reasonable assurance that the program is operating as intended and is 
achieving expected outcomes. A key step in the process of providing 
this assurance is conducting a risk assessment. A risk assessment is a 
comprehensive review and analysis of program operations, especially the 
management of federal funds, to identify risks and to measure the 
potential or actual impact of those risks on program operations. The 
potential for such risks exist in all federal grant programs; for 
example, the diversion of funds to other purposes, inefficient use of 
funds, failure to contribute the grantee's share of funds, or other 
problems that reduce the effectiveness with which financial resources 
are brought to bear on achieving program goals. When a federal program 
relies heavily on grantees to provide services, as the Head Start 
program does, the risk assessment process can become more complex. 
Processes must be developed to assess the operations of every grantee 
to ensure that each complies with program rules and to measure whether 
each achieves expected results.
    The federal government makes Head Start grants directly to nearly 
1,700 local organizations, including community action agencies, school 
systems, for-profit and nonprofit organizations, other government 
agencies, and tribal governments or associations. Many of these 
grantees operate other federal, state, or local programs in addition to 
the Head Start program. Many of these Head Start grantees also provide 
services by subcontracting with other organizations, known as delegate 
agencies. In 2003, there were about 800 delegates providing services in 
the Head Start program. Some grantees had multiple delegate agencies 
while others had none. The various layers of grantees, the 
administrative complexity of the program, and the interrelationship 
between programs operated by the same grantee add to the challenges of 
overseeing the Head Start program.
    ACF uses a number of processes to collect information on grantee 
performance and financial management. Table 1 summarizes ACF key 
processes for monitoring Head Start grantees.

[GRAPHIC] [TIFF OMITTED] T0472.001

    Various offices within ACF have roles in developing and 
implementing processes to monitor grantee performance and financial 
management. (See fig. 1). The Head Start Bureau develops program 
policies and designs the program-specific oversight processes to 
collect information on grantee performance. Staff from the ten regional 
offices implement the policies developed by the other offices within 
ACF, ensure that all grantees are in compliance with program rules, and 
frequently develop additional policies to aid in their oversight 
responsibilities.

[GRAPHIC] [TIFF OMITTED] T0472.002

ACF Lacks a Comprehensive Strategy to Assess Head Start Risks
    ACF uses many processes to collect information on grantee 
performance and financial management but does not bring together this 
information to comprehensively assess the program's risks or identify 
areas where it might need new or improved processes to collect 
information. Staff in ACF regional offices maintain day-to-day contact 
with the Head Start grantees and monitor the operations of those 
grantees throughout the country. Many of those regional office staff 
told us that they most frequently learn if a grantee is having a 
problem through a call from a parent or a teacher. The staff in the 
regional offices said these calls are a routine part of their day-to-
day monitoring activities. Over-reliance on this approach can result in 
missed opportunities to help grantees address management challenges 
before they become problems. Greater linkages among the various 
programs offices and oversight activities could produce a more 
comprehensive approach to assessing program risks and help prevent 
financial management weaknesses in Head Start grantees. (See fig. 2).

[GRAPHIC] [TIFF OMITTED] T0472.003

    In our review of ACF's management of the Head Start program, we 
noted a number of on-going activities that were not well-integrated and 
did not present a comprehensive view of the program's risks. For 
example, Head Start's 2004 Management Initiative targeted risks that 
were identified in recent GAO reports, news articles, and congressional 
inquiries. The Initiative targeted well-known problems such as 
underenrollment, overenrollment of children from families that did not 
meet income eligibility requirements, and excessive executive 
compensation at some Head Start programs. However, efforts to address 
broader concerns about program governance--the skills and knowledge of 
local Head Start governing boards to effectively manage their 
programs--were notably absent from the Initiative.
    In another example of an ACF oversight process that is too limited 
in scope, we reported that before 2004 ACF had not collected 
information it could use to estimate the extent of improper payments 
made by grantees or the Head Start Bureau. But when ACF began to 
collect this information, the agency focused on just one type of 
improper payments to grantees--payments made to grantees that enrolled 
too many children from families that did not meet the program's income 
eligibility requirements. These improper payments pose a program risk 
because eligible children may not have access to services. While this 
effort is an important step in systematically assessing risks, the 
study overlooked many other possible forms of improper payments, such 
as those made to contractors, to grantees that are significantly 
underenrolled, or for unallowable program activities.
    Finally, we noted in our report that ACF relies on its regional 
offices to assess their own operations for gaps that might pose risks 
to all ACF programs, including Head Start. Such gaps might include 
failure to follow ACF grant management policies or to maintain files on 
property acquired or renovated with Head Start funds. Self-assessments 
can be an important tool, but ACF had not recently conducted an 
independent compliance review to ensure that its own grant policies are 
enforced and that the federal government's financial interests are 
protected.

Processes ACF Uses to Collect and Analyze Information on Grantees are 
        Flawed
    We found that the main processes ACF uses to collect information on 
its grantees' financial management--on-site reviews, annual grantee 
surveys, and analyses of financial reports and audits--have flaws that 
limit the value of the information collected. The on-site review 
process, mandated by the Head Start Act and often known as PRISM--the 
name of the review protocol--is ACF's main tool to assess whether 
grantees are in compliance with statutory and regulatory requirements. 
While the Head Start Bureau has made progress in improving its on-site 
reviews, we found that problems remain. We found that the Bureau has no 
process to ensure that the teams of reviewers follow the Bureau's 
guidance. This is a concern because there is evidence that some PRISM 
reviewers might not follow the guidance for the on-site reviews. For 
example, comparisons of simultaneous on-site reviews of the same 
grantees by two different teams--a PRISM review team and an improper 
payments study team--revealed significant discrepancies. Notably, 21 of 
the 50 grantees in the improper payments study were cited for enrolling 
too many children that did not meet the income eligibility guidelines, 
but the PRISM review teams cited only 3 of those same grantees for 
failing to comply with income eligibility criteria.
    The effectiveness of on-site reviews to systematically identify 
grantees with financial management weaknesses depends on some assurance 
that the on-site review is implemented as designed and that the 
reviewers have the necessary skills to assess grantees' compliance with 
Head Start performance standards. The review teams are lead by staff 
from ACF's regional offices and include a number of reviewers under 
contract with Head Start. Many of these contractors are employees of 
Head Start programs throughout the country. While this level of 
experience should indicate a familiarity with Head Start program 
requirements, ACF does not check reviewer credentials or test their 
knowledge of the rules before they are sent to conduct reviews. ACF 
seeks feedback, on a voluntary basis, on the contractors' performance 
but ACF's Director of Regional Operations expressed reluctance to 
solicit feedback on the team leaders' performance.
    ACF also uses an annual survey of its grantees to collect 
information on the status of their programs to measure results, but ACF 
does not verify the information collected. We reported last year that 
important information, such as enrollment in many Head Start programs, 
is often reported inaccurately. Also, our analysis raises concerns 
about the reliability of the survey data. ACF relies on 700 checks of 
internal consistency to ensure that data are reported accurately. Many 
ACF officials said that the checks make it difficult for grantees to 
provide inaccurate information. However, our own review of the internal 
consistency of the data found problems; as long as grantees complete 
the survey consistently, the data--whether accurate or not--would pass 
the tests. While ACF officials said they would be able to address the 
problems we identified in our analysis, because the data are used 
widely by policymakers and the public to assess the program's results, 
until ACF takes steps to ensure the accuracy of the database we urge 
caution in using data from the survey to monitor Head Start grantees.
    All Head Start grantees report on the status of their funds through 
periodic financial reporting and annual audits of their financial 
statements. We found that ACF made limited use of the information 
collected through these two processes to analyze Head Start grantees' 
financial status. For example, ACF does not routinely reconcile a 
grantee's withdrawals with its reported expenditures until after the 
funds have all been spent. It is therefore difficult for ACF to 
identify grantees that might be drawing down excess funds at the 
beginning of the grant period and risking shortfalls at the end of the 
period. Regarding audits, all grantees must obtain an annual audit of 
their financial statements and compliance with selected federal laws 
and regulations. These audits are conducted under a framework mandated 
by the Single Audit Act. While these audits may not be as comprehensive 
as an on-site program review, they are designed to ensure that federal 
grantees' financial statements are accurate, that they have adequate 
checks and balances in place to protect federal funds, and that they 
are in compliance with key regulations. However, ACF officials cited 
limitations in the scope and timing of the audits for failing to use 
them more systematically in their day-to-day oversight activities. In 
focusing on the limitations of these audits, ACF officials may overlook 
some valuable information on grantees' financial management practices.

ACF Does Not Ensure that Grantees Effectively Resolve Financial 
        Management Problems
    One way to assess the effectiveness of the approaches ACF uses to 
address grantees' financial management weaknesses is to examine whether 
grantees resolve their problems and then stay in compliance. ACF's data 
from its on-site reviews from 2000-2003 show that many grantees that 
were cited for failing to comply with financial management requirements 
in one review still had problems in their next review.\2\ Our analysis 
of the data shows that more than half of the grantees cited for failure 
to comply with financial management-related rules were out of 
compliance again with one or more financial management standards during 
their next review. (See fig. 3).
---------------------------------------------------------------------------
    \2\ The data base for on-site reviews, PRISM, contains both 
grantees and grantees with any delegate agencies reviewed. The data 
presented in this section contains both types of entities. When we 
analyzed the grantees separately, we obtained the same results about 
percentages of grantees that were non-compliant and had recurrent 
problems in their next review.

[GRAPHIC] [TIFF OMITTED] T0472.004

    Moreover, the number of areas of financial management in which 
grantees were noncompliant did not decrease with subsequent reviews. As 
figure 4 shows, of the 70 grantees cited in 2000 for problems in all 
three major areas of financial management--fiscal management, program 
governance, and record keeping/reporting--69 still had one or more 
problems in each area at the next review.
    The repeat problems could be a result of failure to correct the 
problems in the first place--something that might have been identified 
with a follow up review--or an initial correction that did not take 
hold. One senior official in a regional office said that many Head 
Start grantees will fix a problem identified in the PRISM report in the 
short term but fail to make lasting changes to their financial 
management systems. For example, a grantee might try to meet financial 
reporting deadlines for a few months after being cited by a PRISM 
review team for missing deadlines, but if the grantee did not implement 
a system to ensure that these reports are consistently on time, the 
improved performance may not be sustained

[GRAPHIC] [TIFF OMITTED] T0472.005

    When grantee problems are identified through on-site reviews or 
audits, ACF often relies largely on grantees' self-certification that 
they have corrected problems rather than imposing special conditions or 
conducting a site visit. While self-certification may be appropriate in 
cases when minor problems can be corrected quickly, the analysis in 
figure 4 suggests that many grantees with problems are not getting the 
help they need to correct their problems and make lasting improvements 
in their financial management capabilities. We reviewed the files of 34 
grantees with financial management problems identified by ACF during 
its on-site reviews. In 18 cases, ACF determined that the grantees' 
problems were not severe enough to be deemed deficient--a term ACF uses 
to identify grantees with severe problems. Of those 18 grantees ACF 
required 16 to submit letters certifying that they had corrected the 
problems and no further action was pursued. In the other 2 cases, ACF 
returned to the review the grantees and found that they had not 
corrected their problems. It was not clear from our file review how ACF 
prioritized these 2 grantees for follow-up, but in revisiting these 
grantees ACF took an aggressive step to ensure compliance. Because the 
two grantees had not corrected their problems, as required by law, ACF 
deemed them deficient and required them to develop a quality 
improvement plan.
    ACF also relies primarily on self-certification to resolve problems 
identified in grantees annual audits. In each of the 30 audits we 
tracked from the date the auditor completed a report identifying 
financial weaknesses until the regional office judged the audit 
findings resolved, that judgment was based on a letter from the grantee 
rather than a site visit or other follow-up. Regional staff said they 
relied on subsequent audits to ensure that such findings are resolved, 
but we found it frequently takes up to 2 years from the point an audit 
identifies a problem until the regional office receives the next audit, 
during which the grantee continues to receive federal funds. While the 
results of our review in four regional offices may not represent the 
range of actions taken by all ACF regional offices nationwide, we 
interviewed managers in other regional offices who generally described 
similar procedures.
    To the extent that grantees have recurring financial management 
problems, more aggressive approaches might be appropriate. ACF has the 
authority to impose special award conditions--such as requiring 
grantees to seek approval for every withdrawal of grant funds--but ACF 
rarely imposes these conditions. ACF can also make a follow-on visit to 
ensure that the grantee has implemented corrective actions and is in 
compliance with the program's rules. The Head Start Act requires ACF to 
conduct follow-on visits when it determines that a grantee has such 
severe problems that it deems the grantee deficient; ACF can also 
return to grantees with less severe problems, but we found ACF rarely 
does so. We could not discern an objective rationale for when ACF 
regional offices decide that a grantee is deficient and when they do 
not. For example, reports based on the on-site reviews for 20 of the 
grantees we reviewed showed similar problems in the quantity of 
violations and the severity of the problems cited, but the regional 
offices deemed only 10 of the grantees deficient. Regional office staff 
and their managers in the offices we visited said they meet to discuss 
any problems identified during the on-site review to determine whether 
to deem the grantee deficient, but they said they treat each case 
differently and largely base their determinations on their previous 
experiences with the grantee.
    The most aggressive approach ACF can take to ensure that a 
community is served by a Head Start grantee with sound financial 
management is to seek a new grantee if the current grantee cannot 
perform as expected. However, we found that ACF rarely terminates its 
relationships with poorly-performing grantees. Instead, ACF said that, 
in lieu of terminating a poorly performing grantee, it will try to 
convince such a grantee to voluntarily relinquish its right to its 
grant. When ACF does undertake the protracted process of terminating 
its relationship with a grantee, the grantee will continue to receive 
funding even if it appeals ACF's decision--regardless of the appeal's 
merits. Under ACF's current regulations, it must also fund a grantee's 
legal costs until the grantee has exhausted its appeals before HHS' 
Departmental Appeals Board. According to an Administrative Judge on the 
Appeals Board, no other HHS grant program except Head Start allows 
grantees to continue receiving funding throughout the appeals process.
    When ACF decides to award a grant, the Head Start Act requires that 
ACF give priority to grantees already operating a Head Start program in 
the community. This aspect of the law provides important continuity for 
Head Start services in a community. It also provides important 
stability for grantees. However, the act allows the Secretary to deny 
priority to any grantee the Secretary finds fails to meet the program's 
performance or financial management requirements. Denial of priority 
status to current Head Start grantees would open up the possibility of 
competition for the grant among other qualified applicants. ACF could 
seek a new grantee that can demonstrate the ability to manage federal 
funds responsibly, in accordance with program rules, and that can 
provide high-quality Head Start services to eligible children in the 
community. Obviously, denying priority status to a grantee that has 
been a part of a community for years, has educated multiple generations 
of children from that community, and has employed a number of staff 
from the community is a major step that should be taken after carefully 
considering all available options. But, denial of priority status is a 
step that ACF should take if a grantee fails to make the necessary 
changes to effectively manage its program. Ultimately, enforcing all 
the program's requirements--especially financial management 
requirements--is really about strengthening our commitment to future 
generations of children, seeking better ways of managing scarce federal 
resources, and making sure that we reach as many eligible families as 
possible.
    We made 8 recommendations in our report to improve the overall 
management of the Head Start program, strengthen the tools ACF uses to 
collect useful information on its grantees, and improve ACF's analysis 
of the information it collects. Specifically we recommended that the 
Assistant Secretary for Children and Families:
      Produce a comprehensive risk assessment of the Head Start 
program and update it periodically. Such an assessment should:
      Consider plans to collect data on and estimate the extent 
of improper payments made for unallowable activities, payments to 
grantees that are significantly underenrolled, or other unauthorized 
activities,
      Aim to improve the processes ACF currently uses to 
collect and analyze information on program risks; for example, ACF 
should:
          Train and/or certify its on-site reviewers to ensure 
        they have the skills and knowledge necessary to perform their 
        responsibilities,
          Develop an objective approach for regional office 
        management to use in assessing the severity of the problems 
        identified during on-site reviews and for finding grantees 
        deficient or not, and
          Implement a quality assurance process to ensure that 
        the framework for conducting on-site reviews is implemented as 
        designed, including holding ACF's regional management 
        accountable for following this framework and for the quality of 
        the reviews.
      Verify key data from the annual survey of grantees to 
enhance the usefulness of this data in overseeing its grantees and 
managing the program, and
      Seek ways to make greater use of the data it collects on 
the status and use of federal funds through a periodic reconciliation 
of grantees' reported expenditures with their withdrawals.
      Take steps to obtain competition for a grant if ACF has 
determined that the current grantee fails to meet program, financial 
management, or other requirements. Such a competition could be held 
without giving priority to the current grantee.
    ACF agreed to implement most of our recommendations. However, ACF 
expressed concerns about our last recommendation, suggesting that it 
did not have the authority to seek competition from other qualified 
applicants for grant funds in communities that are currently served by 
poorly performing grantees without first terminating its relationship 
with such grantees. Seeking other qualified applicants under these 
circumstances would strengthen the linkages between a program's 
performance--including financial management--and its funding. Congress 
may wish to seek other qualified applicants and clarify the extent of 
ACF's authority to deny priority status to grantees it determines fail 
to meet program, financial management, and other requirements.
    Mr. Chairman, that concludes my prepared statement. At this time, I 
would be happy to take any questions you or other Committee Members may 
have.

