[Senate Hearing 109-119]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-119

           HEAD START: ENSURING DOLLARS BENEFIT THE CHILDREN

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

                                HEARING

                               BEFORE THE

       SUBCOMMITTEE ON EDUCATION AND EARLY CHILDHOOD DEVELOPMENT

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON



  EXAMINING HEAD START, FOCUSING ON ENSURING DOLLARS BENEFIT CHILDREN 
  RELATING TO THE EFFECTIVENESS OF THE OVERSIGHT BY THE DEPARTMENT OF 
HEALTH AND HUMAN SERVICES' ADMINISTRATION FOR CHILDREN AND FAMILIES IN 
IDENTIFYING AND RESOLVING FINANCIAL MANAGEMENT WEAKNESSES IN HEAD START 
                                GRANTEES

                               __________

                             APRIL 5, 2005

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                   MICHAEL B. ENZI, Wyoming, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
RICHARD BURR, North Carolina         BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia              JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio                    JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada                  PATTY MURRAY, Washington
ORRIN G. HATCH, Utah                 JACK REED, Rhode Island
JEFF SESSIONS, Alabama               HILLARY RODHAM CLINTON, New York
PAT ROBERTS, Kansas

               Katherine Brunett McGuire, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                 ______

       Subcommittee on Education and Early Childhood Development

                  LAMAR ALEXANDER, Tennessee, Chairman

JUDD GREGG, New Hampshire            CHRISTOPHER J. DODD, Connecticut
RICHARD BURR, North Carolina         TOM HARKIN, Iowa
JOHNNY ISAKSON, Georgia              JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio                    JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada                  PATTY MURRAY, Washington
ORRIN G. HATCH, Utah                 JACK REED, Rhode Island
JEFF SESSIONS, Alabama               HILLARY RODHAM CLINTON, New York
MICHAEL B. ENZI, Wyoming (ex         EDWARD M. KENNEDY, Massachusetts 
officio)                             (ex officio)

                   Christine C. Dodd, Staff Director

                 Grace A. Reef, Minority Staff Director

                                  (ii)






                            C O N T E N T S

                               __________

                               STATEMENTS

                         TUESDAY, APRIL 5, 2005

                                                                   Page
Alexander, Hon. Lamar, Chairman, Subcommittee on Education and 
  Early Childhood Development, opening statement.................     1
Enzi, Hon. Michael B., Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     2
Kennedy, Hon. Edward M., a U.S. Senator from the State of 
  Massachusetts, opening statement...............................     3
    Prepared statement...........................................     4
Horn, Wade F., Ph.D., Assistant Secretary for Children and 
  Families, U.S. Department of Health and Human Services; and 
  Marnie S. Shaul, Director, Education, Workforce, and Income 
  Security Issues, U.S. Government Accountability Office.........     6
    Prepared statements of:
        Wade F. Horn, Ph.D.......................................     7
        Marnie S. Shaul..........................................    19
Dodd, Hon. Christopher, a U.S. Senator from the State of 
  Connecticut, opening statement.................................    37
Caccamo, Jim, Director, Metropolitan Council on Early Learning, 
  Kansas City, MO; A.C. Wharton, Mayor, Shelby County, TN; Yvonne 
  Gates, Director for Marketing and Community Relations, Center 
  for Academic Enrichment and Outreach, Clark County, NV; and 
  Olivia A. Golden, Senior Fellow, Urban Institute...............    44
    Prepared statements of:
        James M. Caccamo, Ph.D...................................    46
        Honorable A.C. Wharton, Jr...............................    49
        Yvonne Atkinson Gates....................................    54
        Olivia A. Golden.........................................    59
Clinton, Hon. Hillary Rodham, a U.S. Senator from the State of 
  New York, opening statement....................................    73

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Response to Questions of Senator Enzi by Wade F. Horn........    14
    Response to Questions of Senator Ensign by Wade F. Horn......    16
    Response to Questions of Senator Alexander by GAO............    26
    Response to Question of Senator Alexander by Mayor A.C. 
      Wharton....................................................    51
    Response to Questions of Senator Enzi by Olivia A. Golden....    64

                                 (iii)

  

 
           HEAD START: ENSURING DOLLARS BENEFIT THE CHILDREN

                              ----------                              


                         TUESDAY, APRIL 5, 2005

                                       U.S. Senate,
Subcommittee on Education and Early Childhood Development, 
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
Room 106, Dirksen Senate Office Building, Hon. Lamar Alexander, 
chairman of the subcommittee, presiding.
    Present: Senators Alexander, Roberts, Ensign, Dodd, Murray, 
and Clinton; and Senators Enzi and Kennedy, Ex Officio.

                 Opening Statement of Senator Alexander

    Senator Alexander. Good morning. This is the Subcommittee 
on Education and Early Childhood Development. We are pleased to 
have with us the chairman of our full committee, Chairman Mike 
Enzi, of the Committee on Health, Education, Labor, and 
Pensions. We will be joined a little later by other Senators, 
including the ranking member of the subcommittee, Chris Dodd of 
Connecticut.
    For 40 years, Head Start has been the Federal Government's 
largest investment in early childhood education. Its goal is to 
encourage equal opportunity, to help all Americans reach the 
same starting line.
    When I attended nursery school and kindergarten in a 
converted garage in my mother's backyard in the mountains of 
Tennessee, I was attending the only preschool program in town. 
That was well before Head Start. The more we have learned about 
preschool education, the more important it has become. Now, 40 
States and the District of Columbia offer some form of 
preschool education and the Federal Government has broadly 
expanded other programs for children under the age of 6.
    Head Start offers low-income children and their families 
preschool education, family support, health screenings, dental 
care, and assistance in accessing medical services.
    This past year, taxpayers spent about $6.8 billion to serve 
more than 900,000 children in Head Start. These dollars have 
grown much more rapidly than inflation. Ten years ago, Head 
Start spent about $4,700 per child. Today, we spend about 
$7,500 per child.
    This Head Start money is distributed in grants to nearly 
1,700 local organizations. Many of these organizations, which 
we call grantees, operate other Federal, State, or local 
programs, or subcontract with other agencies, to provide 
services, known as delegate agencies. There are more than 
20,000 Head Start centers with more than 48,000 classrooms. As 
one of our witnesses observed, managing a program of this 
complexity can present many challenges.
    Our responsibility here in Congress is to make sure that 
taxpayer dollars are being spent for the purposes intended and 
for the children intended. Between January 2003 and the first 
months of this year, there were numerous accounts from 
communities across the country of serious financial abuses or 
irregularities by individuals or entities entrusted with Head 
Start dollars. That is why the House and Senate Education 
Committee leaders asked the Government Accountability Office to 
look into allegations of financial abuse and irregularities by 
the local agencies or individuals entrusted with Head Start 
funds.
    The purposes of today's hearing is to consider the findings 
of the GAO report as well as its recommendations for how the 
Department of Health and Human Services can do a better job of 
overseeing the spending of Head Start money. This is not a new 
issue. In June of 1998, during the Clinton administration, a 
GAO report raised questions about the inconsistency of Head 
Start monitoring.
    We have with us today, as witnesses, representatives of the 
writers of the GAO report and of the Federal managers of the 
Head Start money as well as representatives from the community 
agencies that actually administer and use the Head Start money.
    Our job in Congress, especially as we consider 
reauthorization of Head Start for another several years, is to 
make sure that it is accountable, financially solvent, and 
meeting the purposes for which it is intended. I hope that as 
we consider program accountability, we will look for ways to 
change a process-oriented system to one that does a better job 
of measuring outcomes. In other words, instead of just 
requiring grantees to fill out forms and dot ``i''s, should we 
not be putting more emphasis on finding out, for example, how 
much followup there has been on dental screenings, what the 
quality is of parent involvement, and whether the children are 
learning what they need to know, and need to be able to do, to 
have a more equal opportunity when they enter school?
    We have two panels of witnesses today. Wade Horn from the 
Department of Health and Human Services and Marnie Shaul from 
the Government Accountability Office are on the first panel. 
Mayor A.C. Wharton of Memphis, Yvonne Gates from Clark County, 
NV, Jim Caccamo from Kansas City, MO, and Olivia Golden from 
the Urban Institute are members of the second panel.
    We will ask Mr. Horn and Ms. Shaul to testify in just a 
moment, but first, I would like to call on our committee 
chairman and ranking member, both of whom are here, and to see 
if they have any opening comments.
    Senator Enzi?