                                 ______
                                 
    Chairman Boehner. Mr. Horn.

  STATEMENT OF HON. WADE F. HORN, PH.D., ASSISTANT SECRETARY, 
 ADMINISTRATION FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF 
           HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Mr. Horn. Thank you, Mr. Chairman and Members of the 
Committee. I am very pleased to have this opportunity to appear 
before you today to discuss the recent report of the Government 
Accountability Office Head Start. The President is committed to 
strengthening Head Start and has made accountability a guiding 
principle of our work. And I can assure you that we have--we 
take GAO's findings very seriously. For nearly 2 years, we have 
been actively and aggressively engaged in addressing many of 
the weaknesses cited in this report. Other suggestions in the 
report will help us plan and implement additional strategies 
for enhancing the quality and credibility of our oversight of 
the Head Start program in order to ensure that all Head Start 
children receive the Head Start they deserve. The Head Start 
program is now in its 40th year and is a nearly $7 billion a 
year program serving more than 900,000 low income children and 
families, through a network of 1,600 local grantees.
    Head Start children are served in nearly 50,000 classrooms 
located within more than 20,000 centers, which are located in 
more than 3,000 counties nationwide. Head Start is, in short, 
the program that has wide ranging presence and influence. It 
ought to be absolutely the best early childhood education 
program we can design. As stewards of this program, we are 
committed to making that goal a reality. I will focus my 
testimony today on our ongoing efforts as well as some of our 
planned initiatives to improve program oversight and 
stewardship.
    As discussed in the GAO report, we have several ongoing 
procedures to examine program compliance and to measure 
results. Key among these is the mandated triennial onsite 
monitoring of local programs. Monitoring is one of our best 
opportunities ensure that every Head Start program is 
accountable to all applicable statutes and regulations. In the 
last several months, inconsistent with many of the GAO's 
observations and recommendations, we have implemented several 
efforts to improve our oversight of local Head Start programs. 
First, we have established for the first time minimum 
qualifications for all reviewers in the area they are 
reviewing. Establishing these minimum qualifications helps 
insure that all individuals on a monitoring review team have 
the knowledge, skills and experience necessary to be part of a 
quality review.
    Second, December of last year and February of this year, we 
provided intensive multi-day training for more than 1,000 
reviewers in the areas of fiscal program management and early 
childhood development. Additional training will be conducted 
later this year for reviewers in the fields of health and 
nutrition services, mental health services and family and 
community partnerships.
    Third, we will soon be implementing a quality assurance 
initiative in which specially trained reviewers will lead teams 
to conduct reviews of a sample of recently monitored grantees. 
We believe this effort will substantially address GAO's concern 
about consistency among reviewers and across ACF regional 
offices.
    Fourth, we have been conducting in-depth analysis of all 
triennial and first year monitoring reports to improve report 
quality, comprehensiveness, accuracy and uniformity within and 
across the regional offices.
    Fifth, ACF substantially revised the fiscal checklists used 
during all fiscal reviews to incorporate a risk-based 
assessment approach. This will allow us to identify fiscal 
issues which may suggest underlying fiscal problems.
    Sixth, ACF is requiring the program review instrument for 
systems monitoring, or PRISM review teams to closely examine 
several special areas that were not as carefully or 
consistently considered in the past, including transportation 
services, condition in Federal interest and facilities, 
salaries and staff compensation, maintenance of full enrollment 
and income eligibility.
    And finally, this year, ACF began emphasizing to grantees 
that conducting quality comprehensive program self assessments 
are critical to insuring the delivery of high quality services 
to children and families. I hope this information has provided 
a clear picture of our continued and more aggressive commitment 
to improving program oversight and monitoring. We also look 
forward to working with the Congress in the upcoming discussion 
of Head Start reauthorization to explore statutory changes that 
can enhance the secretary's flexibility to replace poorly 
performing grantees.
    In conclusion, I want to assure this Committee that the 
President, the Department, and the Administration on Children 
and Families are committed to strengthening the quality of Head 
Start. We acknowledge that we can and must do better. I feel 
confident that working together we will achieve that goal. 
Thank you, and I would be pleased to answer any questions.
    [The prepared statement of Mr. Horn follows:]

Statement of Hon. Wade F. Horn, Assistant Secretary, Administration for 
 Children and Families, U. S. Department of Health and Human Services, 
                             Washington, DC

    Chairman Boehner and members of the Committee, I am pleased to have 
this opportunity to appear before you today to discuss the recent 
report of the Government Accountability Office (GAO) on ``Head Start: 
Comprehensive Approach to Identifying and Addressing Risks Could Help 
Prevent Grantee Financial Management Weaknesses''. The President is 
committed to strengthening the quality of Head Start to improve the 
school readiness of low-income preschool children and has made 
accountability a guiding principle of our work. Within this context, I 
can assure you that we take GAO's findings very seriously and for 
nearly two years we have been actively and aggressively engaged in 
addressing the weaknesses cited in the report.
    The Head Start program is now in its 40th year. It is a nearly $7 
billion program, serving more than 900,000 low-income children and 
families through a network of 1,600 local grantees. There are 212,000 
staff employed in Head Start programs and more than 1.3 million persons 
volunteer in local programs. Head Start children are served in nearly 
50,000 classrooms located within more than 20,000 centers, which are 
located in more than 3,000 counties nation-wide. Head Start is, in 
short, a program that has wide ranging presence and influence. It ought 
to be absolutely the best early childhood education program we can 
design. As stewards of this program, we are committed to making that 
goal a reality.
    I will focus my testimony today on our ongoing efforts, as well as 
some of our planned efforts, to improve program oversight and 
stewardship. Several of GAO's findings mirror weaknesses we previously 
identified and are actively working to resolve. Other suggestions in 
the report will help us plan and implement additional strategies for 
enhancing the quality and the credibility of the Head Start monitoring 
system in order to ensure that all Head Start children receive the head 
start they deserve.

Head Start Monitoring
    As discussed in the GAO report, we have several ongoing procedures 
to examine program compliance and to measure results. Key among these 
is the mandated, triennial, on-site monitoring of local programs. Under 
the Head Start Act, each grantee must be monitored at the end of the 
first year of operation and intensely at least once every three years 
thereafter. These reviews are conducted by consultants with 
professional expertise in their assigned area, under the direction of a 
federal team leader. Most teams are composed of approximately six to 
eight reviewers; additional reviewers may be assigned to review larger 
or more complex programs.
    Written reports containing findings from these reviews are provided 
to each grantee and corrective action must be implemented by the 
grantee. Programs identified as deficient must correct all deficiencies 
within a prescribed period of time or we must seek to terminate the 
grantee's authority to operate that Head Start program.
    In fiscal year 2004, the Administration for Children and Families 
(ACF) conducted triennial reviews of 570 programs. Eighty-nine of these 
programs were identified as deficient. Each was issued a report by ACF 
mandating correction of their deficiencies within a specified time 
period, not to exceed one year. Any of these 89 grantees that do not 
correct their deficiencies must have their grant terminated. In fiscal 
year 2004, ACF replaced 20 grantees with unresolved fiscal and quality 
issues.
    Monitoring is one of our best opportunities to measure the quality 
of Head Start programs. As federal stewards, we must use our monitoring 
procedures to assure we are holding every Head Start program 
accountable to all applicable statutes and regulations.
    In the last several months, and consistent with many of the GAO's 
observations and recommendations, ACF has implemented several efforts 
to improve our monitoring.
    First, we have established for the first time minimum 
qualifications for all reviewers in the area they are reviewing. For 
example, a reviewer wanting to do fiscal reviews must have a minimum of 
a bachelor's degree with at least 12 credits in accounting, with a 
preference for a degree in accounting. Establishing these minimum 
qualifications helps assure that all individuals on a monitoring review 
team have the knowledge, skills and experience necessary to be part of 
a quality review. Reviewers not meeting these qualifications can no 
longer participate in Head Start reviews. Qualified individuals must be 
annually certified and meet our minimum requirements. Additional 
individuals will be recruited, trained, mentored, and added to the 
reviewer pool.
    Second, we have implemented a formal assessment process in which 
the federal team leaders and reviewers assess the performance of their 
team members. These assessments are conducted after every review. 
Assessment scores and comments are tracked for individuals over 
multiple reviews. Reviewers with identified patterns of ``poor 
performance'' are removed from the Head Start reviewer pool.
    Third, in February and December 2004 we provided intensive, multi-
day training for more than one thousand reviewers in the areas of 
fiscal, program management, and early childhood development. We also 
have provided and are continuing to provide professional development 
for federal team leaders and federal grants staff. Training for team 
members provides a very clear understanding of the nature of their 
responsibilities as part of a monitoring team, and the important roles 
they play in helping to assure a quality Head Start experience for 
every child and family.
    Additional training will be conducted later this year for reviewers 
in the fields of health and nutrition services, disabilities services, 
mental health services, and family and community partnerships. We feel 
confident that these three changes will go a long way in helping us 
assure that only qualified, skilled reviewers perform the vital role of 
evaluating the comprehensiveness, local management, and quality of our 
Head Start programs.
    Soon we will implement a quality assurance initiative in which 
specially trained reviewers will lead teams to conduct re-reviews of a 
sample of recently monitored grantees. We believe this effort will 
substantially address GAO's concern about consistency among reviewers 
and across ACF regional offices. The re-review teams will go on-site to 
grantees that have been monitored within the previous few months. A 
second, complete monitoring review will take place and the results will 
be evaluated by the Head Start Bureau. This will allow us to make 
better-informed professional judgments about the reliability of our 
current monitoring teams, including individual reviewers and federal 
team leaders. We believe this approach also will allow us to achieve 
more complete, more accurate, and more consistent monitoring outcomes.
    In addition, we are conducting in-depth analyses of all triennial 
and first year monitoring reports. The results of these analyses are 
provided to regional administrators for regional quality assurance and 
staff training. The Head Start Bureau has created a two-part strategy 
to improve report quality, comprehensiveness, accuracy and uniformity 
within and across regions. First, draft deficiency reports are analyzed 
and reviewed for accuracy by the Head Start Bureau prior to release to 
grantees, with the results and recommendations of these analyses sent 
to the regional administrators. In the second part of this strategy the 
Head Start Bureau has established standards for all other letters and 
reports related to grantee monitoring.
    Additionally, ACF is continuing our emphasis on improving each 
grantee's fiscal viability. For example, the Fiscal Checklist, now used 
by all fiscal reviewers, was substantially revised in fiscal year 2005 
to use a ``risk-based'' assessment approach in alignment with GAO's 
recommendation. The Fiscal Checklist includes a set of very specific, 
prioritized indicators, or ``red flags'', designed to identify fiscal 
issues which may suggest underlying fiscal problems. These indicators 
focus on those areas or irregularities which are most likely to have 
the greatest adverse impact on the fiscal accountability of the 
grantee. Grantees whose indicators suggest current or possible future 
problems will be subject to a more detailed review of their fiscal 
systems and records to determine if there are indeed problems that 
impact the grantee's fiscal operations and management.
    Further, ACF is requiring the Program Review Instrument for Systems 
Monitoring (PRISM) review teams to closely examine several specific 
areas that were not as carefully or consistently considered in the 
past. These include transportation services, condition and federal 
interest in facilities, salaries and staff compensation, maintenance of 
full enrollment, and income eligibility.
    Also, in fiscal year 2005, ACF is emphasizing the conduct of 
required grantee self-assessments. Grantees have been reminded that 
conducting quality, comprehensive program self-assessments are critical 
to ensuring the delivery of high-quality services to children and 
families. Grantees must conduct accurate, comprehensive self-
assessments building on information from the triennial federal 
monitoring review to further program improvement, regularly identify 
issues, correct problems, and improve services.

GAO Recommendations
    I hope this information has provided a clear picture of our 
continued and more aggressive commitment to improving program 
monitoring. This is a goal we have undertaken in earnest over the past 
year. The GAO report synthesized many of the concerns we have had 
regarding program weaknesses. This report affirms that we are on the 
right track in strengthening our oversight and accountability efforts.
    While my initial remarks today have provided some insight into our 
responses to the GAO recommendations, I would like to take this 
opportunity to briefly and specifically walk through each of the 
recommendations in their report and our response.
    I. (a) ACF should develop a strategy to produce a comprehensive 
risk assessment of the Head Start program which would provide 
reasonable assurance that a Head Start grantee's finances are 
reasonably sound and that program objectives are being met.
    We fully support the recommendation to develop a ``comprehensive 
risk assessment'' of the Head Start program. We are looking to both the 
HHS Office of Inspector General's Risk Assessment Protocol as well as 
tools used by GAO that have been adopted by other agencies in ACF in 
our efforts to develop this comprehensive risk assessment.
    Over the next few months, we will continue developing an approach 
that will allow us to identify, early on, grantees that have issues 
that could suggest potential fiscal or programmatic problems. Beginning 
with the indicators in the fiscal checklist, we will identify the 
factors we should use in determining a grantee's fiscal and 
programmatic accountability. We then will identify the data source or 
sources we will use to consistently collect information about each of 
the factors. Finally, we will determine the relative risks associated 
with each of these factors and develop a rating system that tells us 
when a grantee is at risk of heading down a path to larger fiscal or 
programmatic problems. We believe that such a system will enable us to 
identify at risk grantees while there is still time to work with them 
and implement appropriate change.
    1. (b) ACF should collect data on improper payments made by Head 
Start grantees.
    ACF will assure that grantees are held accountable for improper 
payments made with Head Start grant funds. For example, this year 
monitoring teams will be looking more carefully and more systematically 
at the way grantees expend all of their Head Start funds. Also, we are 
continuing our strong focus on improper payments begun last year by 
visiting 50 randomly chosen grantees to review grantees' enrollment 
files and determine whether they are serving only children who are 
eligible for Head Start.
    As an additional strategy for examining improper payments, we have 
begun rigorously enforcing the new requirement enacted by Congress to 
cap the compensation of Head Start staff. We will move to disallow 
costs expended by a Head Start grantee when they are in violation of 
this cap. Further, we will continue our efforts to assure all grantees 
are serving the full number of children for which they have been funded 
by holding grantees accountable for upholding all terms and conditions 
of their grant award. Grantees failing to do so will see their funding 
levels reduced.
    II. ACF should train and certify all PRISM reviewers.
    As I discussed earlier, over the last several months, we provided 
PRISM training to federal team leaders and to fiscal, program design 
and management, and early childhood consultants. ACF has and will 
continue to schedule additional training events for consultants in 
other areas of expertise to ensure that all reviewers have appropriate 
training. ACF agrees with GAO that reviewer training needs to be 
provided regularly and designed to assure reviewers have the knowledge 
and appropriate understanding of their roles in assisting ACF in 
determining the management and quality of our Head Start programs.
    III. ACF should develop an approach to assess the results of PRISM 
reviews and ensure consistency among Regional Offices.
    ACF's Head Start Bureau is continuing an effort begun last year in 
which all monitoring reports to be issued by the regional offices are 
reviewed and critiqued, providing feedback to the regions about the 
quality, comprehensiveness and accuracy of these reports and related 
letters to grantees. We also are analysing data from monitoring 
findings and discussing areas of inconsistency within and across our 
regional offices. When regional data indicate inconsistencies in the 
number and types of problems found in Head Start grantees, we are 
working more closely with those regional offices to uncover the reasons 
for the inconsistencies and be certain they do not reoccur.
    As mentioned earlier, in fiscal year 2005, ACF will be implementing 
a quality assurance system in which a selected number of programs will 
be ``re-reviewed'' a few months after their regularly scheduled PRISM 
review. This is another method that will help us achieve greater 
consistency across regions and among reviewers. Further, ACF is 
supportive of legislative change that can provide the Administration 
increased flexibility to use the best team leaders available for a 
particular review by not requiring every team leader to be a federal 
employee.
    We want to acknowledge our agreement with the GAO, that for too 
many years we have relied too heavily on a grantee's self-certification 
that serious non-compliances have been corrected. There may be some 
situations in which such certifications are sufficient; however, 
reliance on this practice for ensuring grantee corrective action must 
be dramatically reduced. Therefore, ACF is significantly increasing the 
use of on-site visits to verify corrective actions. These site visits 
will focus on whether the grantee has made systemic, sustainable 
changes to reduce the possibility of repeating problems in the future. 
This approach also will help regional offices more consistently assess 
a grantee's success in correcting identified problems in both the short 
and the long term.
    IV. (a) ACF should implement a quality assurance system to assure 
on-site reviews are being conducted as intended to provide ACF with 
objective and accurate data about grantees.
    As noted above, in fiscal year 2005, ACF will be implementing a 
quality assurance system designed to enhance consistency and quality 
among both regional offices and reviewers. Specially trained review 
teams made up of some of the best reviewers in the country will visit 
grantees that have been monitored within the last few months. A 
complete monitoring review will take place; the results of which will 
be shared with the responsible ACF regional office. This process will 
allow us to make more informed, professional judgments about the 
reliability of our current monitoring teams; including individual 
reviewers and federal team leaders. We believe this approach will help 
enhance the process of achieving more complete, more accurate, and more 
consistent monitoring outcomes.
    4. (b) ACF should assure the accuracy of its data collection forms.
    ACF and others rely upon the annual Program Information Report 
(PIR) and other data. We will, therefore, continue to explore ways to 
increase the accuracy of the PIR and other data sources. We will, for 
example, initiate an effort this year in which we will visit randomly 
selected Head Start programs to conduct a validation study of the data 
reported on the PIR. We also initiated procedures to assure that the 
information grantees report on their required salary comparability 
studies is accurate and current. In addition, Head Start staff 
currently is working with ACF information technology staff to develop a 
single, integrated database that will contain all the current Head 
Start data sources. This integrated database will allow us to take a 
comprehensive approach to examining the management, fiscal and 
programmatic status of Head Start grantees.
    V. ACF should make greater use of information currently available 
to regional offices to more quickly identify potential risks.
    ACF will make more complete use of all data sources available to us 
to assure we are able to identify risks as quickly as possible. Central 
and regional offices will jointly develop specific protocols to assure 
that we are making full and timely use of the fiscal and other data 
available.
    VI. ACF should recompete Head Start grants when the current 
recipient has not met its obligations in the areas of program or 
financial management.
    ACF is looking forward to working with the Congress in the upcoming 
discussions on Head Start reauthorization to explore changes to the Act 
that can enhance the Secretary's flexibility to replace poorly 
performing grantees. Without such statutory changes, we do not believe 
we can implement GAO's proposed recommendation in this area. It is our 
position that, because of current statutory language there can be 
lengthy delays before we can replace the grantee in charge of Head 
Start operations in that community.
    More specifically, we would like to work with this Committee to 
amend language in the current Head Start Act which provides current 
grantees with priority consideration for funding and which requires 
grantees to be given a hearing before being replaced, no matter how 
poor their operations and performance may be. We believe the current 
system makes it unnecessarily time consuming and difficult to remove 
grantees which are not responsibly delivering comprehensive, quality 
services. Like GAO, we are particularly dismayed by the increasing 
number of grantees with recurring problems that fail to correct or only 
temporarily correct areas of non-compliance and deficiencies. We look 
forward to working with Congress to give HHS the ability to quickly 
remove poor performing grantees so that we are providing the best 
quality services possible to Head Start children.

Additional Program Improvement Efforts
    I would like to close my remarks by sharing with this Committee 
several other efforts the Administration is engaged in designed to 
improve grantee quality and accountability. Foremost among these is 
working with this Committee and this Congress to pass a Head Start 
reauthorization bill which will send a clear message that all Head 
Start grantees are expected, at all times, to deliver high quality 
services to every enrolled child and family.
    First, we would like the Congress to help us increase the 
involvement of selected states in Head Start as we move to increase 
coordination between Head Start, state pre-K programs, and child care 
services. Second, we would like the Congress to provide the Secretary 
with greater discretion to use funds appropriated for Head Start in the 
most effective manner possible by enacting changes to the current 
statutory set-aside for training and technical assistance. Third, we 
would like the statute to more clearly state the expectation that all 
children should leave Head Start prepared for school and that the 
standards for school readiness are being met. Fourth, we would like 
increased flexibility in the make-up of our monitoring teams so that we 
always can send out the most qualified individuals for the job. And 
fifth, we would like to work with Congress to ensure that the statute 
allows us to deal with poorly performing grantees fairly but 
expeditiously.
    In addition to these proposed statutory changes, I would like to 
close by sharing information about one other training and technical 
assistance project which, although not directly related to monitoring, 
plays an important role in assuring grantees are providing high quality 
services to the communities they serve. We are in the second year of a 
new training and technical assistance (T/TA) system that we believe 
will help improve grantee quality and, by so doing, address some of the 
underlying issues raised by GAO. We have, for the first time, hired T/
TA specialists who are assigned to work on a regular basis with 
individual grantees. These specialists will help grantees identify T/TA 
needs and appropriate ways of meeting these needs. They will visit 
their assigned grantees several times a year to focus on improving 
grantees. The local specialists are supported by a team of content 
experts in each regional office to provide guidance to grantees and to 
support the local specialists in their technical assistance work within 
programs.

Conclusion
    In conclusion, I can assure this Committee that the President, the 
Department and ACF are committed to strengthening the quality of Head 
Start. In keeping with the findings of this GAO report-we can do 
better. The Administration for Children and Families will continue to 
improve program oversight to ensure program quality and effectiveness. 
At the same time, we look forward to working with you to make 
appropriate changes to Head Start's legislation that will hold all 
grantees accountable for all requirements and for providing quality 
service. I feel confident that together we will achieve these goals.
    Thank you. I would be happy to answer any questions.
                                 ______
                                 
    Chairman Boehner. Ms. Henry. Welcome. You may begin.


 STATEMENT OF PAMELA HENRY, JR., HEAD START PARENT, LAS VEGAS, 
                               NV

    Ms. Henry. Thank you. Good afternoon, Chairman Boehner, 
Representative Miller, and Members of the Committee. My name is 
Pamela Ann Henry Jr., and I am honored for this opportunity to 
share my experience as a parent and former chair of the Head 
Start and early Head Start policy Council for the Economic 
Opportunity Board, Clark County. EOB is the Head Start grantee 
in Las Vegas, Nevada.
    I may not have a Ph.D. or be a high ranking government 
official, but I can tell you firsthand the importance of Head 
Start to a parent and what is happening, and in some cases, not 
happening in my Head Start program. I am a foster/adoptive 
parent that cares for children with special needs between the 
ages of birth and 5 years of age. Since 2001, my husband and I 
have been affiliated with the Head Start and Early Head Start 
program as active parents, and I, with the policy council as a 
center representative and later chair for the EOB in Clark 
County.
    Policy counsels are required by Head Start regulations to 
assist with program governance that include parents, community 
representatives and liaisons from the executive board. The 
topic of today's hearing is a recent report by the Government 
Accountability Office, or the GAO, which found Federal 
oversights to be inadequate to swiftly identify and correct 
financial mismanagement of Head Start grantees. I have just 
three messages for the Committee today. No. 1, too much time 
can go by from the time problems start to the time they are 
fixed. Many times they go unrecognized. But even worse, there 
is no incentive to fix problems quickly because grantees are 
not held accountable for correcting these problems.
    Number 2, the Federal Government shouldn't let bad grantees 
continue to operate bad programs. Like the three-strikes-you-
are-out policy, at a certain point enough should be enough.
    No. 3, policy counsels and other governing boards at the 
local levels should matter. Often times these boards are not 
given a real opportunity to be involved, but they should be. I 
will elaborate briefly on each of these points. The GAO report 
was requested by Congress after reports of misuse of Head Start 
funds were printed in newspapers around the country. 
Unfortunately the grantee over the center where my children 
attend Head Start is one such case. I know most Head Start 
programs are good, so why focus on a few bad ones? There may be 
many others who don't have these problems, but even if just one 
program has problems, they should be fixed.
    The EOB Community Action Partnership is the largest private 
non-profit social service organization in Nevada. EOB has nine 
service divisions that administer 40 programs intended to 
assist 55,000 area residents each year. EOB receives over $12 
million annually to prepare 1,700 children, including mine for 
kindergarten. In 2003 and 2004, EOB was cited as a high risk 
grantee by the Head Start Bureau. Yet, as I learned later, the 
board had been deemed a deficient grantee in several important 
areas for many years.
    For example, EOB had been cited repeatedly for inaccurate 
accounting practices, yet no corrective action seemed to be 
initiated by the Federal Government or the Agency itself.
    In 2003 I was involved with the annual review process 
conducted by the Region IX staff. I accompanied the EOB 
executive director and other agency administrators. EOB was 
instructed to develop a corrective action plan after its review 
identified multiple deficiencies. The policy council was 
initially involved in the drafting of the corrective action 
plan, but in the end, the senior managers and other agencies 
approved a different plan without our input. The policy council 
expressed concern both to the executive active team and the HHS 
Region IX staff, but our concerns were dismissed. This was very 
discouraging. As policy council chair, I emerged a stronger 
leader and advocate for the Head Start and gained the 
confidence to stand my ground and fight a fight for what I felt 
was right for the eligible children enrolled and their 
families.
    And then at the local level, many Head Start boards are 
agreeing to actions taken by administrators. There is no 
independent review or checks and balances--no accountability 
for the administrators because in most cases, there is no 
responsibility assumed by the executive board.
    A dysfunctional senior management and grantee board at EOB 
triggered multiple concerns that I shared with the Region IX 
representative. While in the position as PC chair, the program 
had been deemed high risk due to several noncompliance matters. 
But one of the most important factors is what the GAO has 
stated in their recent report, mismanagement of program funds, 
along with continuous deficiencies.
    By the end of my third year, there had been several reviews 
and audits. With the right accountability in place, 
mismanagement of funds could have been avoided. However, those 
involved were never held responsible for their misconduct for 
such funds. The EOB never felt as though the grant was 
threatened, or that they could do anything that would lead to 
the termination of their funding. In such cases, an 
organization other than EOB should have been given millions of 
dollars taken for granted by this grantee.
    The GAO report recommends that poorly performing grantees 
should come compete against other entities for their grant. In 
the case of EOB, another organization might have been more 
qualified to manage the Head Start program. I am done. Thank 
you. I am sorry.
    [The prepared statement of Ms. Henry follows:]

    Statement of Pamela Henry, Jr., Head Start Parent, Las Vegas, NV

    Good Afternoon Chairman Boehner, Representative Miller, and Members 
of the Committee. My name is Pamela Henry, and I am honored for this 
opportunity to share my experience as a parent and former Chair of the 
Head Start Policy Council of the Economic Opportunity Board (EOB). EOB 
is the Head Start grantee in Las Vegas, Nevada.
    I may not have a Ph.D., or be a high-ranking government official, 
but I can tell you first hand the importance of Head Start to a parent 
and what is happening--and in some cases not happening--in my Head 
Start program.
    I am a foster/adoptive parent that cares for children with special 
needs between the ages of birth and 5 years. Since 2001, my husband and 
I have been affiliated with the Head Start & Early Head Start Program 
as active parents and I, with the Policy Council as a Center 
Representative and later Chair, for EOB in Clark County. Policy 
Councils are required by Head Start regulations to assist with program 
governance and include parents, community representatives, and a 
liaison from the Executive Board.
    The topic of today's hearing is a recent report by the Government 
Accountability Office--or GAO--which found federal oversight to be 
inadequate to swiftly identify and correct financial mismanagement by 
Head Start grantees.
    I have just three messages for the Committee today:
    I. Too much time can go by from the time problems start to the time 
they are fixed. Many times, they go unrecognized. But even worse, 
there's no incentive to fix problems quickly because grantees are not 
held accountable for correcting these problems.
    II. The federal government shouldn't let bad grantees continue to 
operate bad programs. Like the three strikes you're out policy, at a 
certain point, enough should be enough.
    III. Policy Councils and other governing boards at the local level 
should matter. Often times these boards are NOT given a real 
opportunity to be involved, but they should be.
    I will elaborate briefly on each of these points.
    The GAO report was requested by Congress after reports of misuse of 
Head Start funds were printed in newspapers around the country. 
Unfortunately, the grantee over the center where my children attend 
Head Start, is one such case.
    I know most Head Start programs are good. So why focus on a few bad 
ones? There may be many, many others who don't have these problems, but 
even if just one program has problems, they should be fixed!
    The EOB Community Action Partnership is the largest private, non-
profit social service organization in Nevada. EOB has nine (9) service 
divisions and administers forty (40) programs intended to assist 55,000 
area residents each year. EOB receives over $12 million dollars 
annually to prepare 1,700 children, including mine, for kindergarten. 
In 2003-4, the EOB was cited as a high-risk grantee by the Head Start 
Bureau. Yet, as I later learned, the Board had been deemed a deficient 
grantee in several important areas for many years. For example, the EOB 
had been cited repeatedly for inadequate accounting practices yet no 
corrective action seemed to be initiated by the federal government or 
the agency itself.
    In August 2003, I was involved in the triennial review process 
conducted by the Regional IX staff. I accompanied the EOB executive 
director and other agency administrators. EOB was instructed to develop 
a corrective action plan after its review identified multiple 
deficiencies. The Policy Council was initially involved in drafting the 
corrective action plan but in the end, the senior managers of the 
agency approved a different plan without our input. The Policy Council 
expressed concern to both the Executive Team and HHS Region IX staff 
but our concerns were dismissed. This was very discouraging.
    As Policy Council Chair, I emerged a stronger leader and advocate 
for Head Start and gained the confidence to stand my ground and fight a 
fight for what I felt was right for the eligible children enrolled and 
their families. At the local level, many Head Start boards are agreeing 
to all actions taken by the administrators--there is not independent 
review or checks and balances. No accountability for the administrators 
because in most cases there's no responsibility assumed by the 
Executive Board.
    A dysfunctional Senior Management and the Grantee Board at EOB 
triggered multiple concerns that I shared with the Region IX 
Representative. While in the position as PC Chair the program had been 
deemed as high-risk due several non-compliance matters, but one of the 
most important factors is what the GAO has stated in their recent 
report, mismanagement of program funds, along with continuous 
deficiencies.
    By the end of my third year there had been several reviews and 
audits. With the right accountability in place, the mismanagement of 
the funds could have been avoided. However, those involved were never 
held responsible for the misconduct of such funds. Unfortunately, the 
EOB never felt as though their grant was threatened or that they could 
do anything that would lead to the termination of their funding. In 
such cases, an organization other than EOB should have been given the 
millions of dollars taken for granted by this grantee.
    The GAO report recommends that poorly performing grantees should 
compete against other entities for their grants. In the case of EOB 
another organization might have been more qualified to manage the Head 
Start program.
    Members of the Policy Council had little confidence that an 
adequate corrective action plan was put into place or that Region IX 
administrators would return to EOB to ensure that changes we 
successfully implemented. Under the current system, grantees must self-
certify that deficiencies have been corrected and the federal 
government takes the grantee at their word. Yet, according to the GAO 
report, and consistent with the experience at EOB, problems cited 
continued to be problems for multiple review cycles.
    If Regional manager's performance was tied to the improvement and 
performance of the programs for which they were responsible, many Head 
Start programs would improve. The Regional IX manager's job apparently 
was not judged by the success or failure of the grantees under his or 
her control and so there was no incentive to improve the situation. 
Furthermore, it seems many Regional managers believe it is more trouble 
to go through the grantee termination process than to just recommend a 
grant be re-funded, even when the manager knows it's not in the best 
interest of Head Start.
    Regional managers should be held accountable for bringing a program 
back into compliance and help support grantees in that process or be 
liable for letting a program be deemed deficient over and over again. 
We must remember that this is for the children and low-income families, 
and as our current President says, ``no child shall be left behind!''
                                 ______
                                 
    Chairman Boehner. That is all right. Thank you, Ms. Henry. 
I know it is rather daunting to have to show up and speak 
before all of us and those people behind you, but you did a 
very nice job.
    Dr. Golden.