                   Opening Statement of Senator Enzi

    The Chairman. Thank you, Mr. Chairman. I want to thank you 
for your leadership on early childhood education policy and for 
putting this hearing together. There is no better investment 
that we can make for our future than to support programs that 
help our children learn, and Head Start is an important part of 
that effort. I am looking forward to hearing today's witnesses 
about the future of the Head Start program and how we can make 
sure it is working effectively to help children enter school 
ready to learn.
    The testimony we receive today will help shape the 
reauthorization of the Head Start program in a way that will 
make it stronger, better, and more effective for the children 
it serves. That is important. I am the father of three children 
and one grandchild. I understand the importance of early 
learning. Head Start provides an important service for 
thousands of children by providing a safe and healthy 
environment. Many of these children do not receive the same 
support at home as some of their more advantaged peers, and 
Head Start helps meet many of their needs.
    The Head Start program has demonstrated a great deal of 
success since its creation almost 40 years ago. Lately, 
however, several instances of financial mismanagement and other 
troubling incidents have been brought to our attention, both 
through the recent report issued by the Government 
Accountability Office and from dozens of news reports around 
the country.
    We aren't going to be disparaging or accusing practitioners 
at this hearing. Instead, we will look to our witnesses for 
help in identifying how Congress can ensure that Head Start 
program dollars are being used for the purpose for which they 
were intended, which is to help disadvantaged children succeed.
    One of the findings in the recent GAO report is that the 
monitoring process for the Head Start program can be improved 
substantially to help ensure the program is more effective. It 
is my hope that today's witnesses will discuss options for 
Congress to help strengthen the program's integrity as well as 
its impact on student outcomes.
    In the past Congress, this committee unanimously supported 
a Head Start reauthorization bill that would have made many of 
the improvements suggested by the GAO study. It is my hope that 
today's witnesses will comment on these efforts and suggest 
some alternative policy options, as well.
    In the current economy, continued learning is more 
important than ever. We need to make sure that Federal 
programs, such as Head Start, are giving children the best 
possible start, since today's students are tomorrow's leaders. 
The Head Start program is an important beginning to a lifetime 
of education opportunities that will make it possible for 
today's students to support families in the future. It is 
essential that all children get a good start and that the Head 
Start program provides the type of educational foundation that 
will support a lifetime of learning and success.
    Again, thank you for holding this hearing. I expect it to 
be useful to the committee as it works on the reauthorization.
    Senator Alexander. Thank you, Mr. Chairman.
    Senator Kennedy, who is the ranking member of our full 
committee.

                  Opening Statement of Senator Kennedy

    Senator Kennedy. Thank you very much, Mr. Chairman. I want 
to thank you for having this hearing, thank our chairman, 
Senator Enzi, for his longtime interest in Head Start. Thank 
you, Mr. Chairman, for your strong commitment on education and 
also for your recognition about early intervention, its 
importance, the difference it makes in the development of a 
child's life and also the paths it opens up, not only 
educationally, but socially and in other ways in terms of early 
intervention. I think we know that Head Start does work. It is 
important.
    We know, as well, that we tried to address some of the 
problems in our bipartisan effort in the areas of recompetition 
and better enforcement and followup on under-involvement and 
more efficient and thorough audits. I think we all know that 
increased and improved training at the local level can help 
resolve some of these issues, and I think we are all interested 
in giving focus and attention to the major kinds of issues and 
problems that are out there and how we can deal with them and 
give priority, obviously, to those particular issues.
    I am a strong believer in the Head Start program and have 
visited so many in my own State and talked with people and 
parents and met these young people. I even had a chance during 
the break to visit some in the Greater Boston area. So we are 
looking forward to getting a solid result. We thank you very 
much for your leadership on this and we want to work very 
closely with you and the chairman to try to get a positive 
outcome. Thank you. I will put my full statement in the record.
    Senator Alexander. Thank you, Senator Kennedy.
    [The prepared statement of Senator Kennedy follows:]