    STATEMENT OF OLIVIA GOLDEN, Ph.D., SENIOR FELLOW, URBAN 
                   INSTITUTE, WASHINGTON, DC

    Dr. Golden. Thank you very much, Mr. Chairman, Congressman 
Miller and Members of the Committee. I am honored to appear 
before you today. My perspective on Head Start and on tough and 
effective management has been shaped by experiences as a 
researcher and a practitioner at the Federal, State and local 
levels, as you heard in the Chairman's introduction. I spent 8 
years at HHS, including 3 as Assistant Secretary for Children 
and Families. And in 1993, I was a member of the Bipartisan 
Advisory Committee on Head Start quality and expansion, 
including members from both parties, staff to this Committee.
    The advisory committee's unanimous final report provided a 
rigorous blueprint for quality, including strengthening Federal 
oversight. As a result of reforms put in place by HHS and the 
Congress, beginning with the advisory committee, the 1994 Head 
Start Reauthorization and the 1996 publication of tough and 
research-based performance standards, Head Start has the most 
rigorous standards and the most intensive monitoring of any 
human services program that I am aware of. This emphasis on the 
accountability paid off in clear results during the late 
1990's. As the GAO report indicates, a historically 
unprecedented 144 grantees were terminated or relinquished 
their grants between 1993 and 2001. GAOs report provides useful 
next steps for Federal oversight that build on these earlier 
reforms. But before turning to my suggestions for implementing 
GAO's recommendations, I would like to highlight two themes 
from the research which my written testimony provides more 
detail on. First, Head Start serves extremely vulnerable 
children and families who experience multiple and complex 
problems. You just heard about children with special needs.
    Second, Head Start programs make a positive difference for 
these very disadvantaged children and their family. Research 
demonstrates both Head Start's positive results in terms of 
children's learning and the generally high quality of local 
programs. To me, these themes underline the importance of 
accountability in Head Start. Federal oversight must live up to 
the crucial importance of Head Start's mission.
    Let me turn now to the five suggestions for strong Federal 
oversight that are detailed in my written testimony. These 
suggestions draw on my experience raising the bar on 
accountability during the 1990's, both lessons about what works 
and lessons about what is persistently difficult. The central 
theme is that holding Head Start programs to high standards, 
including closing those that can't meet the standards, can be 
done with strong focused and hands on Federal oversight.
    Lesson one, the foundation for strong Federal oversight and 
results for children is the tough, rigorous and research-based 
requirements of the Head Start performance statistics. As a 
result of the Advisory Committee's recommendations and the 1994 
reauthorization, we thoroughly revamped and strengthened the 
performance standards in 1996 bringing them into line with the 
latest research. So many of the vigorous fiscal standards that 
GAO is now looking at are in place now because of this reform. 
Rigorous standards are especially important because emerging 
research that strong implementation of the standards is linked 
to better results for children.
    Lesson two, terminating grantees and aggressively 
negotiating relinquishments are important steps for HHS to take 
when a grantee cannot successfully resolve its problems. Hands 
on leadership is key. Stronger authority for HHS to terminate 
grantees who can't meet standards was in the 1994 
reauthorization and the 1996 regulations. As GAO indicated in 
its 1998 report, HHS moved quickly and aggressively to use this 
new authority. My own experience was that personal and hands-on 
involvement helped make it happen. In one example, I flew to 
Denver to speak with parents and board members about the 
gravity of our monitoring findings so they could make a more 
informed choice about whether to relinquish the grant.
    Lesson three, continuity for successful grantees is just as 
important as turnover for unsuccessful grantees. Because for a 
Head Start program to do a truly excellent job of linking 
children to services in a community takes time, consistency and 
relationships among partners developed and sustained over many 
years. This means that strong technical assistance to keep 
successful programs on track is a critical partner to strong 
monitoring. It also means that recompetition of Head Start 
grants should be limited to unsuccessful programs.
    Two more lessons. The Federal oversight strategy needs to 
integrate fiscal accountability and program accountability at 
every stage. And Assistant Secretary Horn spoke to that in 
speaking of training. And finally, the oversight strategy must 
include a focus on Federal staff in both central office and the 
regions, including training and professional development.
    In conclusion, for 40 years, the Head Start program has 
played a critical role for the Nation's most impoverished and 
vulnerable children, continuing to evolve and innovate in 
response to family needs. For Head Start to continue its 
success requires an equally strong innovative and vigorous 
Federal oversight role. I want to thank the Committee for your 
commitment over many years and I look forward to any questions 
that you may have.
    [The prepared statement of Dr. Golden follows:]

 Statement of Olivia A. Golden, Ph.D., Senior Fellow, Urban Institute, 
                             Washington, DC

    Mr. Chairman, Congressman Miller, and members of the committee, my 
name is Olivia Golden, and I am currently Senior Fellow and Director of 
the Assessing the New Federalism project (a multi-year, nationwide 
study of low-income children and families) at the Urban Institute, a 
nonprofit, nonpartisan research institute in Washington, D.C.\1\ I am 
honored by the opportunity to appear before you today to discuss the 
Head Start program, effective strategies for federal monitoring, and 
the content and recommendations of the GAO's recent report regarding a 
Comprehensive Approach to Identifying and Addressing Risks.
---------------------------------------------------------------------------
    \1\ The views expressed in this testimony are those of the author 
and should not be attributed to the Urban Institute, its trustees, its 
employees, or its funders.
---------------------------------------------------------------------------
    My perspective on Head Start, on programs that serve low-income 
children and families, and on tough and effective management to support 
accountability has been shaped by my experiences as a researcher and a 
practitioner at the federal, state and local levels. Immediately before 
coming to the Urban Institute, I directed the District of Columbia's 
Child and Family Services Agency. Before that, I spent eight years at 
the U.S. Department of Health and Human Services, as Commissioner for 
the Administration on Children, Youth, and Families and then as 
Assistant Secretary for Children and Families. During those eight 
years, I was a member or chair of three expert committees charting the 
future of Head Start. In 1993, I was a member of the bipartisan 
Advisory Committee on Head Start Quality and Expansion, which included 
both majority and minority staff to this Committee as well as staff 
from both parties to three other House and Senate committees. The 
Advisory Committee's unanimous Final Report provided extensive 
recommendations, including a rigorous blueprint for monitoring program 
and fiscal quality and strengthening federal oversight capacity. In 
1994, I chaired the Advisory Committee on Services for Families with 
Infants and Toddlers, which created the overall design for Early Head 
Start. And in 1999, I chaired the Advisory Committee on Head Start 
Research and Evaluation, which provided an overall framework for the 
design of the Head Start impact study. We are all eagerly awaiting the 
first report from that study.
    In my testimony today, I will focus primarily on effective 
strategies for building the strongest possible federal oversight role 
to support high-quality, fiscally accountable, programmatically 
successful, and well-managed Head Start programs across the country. As 
a result of reforms put in place by HHS and the Congress--beginning 
with the bipartisan 1993 Head Start Advisory Committee, the 1994 Head 
Start reauthorization, and the 1996 publication of tough, research-
based performance standards and continuing across two administrations--
Head Start has the most rigorous standards and the most intensive 
monitoring of any human services program that I am aware of. This 
emphasis on accountability by HHS and the Congress paid off in clear 
quality control results during the late 1990's: for example, as the GAO 
report indicates, 144 grantees were terminated or relinquished their 
grants between 1993 and 2001, a historically unprecedented number.
    GAO's report provides useful next steps for the federal oversight 
role that build on these earlier reforms. The report does not, however, 
provide a clear picture of the number or proportion of Head Start 
programs with serious fiscal problems, because it shows the percentage 
of programs with even one monitoring finding, rather than grouping 
programs by frequency or severity of findings. Based on the Head Start 
Bureau's annual monitoring reports, about 15 percent of grantees have 
serious problems, including both programmatic and fiscal problems. 
Whatever the current numbers, any serious failures in fiscal 
accountability need to be forcefully addressed.
    The GAO report contributes to this effort by identifying gaps in 
federal oversight--in particular, how the federal implementation of 
monitoring doesn't live up to the rigorous design--and by providing 
practical recommendations for improvement. The implementation 
challenges highlighted in the report -'' such as effective use of early 
warning information, consistent decision-making across central office 
and the regions, and closing ineffective programs on a prompt timetable 
yet with appropriate due process--are not limited to any one 
Administration or even to one program. In my own experiences both with 
Head Start monitoring and with designing and implementing monitoring 
systems for other programs and at other levels of government, these 
same challenges have arisen. For that reason, I believe that the GAO's 
practical recommendations for next steps are particularly useful and 
that thoughtful implementation of these recommendations, with some 
additional suggestions and modifications that I suggest below, should 
help Head Start programs live up to the very highest levels of 
accountability.

Why Accountability Matters: The Research Context and the Role of Head 
        Start
    Before turning to these specific suggestions about monitoring, I 
would like to highlight briefly two broader themes from the research. 
To me, these themes ``- (1) that Head Start serves extraordinarily 
vulnerable children and families and (2) that it makes a positive 
difference for them ``- underline the whole reason accountability is so 
important. In a program with such a critical mission, and such a 
history of success for the most vulnerable children in good times and 
bad, we must ensure that federal oversight lives up to the importance 
of the mission, both demanding and supporting strong programs.
    First, Head Start serves extremely vulnerable children and 
families, who experience considerable disadvantage and often multiple 
and complex problems. Children enrolled in Head Start may suffer from 
various health conditions and disabilities, live in families that have 
difficulty finding and keeping stable housing, and experience violence 
in their families and neighborhoods. For these children, improved 
learning and cognitive development require extremely high-quality 
services that follow the comprehensive model laid out in the Head Start 
performance standards.
    For example, a survey of a nationally representative sample of Head 
Start families in 2000 found that 25 percent of parents were moderately 
or severely depressed, more than 20 percent of parents had witnessed 
violent crime, and parents reported that almost 10 percent of their 
children had witnessed domestic violence in the last year. According to 
the researchers, ``preliminary findings suggest that Head Start may 
play a role in protecting children from the negative outcomes 
associated with family risk factors, including maternal depression, 
exposure to violence, alcohol use, and involvement in the criminal 
justice system.'' \2\
---------------------------------------------------------------------------
    \2\ Administration for Children and Families, Office of Planning, 
Research, and Evaluation. April 2003. Executive Summary for Head Start 
FACES 2000: A Whole-Child Perspective on Program Performance, p. 8.
---------------------------------------------------------------------------
    Second, Head Start programs overall make a positive difference for 
these very disadvantaged young children and their families. Both past 
and recent research, such as the rigorous, random assignment evaluation 
of Early Head Start, demonstrate Head Start's positive results for 
children and the generally high quality of its programs when observed 
and compared with other early childhood programs. For example,
      A rigorous, randomized assignment evaluation of Early 
Head Start found that compared to a control group, 3-year-olds who had 
attended Early Head Start had higher average scores and a smaller 
percentage at-risk in language development, higher average scores and a 
smaller percentage at-risk on tests of cognitive development, and 
better home environments and parenting practices (for example, more 
reading to young children).\3\
---------------------------------------------------------------------------
    \3\ Administration for Children and Families. June 2002. Making a 
Difference in the Lives of Infants and Toddlers and Their Families: The 
Impacts of Early Head Start. Executive Summary, pp. 3-4.
---------------------------------------------------------------------------
      Studies of Head Start using a variety of methods (for 
example, comparing siblings who have been in Head Start with those who 
have not) also show positive results for children. Soon, the results of 
the random assignment study of Head Start--designed by the committee I 
chaired in 1999 -'' will be released. This study should provide more 
up-to-date information about the effects of Head Start for today's 
children, compared with being in other programs or at home.
      When researchers score Head Start classrooms across the 
country using standard indicators, they generally find them good and 
quite consistent in quality. A recent study that observed classrooms in 
six state pre-k programs found that the overall quality of these 
classrooms was lower than in similar observational studies of Head 
Start.\4\
---------------------------------------------------------------------------
    \4\ Donna Bryant, Dick Clifford, Diane Early, and Loyd Little. 
2005. ``Who Are the Pre-K Teachers? What Are Pre-K Classrooms Like?'' 
Early Developments 9(1): 15-19. Published by the FPG Child Development 
Institute at the University of North Carolina at Chapel Hill.
---------------------------------------------------------------------------
      Low-income children are less likely than higher-income 
children to get the benefits of high quality pre-school or child care 
settings. This disparity would be far greater without Head Start, 
especially for the poorest children. Research conducted through the 
Assessing the New Federalism project at the Urban Institute has found 
that low-income 3- and 4-year-olds are less likely to be in center-
based care (including preschool) than higher-income children. Because 
of the research evidence suggesting that quality center-based care can 
help children prepare for school, the researchers conclude that this 
``disparity''.may represent a missed opportunity to assist low-income 
children in becoming school-ready.'' \5\
---------------------------------------------------------------------------
    \5\ Jeff Capizzano and Gina Adams, 2003. ``Children in Low-Income 
Families Are Less Likely to Be in Center-Based Child Care.'' Snapshots 
of America's Families III, No. 16. Washington, DC: The Urban Institute, 
p. 2.
---------------------------------------------------------------------------
The Accountability Agenda: Lessons from Experience
    The reforms in Head Start quality and accountability that were 
driven by the bipartisan Advisory Committee of 1993 and the Head Start 
reauthorizations of 1994 and 1998 provide a very rich source of lessons 
about strong federal oversight -- both what works and what issues are 
perennially difficult and need to be revisited often. The central theme 
is that holding Head Start programs to high standards, including 
closing those that can't meet the standards, can be done. It takes 
strong, focused, and hands-on federal oversight that includes both 
monitoring and technical assistance.
    The reforms grew out of the widespread concern that after several 
years of expanding the number of children served in Head Start without 
corresponding investment in program quality or in the training and 
development of federal staff, the quality of local Head Start programs, 
while generally good, had become uneven. The charge of the 1993 
Advisory Committee--whose members in addition to Congressional staff 
from both parties and both houses included experts with experience in 
academia, the federal government, state and local early childhood 
programs, and the broader health and education worlds -'' was to 
provide recommendations for both improvement and expansion that would 
reaffirm Head Start's vision of excellence for every child. The 
extensive and specific recommendations in the unanimous report covered 
every area of quality improvement, from local programs to federal 
staff. Many of the recommendations were incorporated into the 1994 
Congressional reauthorization of Head Start, and others were 
implemented by HHS without requiring legislative authority.
    Five specific lessons from this experience seem to me particularly 
important as Congress and the Administration consider implementing the 
GAO's recommendations:
    1. The foundation for strong federal oversight--and of results for 
children--is the tough, rigorous, and research-based requirements of 
the Head Start performance standards.
    The Advisory Committee recommended and the 1994 Head Start 
Reauthorization required a major overhaul of the Head Start regulations 
that define what is expected of local programs (regulations that are 
known as the Head Start Performance Standards) to raise the bar for the 
quality of both service delivery and management. The final regulations, 
published in 1996, thoroughly revamped and strengthened the performance 
standards across many dimensions. For example, they:
      raised standards for program management, including fiscal 
accountability and governance;
      brought standards for service delivery into line with the 
latest research; and
      created new standards which had not existed before for 
the quality of services to infants and toddlers.
    Thus, many of the rigorous fiscal, board governance, and reporting 
standards discussed in the GAO report are in place now because of this 
important revision of the performance standards. For example, as part 
of their fiscal and governance standards Head Start programs are 
expected to ensure that their governing board and the parent policy 
council approve funding applications and review the annual audit.
    Rigorous standards are important not only because they hold 
programs accountable and form the basis of a coherent monitoring 
strategy but also because emerging research suggests a link between 
strong implementation of the standards and positive results for 
children. As part of the Early Head Start evaluation mentioned above, 
researchers assessed program implementation of key elements of the 
performance standards during in-depth site visits. They found evidence 
that ``full implementation [of the performance standards] contributes 
to a stronger pattern of impacts.'' \6\
---------------------------------------------------------------------------
    \6\ Administration for Children and Families (June 2002), p.6.
---------------------------------------------------------------------------
    2. Terminating grantees and aggressively negotiating 
relinquishments are appropriate, important, and realistic steps for HHS 
to take when a grantee cannot successfully resolve its problems and 
meet fiscal and program standards. Hands-on leadership is key to using 
this authority effectively.
    Stronger authority for HHS to terminate grantees who cannot meet 
standards was recommended by the 1993 Advisory Board and included in 
the 1994 Head Start Reauthorization. As a result, the 1996 revision of 
the performance standards provided a framework and a tight time limit 
``- no more than one year--for grantees with serious problems (called 
``deficiencies'') to solve those problems or face termination. As GAO 
indicated in its 1998 report assessing HHS oversight soon after the 
regulations, the agency moved quickly and aggressively to use this new 
authority, with 90 grantees terminated or voluntarily relinquishing 
their grants by the time of the 1998 report. The GAO report also noted 
the experience of HHS officials that the termination authority helps 
them negotiate voluntary relinquishments, which can be the quickest and 
smoothest path to a transition.
    While I was at HHS, I found that hands-on involvement from agency 
leadership was very helpful in reinforcing the new expectations. In one 
example, I flew to Denver to speak with parents and Board members about 
the gravity of our monitoring findings, so they could make a more 
informed choice about whether the grantee should relinquish the grant 
in order to achieve better services for children. In that example, the 
grantee relinquished the grant, and a transitional grantee ensured that 
services to children continued uninterrupted while the grant was 
recompeted.
    GAO recommends in its report an additional approach, besides 
termination and relinquishment, to ensure the replacement of grantees 
who cannot successfully serve children. The comments provided by the 
Administration on Children and Families express serious legal concerns 
about this approach, which involves changes in the recompetition of 
Head Start grants. I am not qualified to comment on the legal issues, 
but I would note that the existing approaches, termination and 
voluntary relinquishment, exercised with strong leadership and under a 
tight timetable, have in my view proved effective at raising the bar on 
program quality and compliance.
    3. The goal of the federal oversight strategy is good results for 
children. To achieve this goal, continuity for successful grantees is 
just as important as turnover for unsuccessful grantees. This means 
that strong technical assistance--high-quality, well-tailored to 
grantee needs, and available promptly on request--is a critical partner 
to strong monitoring in the federal oversight strategy. It also means 
that recompetition of Head Start grants should be limited to 
unsuccessful programs.
    A very important lesson from the deliberations of the Advisory 
Committee, reinforced for me by my own research and practice 
experience, is the value to children and families of continuity over 
time in a quality Head Start program. The Advisory Committee found that 
an effective Head Start program needs to be a central community 
institution for poor families: it has to link services that vulnerable 
children need in order to learn, such as health care, mental health 
services (for example, when young children have experienced family or 
neighborhood violence), and help for parents who may be young, 
overwhelmed, and struggling to support their children. For a Head Start 
program to do a truly excellent job at linking children to needed 
services takes time, patience, and a consistent set of players in a 
community, sometimes over many years. As a result, just as constant 
staff turnover can jeopardize quality services for children, turnover 
in a program can set back quality for many years, as new players get to 
know each other and readjust their priorities. In my own research, not 
specifically focused on Head Start but on communities around the 
country that created successful partnerships to serve both parent and 
child in poor families, I found that longstanding relationships among 
people involved in the work over many years were an important 
ingredient of success.
    Continuity also matters because the lives of poor children, 
families, and communities are unstable in so many ways that the Head 
Start program may be the one critical source of stability. From my 
experience in child welfare, where I directed an agency that serves 
abused and neglected children, I became convinced that a high quality 
Head Start or Early Head Start program can be a source of consistent 
stable relationships for babies, toddlers, and preschoolers who are 
moving around from home to foster care and back as a result of abuse or 
neglect. Given what the research tells us about the importance of 
consistent relationships to cognitive development in early childhood, 
this role is crucial.
    Therefore, it is just as important to a successful federal 
oversight strategy to make sure strong programs continue to succeed as 
it is to make sure failing programs are replaced. As the Advisory 
Committee made clear in its very first recommendation regarding federal 
oversight, this means placing a priority on responsive, up-to-the-
minute, technical assistance capacity easily available to local 
programs and closely linked to program and management priorities. When 
programs have strong capacity and a strong track record in serving 
children, the federal oversight responsibility must include making sure 
that a small problem doesn't grow until it threatens a program's 
continued success. And as new issues emerge across the country, the 
technical assistance system must be able to respond flexibly and 
effectively.
    At HHS, when we revamped and invested in technical assistance in 
response to the Advisory Committee report, we learned to consider 
technical assistance early in every one of our initiatives. For 
example, in implementing the current GAO report, HHS might consider 
whether the early risk assessment strategy would have its greatest 
impact paired with rapid-response technical assistance, so a program 
could get help as soon as the risk assessment set off alarms. While I 
was at HHS, we used a variation on this strategy in the field of child 
welfare, seeking to make sure that when we implemented more rigorous 
child welfare reviews, technical assistance to address newly identified 
problems would be rapidly available.
    4. The federal oversight strategy needs to integrate fiscal 
accountability with program accountability at every level and stage - 
in staff training, in the design of monitoring, and in additional 
elements of the strategy such as the comprehensive risk assessment or 
the analysis of improper payments proposed by GAO. Focusing on fiscal 
accountability without also emphasizing program accountability and 
results for children can lead, in the words of GAO's 1998 report on 
Head Start monitoring to ``hold [ing] local Head Start programs 
accountable only for complying with regulations - not for demonstrating 
progress in achieving program purposes.'' \7\ Looking at the two kinds 
of accountability together, on the other hand, can lead to successful 
solutions that help programs serve children better and more 
efficiently. Local programs providing Head Start services, like all 
publicly funded human services programs serving children with complex 
needs, often face questions about how to meet child and family needs 
and yet stay within fiscal reporting and accounting requirements. For 
example, when Head Start programs collaborate with other local programs 
- such as a mental health clinic that can help children who have 
experienced violence in the home - they often face questions about what 
services they should pay for from the Head Start grant and what 
services should come out of the other agency's funding stream.
---------------------------------------------------------------------------
    \7\ U.S. General Accounting Office. 1998. Head Start: Challenges in 
Monitoring Program Quality and Demonstrating Results, p. 3.
---------------------------------------------------------------------------
    For these and many other questions that come up regarding fiscal 
accountability, it is important to find solutions that support program 
creativity and innovation as well as fiscal accountability. The worst 
outcome is to have different program and fiscal experts or monitoring 
reviewers provide conflicting advice. Conflicting responses create the 
kind of unfairness that GAO cites, where different programs get 
different treatment, and they also chill innovation, because many 
programs won't want to risk innovation without knowing how reviewers 
will judge it. The best outcome is for fiscal and program experts to 
work together to develop solutions to the real problems programs face.
    Integrated training for fiscal and program reviewers is also likely 
to reduce the inconsistencies reported by GAO in assessing program 
findings and deficiencies. Among the many reasons that people interpret 
regulations differently, one is the different focus of ``compliance-
oriented'' fiscal reviewers and ``results-oriented'' program reviewers. 
For this reason, it is especially helpful to address potential 
conflicts explicitly in advance.
    5. Finally, a key step in implementing the GAO recommendations will 
be a focus on federal staff in both central office and the regions: 
their training and professional development, staffing levels, and 
administrative support (such as travel resources), as well as 
strategies to make federal decision-making more consistent. These are 
difficult issues that have not been solved yet, either in Head Start or 
in most other monitoring programs, but there are promising examples to 
draw on.
    While I was at HHS, we tried a number of approaches to these 
dilemmas - investing in federal staff despite very tight administrative 
budgets and promoting consistent decision-making - but there is much 
left to be done. One promising approach that we implemented might offer 
lessons for today's strategies, because it aimed both to use federal 
dollars more efficiently and to achieve program goals, including Head 
Start accountability. Specifically, we chose to divide the ten regions 
into five pairs, each with one larger ``hub'' region and one smaller 
region, and to design some of the Head Start monitoring strategies 
across the two paired regions. We used this approach to allocate 
resources more efficiently and to ensure that if we thought it 
appropriate, the monitoring team leader for a particular review could 
be from the region that did not directly oversee the grantee. This 
allowed the selection of a team leader who was familiar with the 
geographic area but not involved with the individual grantee.
    In summary, a well-designed system of federal oversight for Head 
Start must
      set the bar high, through rigorous and research-based 
standards;
      ensure through aggressive and hands-on management that 
unsuccessful programs are promptly replaced;
      ensure prompt and high-quality technical assistance, to 
promote continuity and steady improvement for successful programs;
      integrate an emphasis on management with an emphasis on 
results for children, in order to support creativity, innovation, and 
fiscal responsibility; and
      use multiple approaches to strengthen federal staff 
capacity.
    For more than forty years, the Head Start program has played a 
critical role for the nation's most impoverished and vulnerable 
children, continuing to evolve and innovate to respond to increasingly 
complex family needs. For Head Start to continue this success into the 
future requires an equally strong, innovative, and vigorous federal 
oversight role. I appreciate the Committee's commitment to ensuring the 
continued strength of this federal role, so that Head Start can build 
on its record of making a difference to America's poorest young 
children and their families. Thank you for the opportunity to offer 
suggestions for further improvements, and I look forward to any 
questions you may have.
                                 ______
                                 