                 Prepared Statement of Senator Kennedy

    I commend Chairman Enzi and Senator Alexander for 
scheduling today's hearing on Head Start, which gives us an 
opportunity to consider effective ways to improve and 
strengthen all aspects of this vital program.
    One thing is clear--Head Start is a lifeline for the 
neediest families and children across the Nation. For 40 years, 
it has given disadvantaged children the assistance they need to 
arrive at school ready to learn. Its balanced curriculum to 
help them develop the intellectual skills they'll need to meet 
high academic standards later in school. Equally important, it 
helps them learn to get along with their fellow students, and 
delivers the social and emotional building blocks they'll need 
to keep up once they reach kindergarten.
    Head Start also makes it possible for these children to see 
doctors and dentists, and be immunized against childhood 
diseases. It teaches children to eat healthy meals. Every Head 
Start center is grounded in the community in which it operates 
and supports. Parents are welcomed into their children's 
classrooms and urged to participate actively in the local 
programs.
    These services are backed by impressive research. Children 
who participate in the program make gains in vocabulary, and 
develop early reading and math skills. By the end of their 
kindergarten year, Head Start children are typically performing 
at or above national averages. That's a remarkable achievement, 
given the devastating effects of poverty on children.
    Our challenge in reauthorizing Head Start this year is to 
build on the program's many strengths, identify the problems it 
faces, and enable administrators, teachers, parents, and 
families to deal with them. We welcome the opportunity today to 
hear more about Head Start's oversight, and discuss ideas to 
improve its management.
    Our goal is to ensure that Head Start's services reach as 
many children and families as possible. The need for Head Start 
is still miles from being met. Today it serves fewer than 6 out 
of every 10 eligible children and only 3 out of every hundred 
infants and toddlers through its sister program, Early Head 
Start.
    President Bush's budget proposes to increase funds for Head 
Start by only $45 million, and would set-aside those funds for 
nine States willing to turn Head Start into a block grant. 
Block grants are the wrong direction for Head Start. They don't 
guarantee medical check-ups, healthy meals, dental visits, or 
medical screenings for children. They don't guarantee support 
to families and parents. Lower quality and lower standards are 
not the way to strengthen Head Start. We need to invest more--
not less--in the families and children the program serves.
    We can do more to see that every dollar invested in Head 
Start delivers the highest quality of services in the most 
effective manner. New resources for Head Start should be 
accompanied by effective steps to genuinely improve the 
program.
    We welcome the testimony today from the GAO and other 
witnesses on the oversight and management of Head Start, 
especially on ways to measure risks and potential problems more 
accurately and adopt more effective strategies to meet them. We 
know what works in Head Start and it's time to put these 
practices into place.
    For years, Head Start has had one of the most comprehensive 
monitoring systems in early childhood education. Over the 
years, it has been revised and improved, based on Head Start's 
actual services. Annual auditing, reporting, and financial 
accounting are critical for the quality of the programs and the 
most effective level of services.
    It's clear that the number of Head Start programs with 
serious problems is small--15 percent or fewer of all programs, 
by the Department's own calculation. But clearly, when any 
problem is identified in a program--no matter what the issue--
it must receive appropriate attention and followup from those 
responsible at the Federal level.
    Thanks to the bipartisan cooperation of committee members 
in the last Congress, we made good progress in working together 
on these improvements. We did more to enhance the skills and 
qualifications of Head Start teachers, upgraded the educational 
components of the program, and increased coordination at the 
State level with other programs.
    I look forward to continuing our bipartisan work this year. 
We are fortunate to begin that work today by hearing from 
witnesses who will share their expertise and insights from the 
Federal and local levels. Thank you all for joining us this 
morning.
    Senator Alexander. I am going to give brief introductions 
so we can get right on with it, and I will ask these two 
witnesses if they will limit their remarks to 10 minutes or 
summarize their comments and focus on them. We have your 
statements. We appreciate them. That will give the Senators 
more chance to ask questions.
    Marnie Shaul is Director of the Education, Workforce, and 
Income Security Team at the U.S. Government Accountability 
Office. So she is responsible for the studies GAO undertakes 
for the Congress on early childhood programs. Thank you very 
much, Ms. Shaul, for being here.
    And Dr. Wade Horn, who we will ask to go first, was named 
Assistant Secretary for Children and Families in the 
Administration for Children and Families of the U.S. Department 
of Health and Human Services. That is a very long title, but he 
has had a long background in social services and is ultimately 
responsible for the administration of this Federal Government 
for about $6.8 billion of money that goes to Head Start 
grantees around our country.
    So, Mr. Horn, why don't we start with you, then with Ms. 
Shaul on the report, and then we will go to questions.

 STATEMENTS OF WADE F. HORN, ASSISTANT SECRETARY FOR CHILDREN 
AND FAMILIES, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES; AND 
  MARNIE S. SHAUL, DIRECTOR, EDUCATION, WORKFORCE, AND INCOME 
     SECURITY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    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 on Head Start. The President is committed 
to strengthening Head Start, has made accountability a guiding 
principle of our work, and I can assure you that we take GAO's 
findings very seriously.
    For nearly 2 years now, 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. It is a 
nearly $7 billion program, serving more than 900,000 low-income 
children and families through a network of over 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, 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 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 to ensure that every Head Start program is 
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 oversight of local Head Start 
programs. First, we have established for the first time minimum 
qualifications for all reviewers in the area that they are 
reviewing. Establishing these minimum qualifications helps 
ensure that all individuals on a monitoring review team have 
the knowledge, skills, and experience necessary to be part of a 
quality review.
    Second, in December of last year and February of this year, 
we provided intensive multiday 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 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.
    Fourth, we have begun conducting indepth analyses of all 
triennial and first-year monitoring reports to improve report 
quality, comprehensiveness, accuracy, and uniformity within and 
across the regions.
    Fifth, ACF substantially revised the fiscal checklist 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 that the program review instrument 
for systems monitoring or PRISM review teams to closely examine 
several specific areas that were not as carefully or 
consistently considered in the past, including transportation 
services, condition and Federal interest in 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 ensuring the delivery of high-quality services 
to children and families in their programs.
    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 ACF 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 this goal. Thank you very much.
    Senator Alexander. Thank you, Dr. Horn.
    [The prepared statement of Mr. Horn follows:]

               Prepared Statement of Wade F. Horn, Ph.D.

    Chairman Alexander 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 2 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 nationwide. 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, onsite monitoring of local programs. Under 
the Head Start Act, each grantee must be monitored at the end of the 
1st year of operation and intensely at least once every 3 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 1 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 onsite 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 indepth analyses of all triennial 
and 1st 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.
    1. (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.
    2. 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.
    3. 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 analyzing 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 onsite 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.
    4. (a) ACF should implement a quality assurance system to assure 
onsite 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.
    5. 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.
    6. 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 makeup 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 2nd 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.

    
    
         Response to Questions of Senator Enzi by Wade F. Horn

    Question 1. The Senate bill to reauthorize the Head Start program 
from the 108th Congress included provisions that would require Head 
Start grantees to recompete for those funds periodically. One of the 
GAO's recommendations to the Department is to provide the current 
grantee with a certain degree of priority over other grantees. How 
should Congress help support these efforts to ensure high quality 
grantees are able to continue serving children, while still weeding out 
less effective or troubled programs?
    Answer 1. We would welcome the opportunity to work with you on 
language that would enhance the Secretary's ability to periodically 
recompete Head Start grants and replace poorly performing grantees. In 
conjunction with this type of change, statutory change also is needed 
to allow the Secretary to defund a deficient grantee which has not 
corrected its deficiencies within the required timeframe. Currently, 
section 646(a) of the Head Start Act precludes terminating funding of a 
grantee pending appeal and a full and fair hearing, which often can 
take several months and, sometimes more than a year.