    Chairman Boehner. Let me thank all the witnesses for coming 
today, and your excellent testimony. The Members of this 
Committee understand pretty clearly the importance of early 
childhood development especially for low income children. And 
without this help, their chances of success in school is very, 
very limited.
    Congress has made a big investment in Head Start over the 
years. And as we said earlier, a lot of grantees are doing a 
lot of very good work. But Dr. Horn and Dr. Golden, you have 
both been around this process for a long time. There are some 
operators out there who have done a pathetic job for a very 
long time. You probably know who they are better than I do. I 
hear about it from members. They come up to me. They have been 
fighting the problem at home for a long time, and nothing ever 
happens. Why is it it is so difficult to change grantees when 
it is obvious to virtually everyone that there is a significant 
problem? Dr. Horn, you are in the hot seat right now because 
this is your job. So I will let you begin.
    Mr. Horn. Well, first of all, let me say from the outset 
that I believe that most Head Start programs are operating 
well, that most people who work in Head Start get up every day, 
go to work and try to do the best they can to further 
development of children who come from an economically 
disadvantaged background. So I also believe that Head Start is 
the embodiment of a very important ideal. That ideal is that 
now children should be disadvantaged by the circumstances of 
their birth in their overall education.
    So I don't believe that trying to improve the oversight of 
the Head Start program ought to be equated as some have tried 
to equate it with an antipathy toward the program in general. I 
think it is a good program and a program that deserves our 
support. But there are problems. Some of those problems are 
internal within my agency. And some of them statutory. And to 
answer your question about replacing grantees, there is a 
problem statutorily and I know the GAO and we have a different 
opinion upon this and it may be useful for the Congress to 
settle this, because frankly we would like the opinion of the 
GAO to prevail. Would that we had more authority than we 
believe the statute provides. And here is the problem. There 
are two sections in the statute. The first is section 
641(b)(2).
    And this section says, in part, that the secretary shall 
give priority to the designation of Head Start agencies to any 
local public or private non profit or for profit agency which 
is receiving funds under any Head Start program. Unless the 
secretary determines that it is, you know--and then it has some 
exceptions. The problem is, you have to cross reference that 
with section 646(a)(3) in the statute, which says in part that 
financial assistance under the subchapter shall not be 
terminated or reduced or an application for refunding shall not 
be denied to a grantee unless the recipient has been afforded 
reasonable notice and opportunity for a full and fair hearing.
    Now, if you look at the requirements for notice and so 
forth, and you add them up, the minimum amount of time to 
actually defund a grantee who does not voluntary relinquish is 
240 days and that is assuming the hearing before the 
departmental appeals board occurs in 1 day.
    Chairman Boehner. But the fact, is Mr. Wade, or Mr. Horn, 
that if you look at the period from May 1998 to 2001, the--to 
terminate a grantee, here is an example. It took 1,236 days. I 
have got another one here, another example occurred between 
February 1, 2001 and May, 03, 800 days from the start of the 
review to the date of the termination. Now why would it take 
the agency 24 long to make this determination?
    Mr. Horn. Well, part of it has to do--we have no control 
over how long the hearing is before the appeals board. And that 
hearing can drag on for months. There are cases where it has 
dragged on for over a year. Just the hearing. And we can't 
order the DAB to come up with a decision in a shorter period of 
time. But it seems to us--I am agreeing with you. We ought to 
be able to move quicker toward termination of a grantee.
    Chairman Boehner. All right. Dr. Golden.
    Dr. Golden. I guess what I would highlight is that when I 
started people said to me just this, that it is too hard. And 
it turned out that in most cases it wasn't too hard. That is 
how we were able to accomplish that termination and 
relinquishment of so many grantees. And it is what we learned I 
think about what makes it possible is that you have to have--
you have to have high quality fact gathering. You have to have 
hands-on involvement. I think that this helps to have not only 
the high standards of Head Start, those are key, but the clear 
vision about how those standards relate to the result, because 
what I found when I went and talked to parents is that parent 
boards of a grantee might initially have wanted to fight your 
conclusion that it was deficient, but once you talk to them 
about how what was going on was say the kind of fiscal problem 
that we heard from Ms. Henry and that the teachers in the 
classroom who they had such affection for really were terrific 
and were going to be able to stay, once you did that you could 
often get a relinquishment.
    And I don't know the legal specifics of the issue that 
Assistant Secretary Horn is raising enough to know if there are 
additional things Congress could do. But the message that I 
want to leave you with is that there is a great deal you can do 
with the existing authority when you are focused on being able 
to prevent a lot of problems with technical assistance and then 
address the rest.
    And I think the one big picture context piece I would put 
on it is that we know something about the quality of Head Start 
programs compared to the quality of other programs nationally, 
because researchers go out and look. And we know in Head Start 
not only is quality good, but it is unusually consistent 
compared to, say, State pre-K or child care, so that the 
overall, this elaborate and high standards monitoring process 
is delivering at the same time that the Committee is clearly 
absolutely right and the GAO is right, you can't have--you have 
to address the individual cases that aren't being met.
    Chairman Boehner. Well, I appreciate your comments and your 
testimony about all the changes that were made in the 1990's. 
But here is a June 1998 study from the GAO. Challenges in 
monitoring program quality and demonstrating results. And this 
isn't new. And the two of you know that this isn't new. That is 
the part that is agitating me because--
    Dr. Golden. The 1998. I think that is right. The 1998 study 
was very helpful to us. It highlighted how aggressively we have 
moved on terminations, but it expressed the concern--and 
relinquishments--it expressed the concern that the research 
base wasn't as strong and so that is the next step which I 
think is really key to work on.
    Chairman Boehner. Let me ask one more question. And excuse 
me for going a little bit over. But as Mr. Miller pointed out 
in his opening statement, there are 1,796 little boxes that 
every Head Start grantee has to check off. And I have watched 
some of this occur as I have gone to Head Start centers. And 
sometimes, between what we are asking the Head Start centers to 
do in terms of--they are diligent about wanting to check those 
boxes off and the different offices that are reviewing various 
parts of the program, is there ever an opportunity, one, to 
look at the overall program itself that the grantee in terms of 
fiscal management, quality, results? That is one question.
    And second, are we creating an environment with 1,796 boxes 
to check off that we are distracting the local grantee from 
actually accomplishing results for low income children who need 
the help?
    I will let you start, Dr. Golden.
    Dr. Golden. OK. I think that is a great question because I 
think the key issue for the Committee and for anyone managing 
the program is that on the one hand, we know from the research, 
we have studied how programs that do a good job at the 
standards do for results for kids compared to programs that do 
a less good job, and so we know that high standards really 
matter and that carrying out the high standards really matters.
    At the same time, I think you are absolutely right that you 
want to be looking at those standards in a way that is focused 
on results not a way that is picky about details. And so one of 
the things that I think is important about the way the 
regulations now talk about deficiencies is that those are meant 
to be not just about counting up the boxes, but if you are 
going to go into this really serious program improvement 
process you have to step back and you have to say this is 
serious. This is something that is getting in the way of the 
program's success. So my own view would be that high standards 
really matter, and we know that from the research; that in 
enforcing those high standards you have to keep your eye on the 
big picture, do a lot of training and technical assistance, and 
that as the Committee moves forward, that is one of the reasons 
that I recommended thinking about fiscal and program issues 
together in carrying out GAO's recommendations because you are 
absolutely right. You don't want to be pulling people in 
multiple directions. You want them kept focused on the big 
picture.
    Chairman Boehner. Dr. Horn.
    Mr. Horn. I think one of the strengths of the Head Start 
program is its focus on local control and the ability of local 
programs to design a program that meets local community needs; 
and there is a tension between preserving that local control 
and that local flexibility and the degree of Federal oversight 
that we want.
    I think that there are two things that the Federal 
Government ought to do when it comes to oversight of the local 
programs while preserving the ability of the local programs to 
be flexible to meet local community needs:
    First, we ought to make sure, at a minimum, that money that 
you here in Congress appropriate for Head Start is used for 
Head Start purposes, No. 1, and is being used to the maximum 
extent possible to deliver quality services to kids, not to 
provide outrageous salaries to some executives.
    The second thing we ought to do, and I agree with Dr. 
Golden, is to focus on results. If all of our monitoring is 
focused on process and we lose sight of results, then the 
monitoring isn't really very useful. We need to find a way to 
ensure that as we are monitoring these programs, that at the 
end of the day what we really care about is not whether certain 
processes and procedures were followed to the T, but the kids 
are actually developing well as a consequence of those 
programs.
    Chairman Boehner. The gentleman recognizes the gentleman 
from California, the Ranking Democrat, Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. Let me see if I am 
hearing some of this correctly, Dr. Golden and Secretary Horn; 
we have 1,600 grantees roughly, is that correct?
    Mr. Horn. Yes.
    Mr. Miller. You say as a result of the high standards in 
effect, the program is delivering what we expect it to do on 
behalf of these children. And I think, Mr. Horn, in a different 
way you arrived at the same conclusion. Overall, the program is 
in fact delivering the kinds of services that we in the 
Congress and other people expect from the Head Start program; 
is that a fair assessment?
    Mr. Horn. I think most programs are doing a good job.
    Mr. Miller. And I think that would be probably our 
experience. There are obviously some cases when it goes wrong, 
it seems to go wrong in a rather dramatic and even criminal 
fashion. But when I look at the GAO report, it seems to me that 
there is a lot of failure to comply with these regulations or 
with what would be good fiscal management in some cases, or in 
some cases there is programmatic failure to comply; you are not 
doing right by the children.
    But it seems--what I see in this report is you are cited, 
so to speak; you are told that this is the deficiency and you 
are told to correct it, and then there is this heavy reliance 
on self-certification. And it would seem that the average 
grantee could think that these people are never coming back, 
because not only may it take a long time to relinquish one, it 
looks like it is a long time before you get back to find out if 
in fact it was corrected, or, even as you go into the next 
cycle, you find out--the very same problem sitting there 
staring you in the face.
    Is that a fair assumption of what GAO is telling us?
    Ms. Shaul. Yes.
    Mr. Miller. Pretty sloppy layman's language.
    Ms. Shaul. There were a variety of noncompliances, from 
grantees that might have only one, all the way through to 
grantees who are deficient. I think when you have a grantee 
with a very low number of noncompliances, probably on their 
self-certification, could be affected, because it is a fairly 
small issue. But when you begin looking at grantees who have 
multiple citations of noncompliance, or who are deemed 
deficient, of course that wouldn't be appropriate. Deficient 
grantees can't self-certify. They have to have a quality 
improvement plan.
    Mr. Miller. What part of the universe are those people 
where this is serious?
    Ms. Shaul. In the 2000 data we reviewed, of all the 
grantees about 13 percent were deficient grantees. And in that 
group that we said had at least one noncompliance, it was 17 
percent of that group.
    Mr. Miller. This is a theory. This is a manageable 
caseload. If you want to provide technical assistance, if you 
want to provide follow-up, if you want to make sure these 
things are corrected and people are coming into compliance, 
this is I think manageable, Secretary Horn, is it not?
    Mr. Horn. Yeah, I do. However, I don't think it is 
manageable with the old practices and procedures that we had in 
place. And that is one of the reasons we have restructured the 
way that we deliver training and technical assistance to local 
Head Start grantees. In the past, there was sort of an 
overreliance, in my judgment, on going to conferences and being 
trained at conferences. There is a certain efficiency at 
training at conferences, but not an effective way of changing 
behavior.
    What we are interested in doing with the new training and 
technical assistance network is to do much more training and 
technical assistance onsite at the local Head Start program, 
and not just with in-services, but with experts that come in 
and provide mentoring and guided practice and come back again 
and again to make sure that appropriate changes have taken 
place.
    Mr. Miller. That extends to compliance and with program 
regulations?
    Mr. Horn. I agree completely that we have relied too much 
in the past on self-certifications, and we issued guidance 
recently to all the regional offices that said we are no longer 
going to allow self-certification--certainly not for deficient 
grantees--but, rather, they are going to have to travel to the 
local programs to make sure they are fixed.
    Mr. Miller. In terms of flexibility, you talked about what 
happened in 93 with terminations and relinquishments. Those 
were two: You either terminate in an adversarial process or you 
show them the wisdom of their ways and you get a 
relinquishment.
    And there is also this question as to whether or not you 
can deprioritize a grantee, which would then allow competition. 
Is that a cumbersome process?
    Dr. Golden. I think you have heard that there is some 
disagreement between GAO and the Assistant Secretary about what 
is legally possible under the current statute, which I am not 
expert on. We didn't need to go to that strategy, but used the 
other strategies that involved termination.
    Mr. Miller. Dr. Shaul, when I read your discussion on page 
16 of the denial of the priority--and you make the point, which 
I think is an important one, that denying the priority status 
to a grantee who has been part of the community for years and 
has educated multiple generations, this is a serious decision. 
And one of the things we like in this community is having some 
continuity. We don't want to change a grantee or vendor every 
year. I don't think that is helpful. But it seems to me you are 
suggesting that can be done without a lot of hassle. If you 
find that they have consistent nonperformance you can 
deprioritize them, or the Secretary can.
    Ms. Shaul. Our understanding of the law, Congressman, is 
that if the Secretary says that a program is failing program or 
financial standards, that that program does not continue to 
have priority, and therefore the agency could recompete.
    Mr. Horn. If that is the case, I would love the Congress to 
clarify it, because our lawyers says that is not the case.
    Mr. Miller. Have you tried to do it?
    Mr. Horn. Our lawyers tell us that the statute requires 
that you cannot deny--you cannot either terminate funding or 
deny a funding application until the grantee has had an 
opportunity for a full and fair appeal, if they choose to 
appeal, which is the reason why we too try to move to voluntary 
relinquishments. The average number of relinquishments and 
terminations under the Clinton administration was 16 per year 
and under the Bush administration is 13 per year. We are not 
talking about a huge difference. But we do rely upon voluntary 
relinquishments, as the Clinton administration, precisely 
because it is very difficult for us to move to termination, 
given the statutory requirement that we cannot in fact deny 
refunding to a grantee until the appeals process has played its 
course.
    Mr. Miller. If I could have Dr. Shaul respond on that 
point. When I read this, it sounds like this is all doable. 
Your attorneys have the same caveat?
    Ms. Shaul. Our attorneys looked at one case where there was 
a decision made that allowed the agency to select a grantee 
who--to deny priority to a grantee that applied to take on an 
expansion grant. And we used that as the basis for saying if 
they could deny it in that case because one of the delegate 
agencies was deficient, that that would--we thought that that 
would apply in other circumstances as well. That is the case we 
cite in our report.
    Mr. Miller. Mr. Chairman, I have had a number of problems 
in my area, more on the programmatic side than on fiscal side. 
And I don't know, it seems to me if you ride them pretty hard, 
you could get the changes; whether it is in people running the 
program, seems to me you could bring these programs into shape. 
And the ones that are in the newspaper with the travel and the 
purchases and the credit cards, I don't know why somebody 
didn't just call the cops. This behavior went way out of 
bounds. This isn't about compliance, this is about criminal 
intent. And I don't know why the board--I don't know if we can 
bring judgment into play here, but somebody failed to pick up 
the phone and call the district attorney and say someone is 
absconding with the funds. This is beyond this at the moment, 
but there is another failure going on here.
    Mr. Castle. [Presiding] Thank you, Mr. Miller. I yield 
myself 5 minutes for questioning.
    I would like to follow up on that line. How those things 
happened and were never detected I don't know, regardless of 
whether they should have happened or not. But let me try to get 
a bigger picture, because I am having trouble with this hearing 
because I did spend some time reading the report and marking 
up--my staff did as well. I think this was a pretty damning 
report and I didn't look at this as having a lot of positives.
    And I am pleased, Secretary Horn, things are happening as a 
result of it, but what happened before didn't make me real 
happy. Maybe I am wrong. Everybody is sort of making nicer than 
what I would have, based on what I read at this hearing.
    Dr. Shaul, if you could help me, your title is Director of 
Education, Workforce, and Income Security issues. How many of 
these types of reports have you been involved with in your 
career at GAO--not Head Start--but reports where you were 
either the head person or key person putting it together? A 
dozen, 100 or--
    Ms. Shaul. Probably more than 50, less than 100.
    Mr. Castle. How does this rank in terms of what you stated 
in here in a general sense? I read this and I didn't read a lot 
of positive in here. I read, to me, that we have government 
problems. We have problems with these agencies as well that 
have done the things that Mr. Miller referred to. But it seems 
to me that we are not carrying out our responsibilities, and 
maybe even at the congressional level not carrying out our 
responsibilities the way we should have here in recent years. 
Am I misreading that, or are you saying you are just pointing 
out the problems but there are a lot of good things as well? 
What is going on here?
    Ms. Shaul. Our report, Congressman, was designed in part to 
look at the processes in place for oversight and then what 
happened when problems were found. And I think basically what 
we are saying is there are enough processes in place. In our 
chart you can see there are many, many. But we didn't believe 
that the agency really pulled the information together 
effectively so it could do a real risk assessment, so it could 
really target its resources.
    Mr. Castle. Stop right there. In my view, that is the real 
problem. And in following up on what Mr. Boehner said, that 
questionnaire of 1800 things that they have to mark up, there 
is a heck of a lot of information flow, but are we handling the 
management of that information? Is that really at the crux of 
this problem, so that we are not doing the proper supervision 
and administration of these programs--because they complain 
about it as well-- and, you know--and maybe they are right--the 
Head Start programs?
    Ms. Shaul. I think there are two issues. Our report wasn't 
really commenting on the overall quality of the Head Start 
program. We know it is a popular program. What we were focusing 
on was the oversight of the program by the Department could be 
improved by bringing together information in a much more 
effective fashion, and, as I said, targeting the resources.
    Mr. Castle. Let me talk about the information again. I 
mean, one of the complaints I have heard about is that the Head 
Start agency--there are those forms, I don't know if they are 
self-inspection or what they are, they are voluminous, 
literally in the many hundreds and couple thousands, and 
information is derived from that. There is information which is 
derived from the various reviews which are done here. Is there 
a better way of approaching this?
    Without criticizing that--and maybe I should open this up 