    Question 2. In the GAO report where the comments from the 
Department of Health and Human Services are included, the Department 
suggests that it will take action or continue to take action to address 
many of the concerns raised in the report. Since the report suggests 
that the Department may have an interest in having Congress clarify our 
intent in statute, are there specific recommendations you can make that 
will help Congress support your activities to improve the program?
    Answer 2. My testimony provided a number of suggested changes to 
Head Start that we would like to explore with the Congress. 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. Specifically, we 
would like Congress to include in the reauthorization of the Head Start 
Act a provision that will allow interested States to include Head Start 
in their preschool plans. Under the proposal, States are offered the 
opportunity to coordinate preschool programs with Head Start programs 
in exchange for meeting certain accountability requirements. 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 under section 641A of the Head Start Act in the makeup 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. As I indicated earlier, the current 
statute requires a protracted hearing process before we can defund 
deficient grantees. I would be pleased to work with the committee to 
provide details on each of these proposals.

    Question 3. According to the GAO report, more than half of the 
grantees identified as having financial management problems also 
demonstrated recurring financial management issues. Even so, the 
Department of Health and Human Services has not taken action to deny 
grant funding to these programs. What can Congress do to ensure that 
appropriate action is taken against grantees with severe and recurring 
financial management problems?
    Answer 3. One problem is that in the past ACF Regional Offices 
often accepted grantee letters of compliance stating that non-
compliances were corrected. Although there are legitimate situations in 
which a letter and corresponding documentation may be sufficient to 
determine that a non-compliance has been corrected, there also are many 
situations that should be verified through an onsite visit. In fiscal 
year 2005, ACF is establishing a new policy that reduces the acceptance 
of letters of compliance and greatly increases the use of onsite 
followup reviews to verify compliance. This will help reduce the number 
of repeat findings by assuring, onsite, that all problems have indeed 
been corrected.
    In addition, ACF is developing a ``comprehensive risk assessment'' 
of the Head Start program. This approach 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. We also will determine the 
relative risks associated with each of these factors and develop a 
rating system that tell us when a grantee is at risk of heading down a 
path to larger fiscal or programmatic problems. This type of system 
will enable us to identify at risk grantees while there is still time 
to work with them and implement appropriate change.
    Finally, Congressional action is needed to allow the Secretary to 
defund a deficient grantee which has not corrected deficiencies within 
the required timeframe. Currently, section 646(a) of the Head Start Act 
precludes terminating funding of a grantee pending appeal and a full 
and fair hearing.

    Question 4. The GAO report and your testimony today identifies 
self-certification by grantees that they have resolved audit or site-
visit findings as one of the reasons the Administration on Children and 
Families is having difficulty preventing recurring financial or other 
types of mismanagement. What role do you see self-certification playing 
to resolve concerns in the future, and what can Congress do to support 
efforts by the Administration to ensure programs are independently 
reviewed?
    Answer 4. As I discussed in my response to your previous question, 
ACF is making significant changes in the way we determine if grantees 
have corrected identified areas of non-compliance. In the past, we have 
often accepted grantee self-certification and to do onsite visits to 
verify compliance only on occasion. We are fundamentally revising this 
approach to require that verification of compliance be determined 
through an onsite visit and only, for a relatively small number of 
cases, will we accept grantee self-certification.

    Question 5. The issue of recompetition appears to be the only area 
where the Administration on Children and Families suggests they need 
Congress to be involved in addressing the suggestions within the 
report. Are there additional ways that Congress can improve the 
accountability process within the Head Start program, and is there a 
role for Congress to play in the other recommendations made by GAO?
    Answer 5. The issue of recompetition and a related issue of the 
grantee appeal process are key areas in need of statutory change to 
assist us in improving the quality of Head Start programs. 
Specifically, with respect to the grantee appeal process, we would like 
to work with the Congress to change provisions in the Head Start Act 
which allow Head Start grantees which have been judged to be poorly 
performing and, consequently, have been sent letters terminating their 
grant to continue receiving their full Head Start grant during the 
appeals process. Most Head Start appeals take several months, some have 
lasted for well over a year and the grantee which already has been 
determined to be deficient is allowed, during this time, to continue to 
operate its failing Head Start program. We would like to change this 
and give Head Start grantees the same appeal rights as all other HHS 
grantees whose funding is discontinued as soon as a determination is 
made that performance is deficient. Interim grantees would be put in 
place to ensure that services are not interrupted.

        Response to Questions of Senator Ensign by Wade F. Horn

    Question 1. The GAO report stated that many individuals hired as 
PRISM (Program Review Instrument for Systems Monitoring) reviewers do 
not have their references checked prior to hiring. This has led to 
widespread outcome differences across regions during triennial PRISM 
reviews at Head Start Centers. I am very concerned about this trend and 
the part it may have played in allowing grantees to continue receiving 
Federal funds despite poor accountability and fiscal controls. As part 
of the implementation of minimum requirements for these reviewers will 
references and qualifications be checked prior to hiring? What benefits 
do you see of having private sector individuals complete these PRISM 
reviews?
    Answer 1. ACF will, within the next few weeks, begin a policy of 
checking reviewer references and qualifications. We appreciate that it 
is important to assure that all Head Start reviewers have the skills 
and background needed to properly perform their job of monitoring the 
performance of Head Start programs. This effort, coupled with 
additional efforts we are currently undertaking--such as implementing a 
quality assurance system in which a selected number of programs will be 
re-reviewed within a few months of their initial onsite review, 
establishing a rating system for reviewers and providing all reviewers 
indepth training--will help address the problem of Regional 
inconsistency. We also are working closely with our Regional Offices to 
assure that all Federal Team Leaders fully understand the importance of 
doing a professional and objective assessment of each Head Start 
program, and we will explore cross regional review efforts, where 
appropriate, as another way to enhance regional consistency.
    We will assure that all fiscal reviewers are competent to do the 
job for which they have been hired. These reviewers now have to meet, 
for the first time, minimum qualifications and have been provided 
indepth training on how to conduct a fiscal review. Fiscal reviewers 
are, in fiscal year 2005, using a new fiscal checklist which will, we 
believe, go a long way to identifying Head Start grantees with fiscal 
problems early on when there is still time to correct the problem.
    We think we must continue to take advantage of using reviewers who 
are not Federal employees. There are many individuals available to the 
Head Start review system who are expert in their fields. We would not 
be able to even approach this level of expertise using only the staff 
in the Federal Government who work on Head Start. Most Federal Head 
Start staff are generalists who, while certainly knowledgeable about 
Head Start and early childhood education, do not have the kinds of 
specific skills, experiences or training that our private reviewers 
have. We have, for example, dentists, certified public accountants, 
early childhood experts and many other well qualified contractors who 
are vital to a comprehensive, quality monitoring system.
    In addition, it would be extremely helpful if the committee would 
consider a statutory change providing flexibility in the makeup of 
monitoring teams so that we can always send out the most qualified 
individual for the job. Currently, section 641A(c)(2) requires that 
monitoring reviews are performed and supervised by departmental 
employees knowledgeable about Head Start. We would like this changed to 
provide the Secretary the flexibility to ensure that reviewers are 
experts in the fields they are responsible for reviewing.

    Question 2. In the case of the Economic Opportunity Board (EOB) in 
Las Vegas, the entity was required to submit annual audits. It is 
unclear to me how these audits were used and whether onsite review 
teams relied on the audit data. In fact, the GAO report stated that 
many regional staff do not effectively use the audit data provided, 
often because of the lag in reporting the audit outcomes. Over the 
course of 2 years EOB had two different onsite reviews, first the 
triennial PRISM review, and second, a follow up review by the Head 
Start Bureau to determine if the deficiencies found in the PRISM review 
had been resolved. What happens with this audit data once it is 
reported to the Head Start Bureau and the Administration for Children 
and Families? As part of the comprehensive risk assessment, is the 
Bureau going to put in place policies that utilize these audits in 
determining whether a grantee is a financial risk, or having financial 
difficulties?
    Answer 2. ACF currently reviews all grantee audits which have 
findings in order to help inform us about the state of our grantees' 
fiscal health.
    OMB Circular A-133 requires non-Federal entities that expend 
$500,000 or more in a year in Federal awards to have an audit conducted 
for that year. Audits are to be submitted to the Federal Audit 
Clearinghouse which reviews the audit reports to assure they meet the 
A-133 requirements. HHS Audits are then sent to the HHS Office of the 
Inspector General (OIG), where they are reviewed and those with any 
findings are assigned to the appropriate HHS office. For audits with 
findings in the Head Start program, the audit is sent to the 
responsible ACF regional office for resolution. ACF makes a 
determination as to how to resolve the audit findings and so informs 
the grantee. Findings with monetary values typically require the 
grantee to pay back funds. Non-monetary findings require the grantee to 
correct its problems to the satisfaction of the ACF office.
    Onsite review teams look at many documents in assessing grantee 
performance, including the annual audit. While no one document 
necessarily provides all the information needed to fully understand the 
fiscal state of any Head Start program, using many documents, plus 
using the newly revised fiscal checklist, should provide reviewers with 
a full understanding of the financial situation of a Head Start 
grantee. ACF will certainly include audit findings as part of its risk 
assessment strategy to look holistically at the programmatic and fiscal 
health of all Head Start programs.

    Question 3. I was pleased to see in your testimony that the Head 
Start Bureau and the Administration on Children and Families are 
working on a comprehensive risk assessment that will help identify 
grantees that have potential fiscal or programmatic problems. However, 
it did greatly concern me to read in GAO's report that 838 grantees, or 
76 percent of those reviewed using the PRISM system in 2000 were out of 
compliance with one or more financial management standards. It 
disturbed me even more that 440 or 53 percent of those same grantees 
were cited again for fiscal or programmatic problems in the subsequent 
2003 review. About half of those grantees were found to have two or 
more areas of concern. It is my hope that in creating the comprehensive 
risk assessment that the Head Start Bureau and ACF will seriously look 
at this problem and come up with viable answers. Do you anticipate that 
the new risk assessment will help in reducing the number of repeat 
offenders? Also, do you believe that this new assessment will help 
grantees find long-term solutions to fiscal management concerns?
    Answer 3. ACF anticipates that risk assessment will help in 
reducing the number of ``repeat offenders'' in the future. ACF already 
has identified the risk factors that we are moving quickly to address. 
For example, in the past, Regional Offices often accepted grantee 
letters of compliance stating that non-compliances were corrected. 
Although there are legitimate situations in which a letter and 
corresponding documentation may be sufficient for a Regional Office to 
determine that non-compliance has been corrected, there are also many 
situations that should be verified through an onsite visit. In fiscal 
year 2005, ACF is establishing new policy that reduces the acceptance 
of letters of compliance and greatly increases the use of onsite 
followup reviews to verify compliance. This will help reduce the number 
of repeat findings by assuring, onsite, that all problems have indeed 
been corrected.
    ACF believes that some repeat non-compliances occur because the 
original review team did not establish and report the connection 
between a non-compliance and the underlying governance and/or 
management systems that should have detected and corrected the non-
compliance as part of their ongoing local oversight responsibilities. 
Through training, policy development, and quality assurance ACF will 
insist on review teams addressing these interrelationships and making 
them known to grantees in monitoring reports so that grantee corrective 
action is completed in a way that ensures that changes are long-lasting 
and sustainable in fiscal as well as programmatic areas.

    Senator Alexander. Ms. Shaul? I guess I should say Dr. 
Shaul. Excuse me.
    Ms. Shaul. Mr. Chairman and members, thank you for the 
opportunity to present the findings of our review on the 
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 about 40 years, and as both you and Dr. 
Horn point out, it is the largest Federal investment in early 
childhood education and care. So it is important that this 
program is managed so that it ensures that children receive the 
services that they do deserve.
    With me today are members of the GAO team that worked on 
this report.
    My remarks today focus on three issues. First, risk 
assessment, the extent to which the Administration for Children 
and Families, which is the part of HHS that is responsible for 
Head Start, connects the information it has to make an 
assessment of financial risks. Second, information quality, the 
quality of information in ACF's processes. And third, 
correcting financial problems, the effectiveness of ACF's 
approaches in ensuring 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. We brought a chart over 
here which shows a number of individual processes that ACF has 
for looking at the program. But instead of integrating this 
information, which is collected by several ACF offices, and I 
am pointing out on this chart--we have got these colored in 
some of the different offices in ACF that have some 
responsibility for the Head Start program--instead of 
integrating that information, Head Start sometimes relies on ad 
hoc responses, for example, in response to calls made to 
regional offices about grantee problems or to questions from 
Congress. This type of response is useful, but it cannot 
substitute for a comprehensive approach to determining where 
Head Start faces the greatest risks.
    Second, regarding information quality, we found problems 
with ACF's processes, and again, I am referring to these 
processes in the chart over here. For example, different onsite 
teams have had inconsistent findings about the status of the 
same grantee. Let me give you 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 ensuring that grantees 
correct their financial problems. 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 followup visit, more than half of these grantees still 
were not compliant with financial 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's regional offices did not use common criteria 
to determine deficiency. In our review of 20 grantee files that 
contain similar financial problems, and where we would have 
expected to see 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 have relinquished their 
grants or were terminated.
    As Dr. Horn pointed out, 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 says that it must give 
current grantees priority at renewal time, which effectively 
eliminates its opportunity to replace grantees then. 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 that 
my full statement be placed in the record and I would be 
pleased to answer questions. Thank you very much.
    Senator Alexander. Thank you, Dr. Shaul, and thanks to you 
and your team for your work at the request of Congress. It is a 
great help.
    [The prepared statement of Ms. Shaul follows:]

                 Prepared Statement of Marnie S. Shaul

    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). 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. The reauthorization 
of Head Start presents an opportunity to address some of the management 
challenges facing the Head Start program.
    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.
    My testimony today will focus on how well ACF manages the 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 longstanding 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 2001-02 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.
    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 10 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.