to Secretary Horn and Dr. Golden as well--but are there ways on 
improving this? I don't think there isn't anybody here on 
either side of the aisle that doesn't want to make Head Start 
the best program we can. We all like and admire this program as 
well. And we had trouble with this legislation last year and we 
would like to pass legislation this year, but we want to 
effectively monitor this without having these groups spending 
all their lives without having to fill out forms. And my 
impression is there is a lot of information flow without much 
coming from it which is really beneficial. And as a result, we 
don't know where the programs are. We don't seem to be able to 
terminate the programs, and there are some serious and 
incredible flaws in at least a dozen, two dozen, programs that 
seems to me that somebody should have caught. Why isn't all 
this happening? Does anybody want to help me with that?
    Dr. Golden. I was going to comment on the more general 
information flow question, and the question is where does the 
information for monitoring go? And I do want to note, because 
there is a lot of research around Head Start, it is possible 
for us to know some things that we don't know about how the 
programs work and what is out there. One of the things we know 
is that when researchers go in and observe programs, even 
though Head Start is spread out all across the country, they 
find consistent good quality. They find very few classrooms 
that are of low quality compared to when they look at, say, 
pre-K or child care settings, which are more varied and of 
lesser quality.
    So what I would take from that--even though I think you are 
absolutely right that there is an enormous amount of 
information and some of it doesn't get used well--that, 
clearly, gathering this information in a lot of areas is having 
an effect in terms of consistency, and that is because of the 
work the Committee has done to make sure that there is rigor.
    The way I read the GAO report was that it provided very 
important recommendations for a particular set of programs, for 
both pulling together fiscal information for a particular set 
of programs that could build on the capacities you already 
found there and that needed to be pulled together.
    Mr. Castle. I would like to hear from Secretary Horn as 
well. You are basically saying that that information flow, you 
think, helps give them parameters in terms of what they are 
doing, and therefore we have a consistent, reasonably high 
quality of programs at Head Start?
    Mr. Horn. I want to agree there are high-quality programs 
at Head Start. I think most of the programs are delivering 
quality services to the kids, and that is borne out by some of 
our survey studies, particularly through the FASA survey. But I 
agree we have not made maximum use of the information that is 
available to us, and we need to do a better job.
    We--for example, it is astounding to me as it is to you 
that we can have Head Start directors making $200,000-plus and 
not have somebody question that in a refunding application and 
to ask for the comparability study which is required by our 
regulations to show that that salary is in line with other 
executive directors in similar situated nonprofits in that 
community.
    The fact that the Head Start programs are required to 
provide us every 6 months with a history of their drawdowns and 
expenditures, not in detail, and that those are not being 
reconciled on a regular basis in the regional offices; we need 
to do a better job, because if you start to see over time a 
grantee which is--whose expenditures are going up at a 
precipitous level or who are drawing down too early in their 
grant period, that should be a red flag to us to go out to the 
program and ask what is going on.
    I think most programs get themselves in trouble not because 
they wake up and say, gee, what can I do that is illegal or 
fraudulent today; I think a lot of programs get themselves in 
trouble because they don't know better. They find themselves in 
a situation where they have overspent their grants and don't 
know how to deal with it. And we have to do a better job 
working with the local Head Start programs and making sure they 
don't get into those kinds of trouble.
    The best system in the world is not going to be able to 
detect immediately every instance in which someone submits 
fraudulent data to us, but we can do a better job with the 
information we have available to us, and we are committed to 
doing so.
    Ms. Shaul. If I could just add one thing to support this. 
One of the noncompliance areas has to do with program 
governance, and that is really the place where the day-to-day 
oversight of the agency occurs, not through the Federal 
oversight, which is a more systematic and systemic kind of 
approach.
    Mr. Castle. You mean a local board of directors is running 
that?
    Ms. Shaul. The importance of the local board of directors. 
We all know in other venues, the importance of boards in 
providing some oversight. So the local boards are extremely 
important.
    Mr. Castle. Maybe we can make Sarbanes-Oxley applicable to 
them. That would take care of that problem. That is a joke.
    I recognize Mr. Kildee for 5 minutes.
    Mr. Kildee. Thank you, Mr. Chairman. Thank you for the 
hearing today.
    I know you are concerned about prolonged appeals and you 
listen to your attorneys. I can understand that. But I can 
recall Secretary Shalala probably didn't listen to her 
attorneys. I remember in 1 year she got rid of 100 grantees 
under the same law. Maybe she had different attorneys. But I 
would think that you might want to change your attorneys. I 
have done that a few times, too.
    Either these grantees relinquished their funds or she 
pushed them out. A little more aggressive action for those who 
aren't really functioning well might be warranted. You might 
look into that and consult your attorneys.
    Dr. Golden, it is good to have you before this Committee. I 
have memories of your testimony before this Committee from 
years past. Should good programs be required to recompete? And, 
if not, how should we determine which ones should recompete?
    Dr. Golden. Thank you for asking that, Congressman, because 
one of the points I made in my testimony is that we need to be 
able to have turnover when programs don't succeed; but when 
programs are good, we need to have continuity. And the 
different several sources of evidence I think suggests that 
that is what works for children.
    That bipartisan advisory committee I mentioned did some 
looking into what it takes to build community connections to 
serve children well, and they concluded you needed continuity. 
My own research has suggested the same thing. And when I was in 
the district working on child welfare and working with kids, as 
you heard from Ms. Henry, kids who have been abused and 
neglected and have lots of instability in their lives, having 
that Head Start program as a source of stability was really 
important. It was a place you could build continuity. My own 
view would be that good programs should not be recompeted. You 
should not be adding a source of instability.
    In terms of which programs, I guess my own view is that the 
structure we had around deficiencies where you are looking at 
programs that seriously can achieve the goals of the program 
and can't fix it is a pretty good framework. We may need to 
fine-tune that in some way. But right now, what we have at the 
Federal level is the ability to say once we pull together the 
information, this is a program that has a serious problem, we 
are going to give them a very short amount of time to fix it; 
and, if not, they are not doing a service to children.
    Mr. Kildee. I appreciate your response, Dr. Golden.
    It has been proposed that the Head Start program be block 
granted. Some don't like to use that term, but we all know it 
is a block grant. I have been in Congress 29 years and I can 
smell a block grant a mile away. So it is a block grant. Would 
this help or hurt Head Start, especially in the area of 
accountability?
    Dr. Golden. Let me not use the word ``block grants,'' and 
that sounds as though it is under dispute, and talk about what 
I think the research says about what works for kids. I think 
that the research on early childhood says that high standards, 
like the high Federal performance standards and consistent 
enforcement, consistent quality, are what is key. And I think 
we know from a variety of sources that the way you get 
consistent quality is through the Federal monitoring and 
enforcement.
    So some of the kinds of research that I turn to to draw 
that conclusion, the reviews of the quality of Head Start 
programs through observation compared to--for example, there is 
a recent study that compares that to observation of State early 
childhood programs and finds the Head Start programs higher 
quality. When you look at State capacity to do monitoring or 
quality enforcement in child care and pre-K, what you find is 
enormous inconsistency; and, in child care, a very great 
difficulty with having high standards to start with.
    I learned some more about this with the research I am doing 
now at the Urban Institute where we are looking at State 
programs, programs for low-income children more broadly. One of 
the things you see is that when there is devolution, when 
States are asked to take responsibility for programs for low-
income kids, State budgets are so hit hard by the recession, by 
the ups and downs, that they get hit by the State budget crunch 
at the very same moment that there are more poor children that 
need help, so it doesn't work as a way to get consistent high 
standards.
    I think what I would say is what it takes to deliver on the 
goals of Head Start, on the school readiness, on the learning, 
on the results, is consistent, high standards, the Federal 
performance standards in force through an effective Federal 
monitoring structure.
    Mr. Kildee. Thank you very much.
    Chairman Boehner. [Presiding] The Chair recognizes the 
gentleman from Minnesota, Mr. Kline.
    Mr. Kline. Thank you, Mr. Chairman, and you all for being 
here today.
    I would like to pick up on the notion that Mr. Miller 
raised earlier when he was asking about the universe and the 
scope. We see--we have the anecdotal evidence here clearly that 
there has been abuse. We have the stories of directors making 
$200,000-plus salaries. And I am looking at the report, Dr. 
Shaul, and there is a number in here on page 2 in the summary. 
I would like you to think I got past the summary, but let me 
refer to the summary. It says this is a concern because ACF's 
data shows that more than 76 percent of Head Start programs 
that were reviewed in 2000 were out of compliance with 
financial management standards.
    And in response to Mr. Miller, when he asked about the 
universe, I think you said there was a 13 percent number and 70 
percent of 13. Could you take a minute and sort out the 
percents here, to the end where how big is the problem?
    Ms. Shaul. In terms of serious problems, Congressman, those 
would be grantees who are deemed deficient in the 2000 year 
sample that we looked at of all those grantees that we reviewed 
that year, 13 percent of those grantees were deficient. Now, if 
I move to the pool that we said had at least one noncompliance, 
the 76 percent--17 percent of that group, since it is a smaller 
portion of the grantees--17 percent of that group were 
deficient. Those are the most serious.
    I would want to make one point on the record here too, is 
that we did make a recommendation that the agency look at 
developing a clear definition that both it and the grantees 
know what is deficient, since we found that there were some 
inconsistencies and deficiency determinations.
    Now, to go back to your question about how serious. When we 
came to that 76 percent, we looked at one noncompliance in any 
one of three areas which we considered important to financial 
management. And so there was a wide range of problems at 
grantees, from grantees who might have had only one 
noncompliance to grantees who might have had dozens of 
noncompliances. So there is a big range from the first grantee 
who is cited with the noncompliance all the way through to 
grantees who were deficient.
    Mr. Kline. Could you help me a little more and sort of--and 
to get out of the sort of deficient one point, many points and 
so forth, could we look at the Head Start program that grantees 
out there, how many--what percentage of the total universe of 
Head Start grantees are in your judgment--and I am certainly 
willing to take subjective here--are in trouble; just don't--
absolutely do not know what they are doing and therefore are in 
major noncompliance or perhaps occasionally on purpose 
noncompliant? Of all those programs out there, how many should 
we be worried about?
    Ms. Shaul. Congressman, our review is limited to the 
financial aspect. If you are asking for the program as a whole 
in any given year, HHS reports something around 15 percent or 
fewer of its grantees are deemed deficient.
    Mr. Kline. And financially, when you cut through the 13 or 
16 of 76, what is that number?
    Ms. Shaul. The number would be slightly lower, because HHS 
makes its determination about deficiencies looking across the 
program standards, not just the financial ones.
    Mr. Kline. That does help me understand the scope. And I am 
getting ready to yield back, but I am going to express my 
concerns. We have a 1998 report and a 2005 report indicating 
that there are difficulties. And so I think, Mr. Secretary, you 
can see where there is some frustration on our part that we 
don't seem to be making the progress that we ought to be.
    Thank you. I yield back, Mr. Chairman.
    Chairman Boehner. Chair recognizes the gentlelady from 
California, Ms. Woolsey.
    Ms. Woolsey. I have three comments and two questions.
    The comments. First of all, when we are talking about 
appeals and hearings, I would like to remind everybody in this 
room that this is still America and we do have a process for 
appealing for what we don't think is right. Second, I would 
like to say where there is a will, there is a way. And I think 
that this report has laid this out for us. We can, if we want, 
take this report and make it punitive to the Head Start 
directors and the Head Start program in general, or we can use 
it to learn and to help and to prevent future problems. And 
that depends on what this Congress wants to do with the report. 
Third, don't throw the baby out with the bath water. Most of 
the programs are doing a good job, and every single person up 
there has said that. So the idea that we would recompete every 
year with every program would be absolutely wasteful and 
inefficient; it would punish the good programs for the problems 
of just a few. And I don't think we should be writing law based 
on a few bad apples. There will always be a few bad apples. Let 
us prevent those bad apples from being part of our programs.
    Mr. Horn, you mentioned salaries at least three times, so 
that must be a problem you see with Head Start programs. And 
from what I can tell, there are some outrageously high salaries 
and/or benefits with a few program directors, from what I can 
tell. But the average salary of a director is under $57,000 a 
year. Do you think that is excessive, one?
    And two, given that HHS approves the budgets of these 
programs, who approved those excessive salaries?
    Mr. Horn. Well, first of all, it is not just me who worries 
about excessive salaries. Apparently the Congress does too, 
because they put the salary cap on Head Start staff in last 
year's Labor-HHS appropriations bill. I am not against people 
making money. The real tragedy in my view is somebody making 
$150,000 as a Head Start director. It is not that they are 
making $150,000; the real tragedy is if they are still paying 
their teachers about 6 or 7 bucks an hour. When you think about 
salaries in Head Start, it is not just looking at the top 
salaries, you have to look at the salary structure.
    Ms. Woolsey. I am asking about the $56,670.
    Mr. Horn. I think most directors of most Head Start 
programs have salaries that are reasonable and have a 
reasonable salary structure, but that doesn't mean that we 
ought not to identify those who are paying themselves.
    Ms. Woolsey. Why weren't they identified when the detailed 
budgets were before HHS each year?
    Mr. Horn. Very good question. And we have issued guidance 
to our regional offices that they require and ask for and 
receive information on the salaries of not only--of the 
salaries of the directors and the top executive staff, but of 
their teachers as well; because I think it is very important 
that we take a comprehensive view every single time there is a 
refunding application that looks at the complete salary 
structure, because, as I said, it is not just looking at the 
director's salary that has me bothered. But what bothers me is 
when someone is making a high salary and paying their teachers 
6 or 7 bucks an hour.
    Ms. Woolsey. What is the average salary of the director of 
the HHS program, or your program, of the director of the 
assessors or the fact finders? What is the average salary of 
the fact finders in your Department who are going to training 
and technical assistance?
    Mr. Horn. I don't have that information.
    Ms. Woolsey. I bet it is a lot higher than a lot of these. 
We should look at that. I mean apples and apples.
    Mr. Horn. My salary is substantially below the cap that the 
U.S. Congress put on Head Start directors last year.
    Ms. Woolsey. Well, OK.
    Dr. Shaul, I have a question. You said something about 
there being a relatively small number of grantees that were 
seriously deficient and not closed. How many of those actually 
improved so they didn't have to close? Was there any way to 
know that?
    Ms. Shaul. Congresswoman, we did not look at that, but I am 
sure one could tell the answer to that question by going back 
to the HHS data.
    Ms. Woolsey. But it could be.
    Ms. Shaul. We could certainly do that. And certainly other 
grantees who are deemed deficient, only a portion of those have 
had their grants terminated or they have been relinquished. One 
could presume that they have gotten the technical assistance 
they needed to improve.
    Ms. Woolsey. I have one last thing to say and that is to 
Ms. Henry. Good witness down there. And what you have to know, 
don't ever be intimidated by us. You are sitting there, and you 
are the teacher and we are the students. You know way more than 
we do.
    Chairman Boehner. The Chair recognizes the gentlelady from 
Virginia, Ms. Foxx.
    Ms. Foxx. North Carolina.
    Chairman Boehner. I was looking at the gentlelady from 
Virginia, Ms. Drake. But, Ms. Foxx, you are recognized.
    Ms. Foxx. Thank you, Mr. Chairman.
    Ms. Henry, I would like to thank you for being here, too 
and thank you for what you do. We appreciate you very, very 
much and thank you for what you do.
    I would like to make a brief comment and then ask Dr. Horn 
a question. Dr. Horn, I was on the original board of the Smart 
Start program in North Carolina when it was formed about 1995. 
And that program was designed to give maximum flexibility to 
local programs in North Carolina, but it is State-funded 
primarily.
    I have always had a little bit of experience of program 
evaluation over the years in my role as a university 
administrator and community college president, so I know a 
little bit about program evaluation. Smart Start, where we 
funded 12 programs, and then 12 more, and then 12 more, and 
then we had one or two programs that really had problems, and 
we almost could know that from the very beginning that they 
were going to have problems. We could tell that from the 
criteria that had been established, and yet we funded them 
because we were trying to do one per congressional district. 
When we abused the system to make it fit, we created problems. 
But over time, we had few people who really abused the system 
and misused funds. And part of that is because there was not a 
consistent accounting program established and there was not 
consistent evaluation of the programs done at the State level. 
And what wound up happening was there were both sins of 
omission as well as sins of commission that occurred.
    What is wrong with the Federal Government establishing 
oversight that would establish minimum sort of requirements for 
evaluation, minimum requirements for accounting standards and 
those kinds of things? In fact, I am not very much involved 
with Smart Start anymore, but my understanding is they have 
installed a statewide accounting program so that people can--so 
apples and apples can be compared.
    What is wrong with the Federal Government establishing a 
mechanism for gathering information and evaluating at the 
Federal level, and yet leaving capability for local control, 
which you said is a very difficult balance to strike? And has 
anybody attempted to do that?
    Mr. Horn. Well, two things. First of all, there are 
certainly consistent ways that the Federal Government asks for 
information from the local programs. I think you are suggesting 
a step further than that, which is that the Federal Government 
should say precisely what accounting package they use and so 
forth. That is sort of left up to local grantees in the Head 
Start program. But there are consistent methods for us to ask 
for information that they have to generate for us.
    I think the difficulty that GAO pointed out is that we 
don't always use that information to its maximum potential. But 
it is precisely on this point of consistency that we 
implemented the National Reporting System in Head Start, 
because prior to the National Reporting System, every grantee 
could determine for themselves how they were going to measure 
outcomes.
    And as someone who has a history in program evaluation, I 
realize that as a Federal program manager, if people are 
measuring what they think is the same thing but in different 
ways, you can't compare them. Even worse, if you don't know 
they are measuring them in different ways, you compare them 
anyway, and then you have no idea whether your interpretations 
are correct.
    So is there anything wrong with the Federal Government, in 
appropriate areas, standardizing the way people collect 
information or report information? Absolutely not.
    Ms. Foxx. Follow-up, if I could, for Dr. Shaul and you too.
    Did we see consistent problems or is there a thread that 
runs through? I know, again from having operated a Federal 
program one time in my life, grantees get together and share 