  Table 1: ACF's Oversight Processes for Monitoring Grantees' Financial
                               Management
------------------------------------------------------------------------
                                                          Purpose and
       Monitoring process         Required frequency      description
------------------------------------------------------------------------
onsite review (PRISM)...........  Triennial.........  To determine
                                                       whether a grantee
                                                       meets standards
                                                       established in
                                                       the Head Start
                                                       Act, including
                                                       those related to
                                                       financial
                                                       management, teams
                                                       of Federal staff
                                                       and contracted
                                                       consultants
                                                       conduct a
                                                       weeklong, onsite
                                                       review using a
                                                       structured guide
                                                       known as the
                                                       Program Review
                                                       Instrument for
                                                       Systems
                                                       Monitoring
                                                       (PRISM).
Survey of grantees (PIR)........  Annual............  To provide
                                                       management
                                                       information to
                                                       the Bureau and
                                                       policymakers, all
                                                       programs
                                                       (grantees and
                                                       delegates) are
                                                       mandated by
                                                       Federal
                                                       regulations to
                                                       submit
                                                       performance data,
                                                       including key
                                                       financial
                                                       measures such as
                                                       enrollment and
                                                       teacher salary
                                                       ranges. Grantees
                                                       report these data
                                                       through a survey
                                                       known as the
                                                       Program
                                                       Information
                                                       Report (PIR).
Review of financial reports.....  Semiannual........  To account for use
                                                       of grant funds,
                                                       all grantees must
                                                       submit semiannual
                                                       reports on the
                                                       status and use of
                                                       their Federal
                                                       funds.
Review of audits................  Annual............  To ensure that
                                                       Federal grantees'
                                                       financial
                                                       statements are
                                                       accurate, that
                                                       they have
                                                       adequate controls
                                                       in place to
                                                       protect Federal
                                                       funds, and that
                                                       they are in
                                                       compliance with
                                                       key regulations,
                                                       under the Single
                                                       Audit Act all
                                                       grantees must
                                                       obtain an annual
                                                       audit of their
                                                       financial
                                                       statements and
                                                       compliance with
                                                       selected Federal
                                                       laws and
                                                       regulations.
Day-to-day contacts with          Variable..........  To assist Head
 grantees.                                             Start programs,
                                                       program
                                                       specialists in
                                                       ACF regional
                                                       offices respond
                                                       to grantee
                                                       queries and other
                                                       calls from
                                                       grantee staff,
                                                       parents, and
                                                       others with an
                                                       interest in their
                                                       local Head Start
                                                       programs.
Renewal application.............  Annual............  To provide
                                                       information to
                                                       support
                                                       determination of
                                                       the grantee's
                                                       future funding
                                                       level, grantees
                                                       are required to
                                                       submit renewal
                                                       applications each
                                                       year to the ACF
                                                       regional office.
------------------------------------------------------------------------
Source: GAO analysis.

     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).
    In our review of ACF's management of the Head Start program, we 
noted a number of ongoing 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--onsite reviews, annual grantee 
surveys, and analyses of financial reports and audits--have flaws that 
limit the value of the information collected. The onsite 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 onsite 
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 onsite reviews. For 
example, comparisons of simultaneous onsite 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 onsite reviews to systematically identify 
grantees with financial management weaknesses depends on some assurance 
that the onsite 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 onsite 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 onsite reviews from 2000-03 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 onsite 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.
---------------------------------------------------------------------------
    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.
    When grantee problems are identified through onsite 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 onsite 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 two cases, ACF 
returned to review the grantees and found that they had not corrected 
their problems. It was not clear from our file review how ACF 
prioritized these two grantees for followup, 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 followup. 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 onsite 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 onsite 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 onsite 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 onsite 
reviews and for finding grantees deficient or not, and
        Implement a quality assurance process to ensure that the 
framework for conducting onsite 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.

                 GAO CONTACT AND STAFF ACKNOWLEDGMENTS

    For more information regarding this testimony, please call Marnie 
S. Shaul at (202) 512-7215. Individuals making key contributions to 
this testimony include Betty Ward-Zukerman, Bill J. Keller, Mark Ward, 
and Neal Gottlieb of our Education, Workforce, and Income Security 
Team; Kim Brooks, Diane Morris, and Gabrielle Fagan of our Financial 
Management and Assurance Team; Curtis Groves of our Applied Research 
and Methodology Team; and Richard Burkard and James Rebbe of our 
General Counsel.

           Response to Questions of Senator Alexander by GAO

    Question 1. According to the report, more than half of the grantees 
identified as having financial management problems also demonstrated 
recurring financial management issues. Even so, the Department of 
Health and Human Services has not taken action to deny grant funding to 
these programs. What can Congress do to ensure that appropriate action 
is taken against grantees with severe and recurring financial 
management problems?
    Answer 1. While only about 24 percent of the grantees reviewed in 
2000 passed their reviews without any findings of non-compliance with 
financial management standards, nearly half--about 47 percent--of those 
with problems passed their next review with no financial management 
problems.
    The Head Start Act requires HHS in awarding new Head Start grants 
to give priority to current Head Start grantees. We are aware that this 
provision is designed to ensure the continuity of high quality programs 
and avoid unnecessary and disruptive changes in grantees that serve a 
particular community. However, HHS may deny priority to a grantee if it 
determines that the grantee fails to meet financial management or 
performance standards. In such a situation, HHS may, as we suggested, 
choose to conduct a competition which could ultimately result in a new 
grantee being selected and the current grantee being terminated. The 
Congress may wish to consider amending the current law by providing for 
alternative termination procedures and timeframes to minimize 
disruption under these circumstances. Congress may also wish to more 
explicitly specify the circumstances under which a grantee could 
maintain its priority status and the level of failure to meet financial 
management or performance standards that would be necessary for a 
grantee to be denied priority status.

    Question 2. The Senate bill to reauthorize the Head Start program 
from the 108th Congress included provisions that would require Head 
Start grantees to recompete for those funds periodically. One of the 
GAO's recommendations to the Department is to provide the current 
grantee with a certain degree of priority over other grantees. How 
should Congress help support these efforts to ensure high quality 
grantees are able to continue serving children, while still weeding out 
less effective or troubled programs?
    Answer 2. Our recommendation was based on current law that 
generally provides priority to grantees that operate programs that meet 
financial management and program requirements. Among those grantees 
that were reviewed in 2000, 24 percent met their financial management 
requirements and, of those that did not, 47 percent were able to 
correct any noncompliances before their next review. Clearly, we do not 
want to lose the experience and expertise such providers bring to the 
program. On the other hand, of the grantees reviewed in 2000 that had 
financial management weaknesses, 53 percent continued to have financial 
management problems in subsequent reviews. ACF will need to focus its 
oversight resources on these grantees in order to ensure that such 
programs can succeed; if no improvements are forthcoming, then ACF may 
need to exercise its authority to recompete those grants.
    While we did not address the Senate bill to reauthorize the Head 
Start program, we generally believe that competition on a level playing 
field will result in the consistent selection of high quality grantees 
and that a grantee's past experience can and should be an important 
factor in these selection decisions.
    As noted in our report, if ACF improves the processes it uses to 
collect and analyze data on grantee financial management, ACF will be 
in a stronger position to link funding opportunities to performance. 
Reliable, accurate, and transparent processes are needed in order for 
ACF to be effective in separating stronger grantees from poorly 
performing grantees.