information, talk about what works, what doesn't work. Did you 
see regional problems where people are sharing bad information 
or how to get around the system? Are there regional issues, 
State issues? Are there just programs stuck out there all by 
themselves? Is there any kind of pattern to the problems that 
you saw?
    Ms. Shaul. We did an analysis of which of the Federal 
standards and regulations were the ones that were most commonly 
a problem for grantees, and the ones that came up most often 
were in the program governance area, particularly things like 
the ability of the agency to generate reports that could 
provide information to its policy boards, its parents, and to 
the staff so they could know what was going on in program 
management and operation. So that was a fairly common thread.
    Also there was an issue that came up fairly regularly about 
difficulties in establishing practices between the policy 
boards and the governing boards about how they would share 
program responsibility, which sometimes meant that agencies 
were not in touch with what the community wanted them to do. 
Those are two areas.
    One thing I might add to the question you raised earlier, 
too, I think probably all of the Head Start programs or the 
entities within which they are housed are subject to the Single 
Audit Act, so there is that uniformity across the agencies. 
However, as Dr. Horn pointed out, that information isn't always 
used.
    Chairman Boehner. The Chair recognizes the gentleman from 
Texas, Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Mr. Chairman. I also want to thank 
the panelists for your presentation and coming to visit with us 
this afternoon.
    My first question is to Dr. Horn. Dr. Horn, in your 
testimony, you highlight some of the administration's 
recommendations for this reauthorization of Head Start. 
Specifically, you ask for more discretion to use funds in the 
most effective manner, and that sounds good.
    I am concerned that the track record at HHS does not 
warrant increased discretion. Let me tell you why. Currently, 
13 percent of Head Start funding, which equals $897 million, is 
set aside for the Secretary of HHS to carry out a list of 
activities, including funding migrant and seasonal Head Start 
Training and Technical Assistance, quality assurance, and 
several other activities. Clearly, one of the messages we take 
away from the report that we have been discussing is that there 
is a need for Training and Technical Assistance and greater 
oversight. Furthermore, despite HHS studies showing that 
Migrant and Seasonal Head Start is reaching a measly 19 percent 
of the eligible population, and appropriations language 
directing the Secretary to develop a plan to serve more migrant 
children, the Secretary has not used his discretion to close 
the access gap for migrant children. In the 9 years I have been 
in Congress, this has been one of my biggest concerns, and I 
don't see it happening.
    Please break down for me the $897 million in big 
categories, how it is being spent by HHS.
    Mr. Horn. I would be pleased to present that and give that 
to you for the record. I don't have those numbers in front of 
me right now, but let me respond to the 19 percent figure.
    When it comes to the migrant program, the denominator is 
all children zero to five. When it comes to enrollment of 
children in Head Start, the denominator is 3- and 4-year-olds. 
You are going to get a smaller percentage because your 
denominator is over 5 years, zero to five, and there are more 
kids. Whereas in the Head Start program, the denominator is 2 
years of kids, 3- and 4-year-olds. What we have to start to do 
is look at apples and apples and not apples and oranges when it 
compares to the enrollment of children in those two programs.
    The other thing I would say is that we have made a very 
special effort in the last 3 years in this administration to 
enroll Hispanic children in the regular Head Start program. We 
distributed, as far as I know for the very first time, Spanish 
language television and radio PSAs specifically targeting 
Hispanic and Latino families to encourage them to enroll in 
Head Start. We have been working with chronically under-
enrolled Head Start programs who--one of the reasons they are 
often under-enrolled is they aren't very effective at reaching 
out to Hispanic and Latino families. We are working with them 
to do that. We held the first-ever Hispanic Institute for Head 
Start just a month or so ago. And in fact, the result of that 
is that we now serve a greater number of Hispanic and Latino 
children in Head Start than we do any other subgroup. 
Historically, that that has not been the case. Historically, 
the largest subgroup that we serve is African American 
children. And this year is the first time that we are seeing 
the plurality of children are actually of Hispanic and Latino 
descent.
    Mr. Hinojosa. Your response is one that is very 
bureaucratic, and I am not going to accept that because we are 
dealing with the total number from zero to five, and that the 
Head Start children are just for the 2 years, that this 19 
percent of the eligible population of those children from the 
migrant and seasonal workers is OK.
    I have said it is not OK 9 years ago, and I don't see you 
or anyone changing the numbers in a way that we compare apples 
to apples and we get the number to at least 50 percent of the 
eligible children.
    That you are bringing up some Spanish language and Spanish 
written material, I accept that. I have seen the improvement in 
some of the materials that are coming to our children. My 
problem, my concern, is that we don't reach 50 percent instead 
of the numbers that we have gotten for the 9 years I have been 
in Congress. If you want to compare apples to apples, do it. Do 
it so we can have something that we can really measure the 
outreach of. And I would love to see the report that gives me 
the answer to my question, how you are using the $900 million 
of that 13 percent of Head Start funding.
    With that, Mr. Chairman, I return the balance of my time.
    Chairman Boehner. The Chair recognizes the gentlelady from 
Virginia, Ms. Drake.
    Mrs. Drake. Thank you, Mr. Chairman.
    First of all, I would like to thank you all for being here. 
Your testimony has raised a lot of questions in my mind. I 
think you can hear tremendous support for Head Start. We 
realize the value of it and realize the value of continuing 
very good programs. But I think after a program has been in 
place for 40 years and we hear the kind of abuses that we are 
hearing about, it is very upsetting to think that we haven't 
determined a better way to monitor this program.
    And I would like to know from you, Mr. Horn, these cases 
that we read about in the cities that were cited, are these 
programs that you were already investigating or maybe they were 
in an appeal process? Or were they new to you when the press 
reported some of these abuses with credit cards, vehicles, 
salaries?
    Mr. Horn. I think it is quite variable. In some cases we 
were involved, and in some cases the inspector general's office 
was involved, and in other cases we were not.
    Mrs. Drake. When they file these reports with the 1700-and-
some boxes with the information that you want, does somebody 
actually review that information; or are there certain 
components that they look at based on are they self-certifying, 
or are they ones you need to look more closely?
    Mr. Horn. Are you referring to the PRISM review information 
or the program information report?
    Mrs. Drake. You mentioned that they have to file a report, 
but there seems to be no consequences from that report.
    Mr. Horn. Well, we have implemented a policy that says that 
except in--that the exception shall be, if there are instances 
of noncompliance, the exception shall be self-certification as 
opposed to the acceptable means of dealing with noncompliances; 
that noncompliances in the future, except for when we are 
talking about relatively noncompliances, shall be certified by 
a visit directly to the Head Start grantee.
    I think that is going to go to a long way to ensuring that 
the kind of situation that the GAO talked about between 2000 
and 2002 doesn't occur; that we actually show that changes have 
been made.
    Mrs. Drake. I think one of the questions I had as well is, 
are these people that are so blatantly abusing the program--and 
I think we are very angry about that, because those are 
children we aren't serving--are they providing you fraudulent 
data on those forms, or are they coming right out and telling 
you this?
    Mr. Horn. I doubt the ones that are using the money to 
support their private restaurant business are reporting that to 
us on that form. Let me clarify one thing. It is perfectly 
possible for someone to have inadequate fiscal controls and 
still provide a quality environment in the classroom for 
children.
    Mrs. Drake. If they are spending money on their restaurant 
or their vehicle--
    Mr. Horn. That is not an excuse for fiscal mismanagement. 
Some are suggesting that, gee, because we have data that shows 
that classroom quality is high in most Head Start classrooms, 
that therefore that is a reflection of good fiscal management. 
Well, not necessarily. You could have very poor fiscal 
mismanagement, have someone paying themselves an exorbitant 
salary, and yet have reasonable good quality in the classroom 
itself.
    But your point is exactly correct. The reason it is so 
important for us to do a better job of fiscal oversight is 
because every dollar wasted is a dollar that is not going to 
services for kids. That is the real tragedy here. When somebody 
is being given a Mercedes SUV as part of their compensation 
package, that is money not going to kids. And that is why we 
need to do a better job.
    Mrs. Drake. Is it true that you have to fund the cost of 
that program's appeal?
    Mr. Horn. Yes.
    Mrs. Drake. Why wouldn't people appeal if it isn't a cost?
    Mr. Chairman, I know I am running out of time. What I am 
hoping that we will do is look at what we are asking of these 
programs, what should be the process to determine they are 
doing a good job; maybe set up a way to help them if they are 
not; but ones that are doing blatant things like this, that 
they just be terminated immediately. Whether it is America or 
not, I think it is criminal.
    Mr. Horn. One last clarification. The notion that we cannot 
move to restrict funding or terminate funding during the course 
of an appeal is somewhat unique to the Head Start program. That 
is not something that we generally do with grants from the 
Federal Government. And most grant programs from the Federal 
Government to a local program, if we believe that they are 
underperforming or engaging in--lack of internal controls and 
so forth, we can defund them immediately and then the appeals 
process is still available to them, but we don't have to 
continue to provide them with funds while the appeal is going 
on. That is what is unique about this program. And that is a 
problem--if in fact we can move directly and terminate their 
funding without a change in the statute, please let us know 
that, because we don't believe the statute allows us to do 
that.
    Mrs. Drake. In those other programs, do you also fund their 
appeal like you do in Head Start?
    Mr. Horn. No.
    Mrs. Drake. Mr. Chairman, I hope those are things that we 
look at.
    Chairman Boehner. It is clearly under advisement. The Chair 
recognizes the gentleman from Nebraska, Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman. I would like to thank 
Members of the panel for being here today and being so patient.
    I know this is about Head Start. I would like to make a 
somewhat broader comment. There was a White House report that 
came out a couple of years ago that indicated there are roughly 
150 different youth-serving programs under the auspices of the 
Federal Government, and there was quite a bit of concern in 
this report. Obviously, Head Start is one of those 150. But the 
report basically said that there is a little coordination 
between programs, little evaluation of programs to see if they 
are really doing what they are designed to do. In some cases, 
the statute actually prevented people from one agency talking 
with individuals in another agency who may have a similar 
program. And so there is quite a bit of frustration among 
youth-serving programs around the country. And they approached 
us and others and said, you know, we would like to see 
something where we could pull all of these programs at least 
under one umbrella, and take a look at them and make sure there 
is not duplication and make sure there is not waste, fraud and 
abuse, and make sure they are fulfilling their purpose and make 
sure there are quantifiable, measurable goals that they are 
attempting to meet.
    And so we have introduced a Federal Youth Coordination Act. 
But just a couple of examples of these concerns would be--we 
have talked about Head Start today; but, for instance, a child 
that is in foster care has to go to four or five different 
agencies, and if you are in foster care it is pretty difficult 
to negotiate that jungle. As part of the reauthorization of the 
Elementary and Secondary Education Act a couple years ago, we 
included an amendment for mentoring for success, and there were 
two objectives to that. One was to broaden mentoring to provide 
some money. But the second was to determine what programs 
worked--you know there are all kinds of mentoring programs, 
there are school-based, faith-based, there are one-to-one, 
there are 1-to-10, over the Internet--and also to determine are 
some programs saying let us cut drug and alcohol abuse by 50 
percent? Is that true? We haven't been able to get an answer. 
The President's budget zeroed out this particular program and 
said it hasn't fulfilled its purpose. The program was what we 
have outlined and we can't get any answer as to any evaluation 
that has been done. We have been trying to. The money has been 
distributed, but what we wanted to do was to try to get a 
handle on what works.
    So that is just sort of an editorial comment and I would 
like to proceed with a couple of questions, having gotten that 
off my chest.
    Ms. Henry, you haven't had a lot of questions here. How 
long did the problems continue without action being taken? Is 
there a time lag? How long a delay was there?
    Ms. Henry. For many years prior to my involvement, they 
have been happening, you know, the continuous deficiencies and 
everything that has been happening. In Nevada, it has been 
going on many years prior to my involvement.
    Mr. Osborne. Dr. Shaul, how do you believe that competition 
will help address the problems in communities served by poorly 
serving grantees? I think you talked about competition being 
important.
    Ms. Shaul. Currently it appears as though it has been 
difficult for the agency to replace grantees quickly. And we 
believe that many grant programs do have an annual renewal 
process. And we were not recommending recompetition at renewal 
time for every grantee. But for grantees who are not performing 
well, we believe that at renewal time, that would be a good 
opportunity to give others in the community who might be able 
to provide good services for children the opportunity to put in 
an application and compete on a level playing field with the 
current grantee and to have some determination made about which 
of the entities might be able to best serve the children in the 
community.
    Mr. Osborne. And, Dr. Horn, this may be repetitious, and I 
had to step out and if this was asked before, please let me 
know. The study noted when Health and Human Services sent 
different review teams to the same grantee, they often came 
back with different results. And do you see any solution to 
this, or do you have any idea why this was happening?
    Mr. Horn. In particular, the study we did had to deal with 
erroneous payments where the regular PRISM review team went to 
the local grantees, and a piece of that PRISM review is to look 
at whether children who are ineligible for the program are 
being served, and to the extent to which those erroneous 
payments are being made. And then we sent specialized people in 
to look at the same data and they came back with two different 
conclusions.
    And that has led us in two places: First of all, better 
training for review teams, the standard review teams on this 
issue. The other thing we are implementing, which I think is 
consistent with the GAO's recommendations, is this idea of 
rereviewing a certain percentage of local programs that are 
reviewed in the course of any given year by a specialized team 
that will review them across the 10 regions. What they will 
serve is as calibrators, if you will, for the adequacy, the 
reliability, and the validity of the general review teams that 
are sent out to the local programs.
    So we review a third of the local grantees as we normally 
do, but then we would send out these specialized review teams 
to a random sample of those grantees to rereview them to make 
sure we are applying the standards consistently across the 
various regions and across the various review teams.
    Mr. Osborne. I yield back, Mr. Chairman.
    Mr. Castle. [Presiding] Mr. Price is recognized.
    Mr. Price. I appreciate that, Mr. Chairman. Now is the time 
you can ask questions and really get the truth. I want to thank 
each of you for coming as well, and for testifying, and I have 
concerns, like all of the Committee Members do, about Head 
Start and not about its mission. Obviously, its mission is 
noble. One of the things that may be that when a mission is so 
noble, it may be that accountability and oversight gets less, 
because anybody that questions the program itself then is 
questioned for questioning whether or not the program itself 
ought to continue, which isn't what we are talking about at 
all.
    But I have a very simple question, and it may be too simple 
but I don't know. And that is, when I look over the numbers 
that have been presented in the budget, I think that we are 
spending $6.8 billion, about, for a Head Start program that 
provides services to 919,000 or thereabouts children. Are those 
numbers accurate?
    Mr. Horn. Yes.
    Mr. Price. 6.8 billion. If my calculator is working 
correctly, that means we are spending about $7,400 per child?
    Mr. Horn. It is a bit more, because what that calculation 
does not take into account is services that are provided to 
Head Start through other funding sources; for example, the food 
nutrition program, the child care, and also Medicaid.
    Mr. Price. I was being conservative. So the question is are 
we getting our money's worth?
    Dr. Golden. I don't know if I could comment on that, 
because that is a really important question and one that as a 
researcher is very dear to me. One of the things that Head 
Start has, that goes to the several earlier comments about 
evaluation, is that very few other Federal programs have very 
detailed research, sort of meeting the gold standard of 
research, meaning children in the program compared to 
comparable children outside, that helps you answer both what 
you are accomplishing and how much are you paying for it and 
how much is the benefit.
    In early Head Start, which is the program for babies and 
toddlers, it is a bit more expensive than that, because, as you 
know, in any State or in any circumstance, high-quality care 
for very young children is more expensive because you need an 
adult to be with fewer children.
    Dr. Golden. There we have evaluation research showing the 
effects on kids in terms of fewer of them, for example, in the 
range that would be likely to target them for special ed for 
disabilities. So we are seeing learning improvements that take 
kids out of some of these expensive later experiences.
    We have new information, I think, about early Head Start 
bringing the kids up to about 4 years that should be--I think 
will be--out this week. And then the equivalent evaluation 
study about Head Start as a whole, there is a lag time in 
research, so I had the chance to chair the group that designed 
it when I was at HHS. But I gather that that will be out, I 
hope, within weeks, perhaps months, in any case, in time for 
this Committee to consider it. So I think one of the advantages 
of Head Start is that whereas with some programs, you would 
just have to guess or you would have to say there are lots of 
early childhood programs out there and they show a four-to-one 
return on expenditures; with Head Start there is actually some 
additional detailed information to help the Committee look at 
that.
    Mr. Price. Dr. Horn, do you want to comment? Are we getting 
our money's worth?
    Mr. Horn. Well, first of all, I would say that when she 
chaired the committee to design the implementation of the 
national impact study, she invited me to serve on the 
committee, so we both have an investment in that project. I 
think it is a well designed project and, for the first time, 
will allow us to serve with a national representative sample 
randomly assigned to Head Start, not Head Start, be able to 
determine what the true impact of Head Start is.
    Mr. Price. The answer is, we don't know. Is that accurate?
    Mr. Horn. I think the--I mean, my feeling is that we know 
some things. I think the data is strong enough for us to say, 
all things being equal, it is better for kids in economically 
disadvantaged circumstances to get a quality program such as 
Head Start than not.
    Mr. Price. When folks in my neighborhood want their 
children who aren't Head Start eligible to go to a program that 
is similar to Head Start, the cost of that program is markedly 
less than $7,400 a year. So I would hope that, in this process 
that we are going through, Mr. Chairman, and as we try improve 
this program, we look at where the efficiencies are that can be 
derived from the program that make it so that we are driving as 
much money to the child and not wasting money along the way, 
which I fear we are doing.
    Mr. Horn. I agree with that 1,000 percent.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Mr. Castle. [Presiding.] Thank you, Mr. Price.
    And I think we have reached the end. And let me just thank 
all the Members who are here and able to ask questions.
    But I would like to particularly thank those of you who 
came from near and far to testify and answer our questions here 
today. We appreciate it a great deal, and all those who 
participated by being witnesses to all this today.
    With that, we stand adjourned.
    [Whereupon, at 4:15 p.m., the Committee was adjourned.]

                                 
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