    Question 3. Testimony that will be given later today suggests that 
the data used in the report could be improved by separating grantees 
into categories based on whether or not they had multiple findings, or 
whether the findings were severe or not. Is that data available, and 
how might the GAO report be different if the data were reported in this 
way?
    Answer 3. ACF provided us with its databases summarizing the 
results of its onsite reviews for fiscal years 2000-03. The 2000 
database contained approximately 1,100 records reflecting reviews done 
by ACF in 2000. These records include both grantees and grantees with 
any of their delegates. We have run the analysis for both the entire 
database and for grantees separately and the results are the same: 76 
percent of the grantees had at least one of the three areas with non-
compliance and 53 percent had recurrent problems.
    Of the 76 percent that were out of compliance with at least one 
financial management standard in 2000:
     14 percent were out of compliance with only 1 financial 
management standard,
     32 percent were out of compliance with 2-5 financial 
management standards,
     54 percent were out of compliance with 6 or more financial 
management standards, and
     36 percent were out of compliance with 10 or more 
financial management standards.

    In both 2000 and 2003, the four standards with which grantees were 
most often found out of compliance were:
     The requirement to maintain an effective reporting system 
to generate reports on grantee financial status and program operations 
to advise governing bodies, policy groups, and program staff of program 
progress;
     The requirement that grantees maintain a recordkeeping 
system to provide accurate and timely information regarding children, 
family and staff and assure appropriate confidentiality of this 
information;
     The requirement that the grantee establish procedures 
describing how the governing body and the appropriate policy group will 
implement shared decisionmaking;
     The requirement that each grantee and delegate agency 
establish written procedures for resolving internal disputes between 
the governing body and the policy group.
    In 2000, 13 percent of grantees reviewed were judged deficient 
based on financial management standards. However, in our review we 
found that ACF did not use common criteria to determine deficiency.

    Question 4. The issue of recompetition appears to be the only area 
where the Administration on Children and Families suggests they need 
Congress to be involved in addressing the suggestions within the 
report. Are there additional ways that Congress can improve the 
accountability process within the Head Start program, and is there a 
role for Congress to play in the other recommendations made by GAO?
    Answer 4. All of the recommendations we set forth in our report are 
actions that, we believe, ACF can take without seeking further 
authorities and ACF has indicated that it intends to act on most of 
these recommendations. However, congressional oversight is always 
necessary to ensure that Federal Agencies demonstrate continued 
commitment to improvements. If asked, we are prepared to assist the 
committee to monitor ACF's progress in implementing our 
recommendations.

    Question 5. As we've heard from Assistant Secretary Horn, the 
Administration on Children and Families is committed to strengthening 
the Head Start accountability process. He's outlined a number of recent 
policies that have been put in place, as well as a number of new 
initiatives that will help ensure Head Start program dollars are being 
used most effectively. Do you expect that these activities will be 
sufficient, and are there additional activities you might suggest?
    Answer 5. The steps set forth in Assistant Secretary Horn's 
statement should lay a solid foundation to ensure that ACF can do a 
better job identifying and addressing the program's risks and 
preventing grantee financial management weaknesses. However, continued 
monitoring may be necessary.
    The Congress may wish to ask ACF to conduct additional systematic 
analyses of other types of improper payments in order to provide a 
better estimate of program risks. In Assistant Secretary Horn's 
statement, he expressed support for looking more carefully and 
systematically at the way grantees expend all of their Head Start 
funds. However, he did not indicate that ACF would specifically look at 
other types of improper payments the same way it reviewed compliance 
with the income-eligibility rules in 2004 as we recommended in our 
report that HHS should do so. In February, ACF provided technical 
comments on a draft of our report and noted that audit reports and 
other reviews would be used to identify other possible improper 
payments. However, reliance on these oversight tools will not provide 
ACF with a systematic way to assess risks associated with other types 
of improper payments.

    Question 6. In your testimony you stated that the Head Start 
program is the only program operated by the Department of Health and 
Human Services that allows a grantee to continue grant operation while 
appealing the termination of the grant. Could you determine in your 
review why this is the case? Are there other Federal programs that 
allow this?
    Answer 6. Our work did not cover grant conditions in Federal grant 
programs in other Federal Agencies. We limited the scope of our work to 
the Head Start program specifically and sought supplementary 
information from the HHS' Departmental Appeals Board in order to draw 
comparisons to other programs under its oversight authority.

    Question 7. Also mentioned often in your testimony and in the GAO 
report is that regional staff believe they are overworked and have 
control over too many grants. How pervasive is this problem? Do you 
believe that additional staff at the regional level would help earlier 
detect some of the financial and programmatic problems at the grantee 
level? Or would additional staff simply add to the Federal bureaucracy 
of the program?
    Answer 7. We did not assess the human resource capacity in ACF's 
regional offices. We did report that regional office program 
specialists working with Head Start grantees typically are responsible 
for about 12 grantees. According to the Assistant Secretary for 
Children and Families' testimony before the committee, ACF fully 
supports our recommendation to develop a comprehensive risk assessment 
of the Head Start program. Once completed, ACF should be in a position 
to make more efficient use of its human resources and better target its 
oversight resources to identify financial and program problems at the 
grantee level. Additional training for ACF's existing staff is also an 
area discussed in the report.

    Question 8. It is often stated in the GAO report that ACF rarely 
uses the authority it has to recompete a grant if a grantee has been 
found deficient. The report also states that deficient grantees are 
often given bonus points during renewal, even though ACF is not 
required to give priority to a grantee that has failed to meet program, 
financial management or other requirements established by an agency. Do 
you believe that increased use of this authority would strengthen 
current grantees or would it hurt the continuity of the program?
    Answer 8. We believe that ACF has the authority to deny priority 
status to a grantee that fails to meet program or financial management 
requirements--i.e., deficient grantees--when awarding grants and that 
ACF should use its authority in order to open up the possibility of 
competition for grants to other qualified providers. Denial of priority 
status is a major step that should be taken after carefully considering 
all available options so as to avoid unnecessary and disruptive changes 
in grantees that serve a particular community. However, denial of 
priority status is a step ACF should take if a grantee fails to make 
the necessary changes to effectively manage its program.

    Senator Alexander. And Dr. Horn, thank you. Your comments 
will be placed in the record.
    Each of us will take 5 minutes, and let me begin with a 
more general question. I have some more specific questions, but 
I would like to talk about the theory of management and 
regulation a little bit.
    It seems to me, as we look at how the Federal Government 
funds educational activities, we have got two models. One is a 
Head Start/higher education model, let us say, and one is the K 
through 12 model. Now, what I mean by that is that in higher 
education, we have 5,000 or 6,000 entities and we basically 
give the money to students. It follows them to the entities and 
the entities have great autonomy and we really don't manage--we 
don't try to manage the Vanderbilt University and the 
University of Tennessee or the community college in California 
from Washington. We have accrediting agencies and we have a 
very light touch from Washington and that has helped to produce 
the greatest system of colleges and universities in the world.
    On the other hand, in K through 12, we have a very heavy 
touch. We get in and tell everybody what to do and we tell 
children where they have to go to school and it is a completely 
different model.
    Head Start for 40 years has been more like higher 
education, it seems to me. We have 1,700 different local 
organizations, more or less, to whom the Federal Government 
directly gives money. They have a lot of autonomy in what they 
do. And there are about 20,000 Head Start centers.
    So I am trying to understand, how can we effectively be 
good stewards of that money without having too heavy a 
management touch from Washington on 20,000 different Head Start 
centers which is really impractical? I don't want to see us get 
into a situation, for example, where we have a lot of rules 
from Washington and a lot of local centers going around filling 
out forms and doing small things, and trying to do all the 
regulation from here when, in fact, the model is autonomous 
local agencies with responsibility for results and Federal 
oversight of big financial problems and hopefully some 
measurable outcomes.
    We will hear a little later on the second panel from Mayor 
Wharton of Memphis, who is the mayor of our largest county in 
Tennessee. He found a Head Start center that was a mess. More 
recently, it has been alleged that the people there were 
pilfering from the pension fund as well as other problems. He 
is here today because he was prevented from taking charge and 
solving the problem by the regulatory system that we have.
    So if each of you would help me understand, what would be 
the ideal system here? How can we maintain autonomy for these 
20,000 centers and 1,700 organizations, and allow the people 
working there to focus on the children rather than filling out 
forms? I don't want them to become like the Federal Election 
Commission, where you spend 10 percent of your time and your 
money satisfying lawyers and accountants rather than doing what 
you are supposed to be doing. So can you help me with that 
general observation?
    Dr. Shaul, what is your reaction to that?
    Ms. Shaul. The Head Start program is a unique program with 
a long history of how it is provided. It does have very high 
standards for the kinds of services children are to receive.
    I think part of how to give programs flexibility is to have 
the results-oriented part. Our work was really about the 
financial side, so I am not going to speak much to that, but to 
have the results-oriented part for the children with some local 
autonomy about how they get there.
    But on the financial side, I think it is to do this risk 
assessment, to focus your energy on the most important areas, 
not to have a really long checklist of things that are of equal 
importance but perhaps individually may not be getting to the 
absolute most important things, but to really look at what are 
the key issues that give you risks in the financial area. Is it 
that people aren't paying attention to single audit results or 
what are in them, and those kinds of things. So it is creating 
some focus rather than treating everything as though it is 
equally important.
    Senator Alexander. Dr. Horn?
    Mr. Horn. I believe that one of the great strengths of the 
Head Start program over the years has been the local control. I 
think that is very important for us to preserve, the ability of 
local programs to design their programs to meet the needs of 
their community and that whatever we do, we ought not to unduly 
constrain the ability of local programs to design that program 
to meet those local needs.
    I also want to say that I think that despite our 
acknowledgement of weaknesses in our oversight of local 
programs, I think most local programs do a good job. I think 
that most people who work in Head Start get up every day and 
come to the Head Start program and help to fulfill a very 
important ideal, that no child should be disadvantaged in their 
later education because of the circumstances of their birth. At 
the same time, I think that there are two things that are very 
legitimate for the Federal Government to do, given that this is 
a Federal-to-local grantee administered program.
    First of all, I think it is important for us to be able to 
assure the American taxpayers that their funds are being used 
appropriately and are being used only for the purposes 
authorized by Congress and are being used to the maximum extent 
possible to benefit the well-being of the kids in the local 
programs.
    The second thing is that I think we need to do a better job 
of managing by results and not just intentions, that we ought 
to have a greater focus on whether or not children are, in 
fact, progressing developmentally in their local Head Start 
programs as opposed to simply making sure that programs fill 
out forms accurately.
    So there is a nice balancing act here that we have to 
continue to strive to achieve. Preserve local control, 
recognize most programs are doing a pretty good job, but at the 
same time, do a better job of overseeing the fiscal management 
of the taxpayers' dollars at the local level and also manage 
more by results.
    Senator Alexander. Senator Kennedy?
    Senator Kennedy. Thank you very much. I appreciate your 
answer, and let me say the record ought to show that Marnie 
Shaul was nodding at a good part of what you said on these 
issues.
    I think for those of us who have been strong supporters, 
understand that we want this to be run well, run well, the way 
that you described it, Mr. Horn, and that it is the local kind 
of component so that it is going to take into consideration the 
local needs of children, and they vary extensively, as we all 
know, and also people that are trying to do a job. These are 
challenging jobs that they do and they have got to be equipped 
to be able to meet the financial kind of responsibilities, and 
how you do that in a way that is nonbureaucratic, as the 
chairman has said, but yet requires some skills, some auditing 
skills and some requirements and some training programs, and to 
be able to do that effectively and have the role of the 
regional office.
    We want obviously to have some, I think, addressing of 
these problems of the under-enrollment. I mean, that is not 
good. We want to make sure that these audits are done and done 
right and done well.
    I like the idea of this recompetition of deficient programs 
that we are going to have for those that are deficient. There 
are new kinds of opportunities for children in other places and 
they are going to try to do it. That sends a very powerful 
message to people, too, so people are going to make sure that 
theirs doesn't fall in that kind of level. That is very 
important.
    Just in terms of the training programs, I would like you 
just to talk, and maybe Marnie Shaul could talk a little bit. 
There was a training program at the Institute for Head Start 
Directives on management practices for programs. I would like 
you to comment where that is. Does that reach out? Is the 
program providing the kind of training that it should? Should 
they get more help and assistance, being able to do the job and 
do it right? Are they getting that kind of support? I think we 
ought to know that. Maybe you could tell us, both whether we 
are giving that kind of training from the Head Start program, 
whether we are doing that in the regional and whether we do it 
at the national, do it enough.
    And also, I noticed in the report there were some concerns 
about individual Head Start centers. They told the GAO about 
the issues on staffing and workload and travel that kept them 
from addressing some of the problems that they saw in these 
Head Start centers, or in the regional office. Maybe you could 
comment on that, if you are familiar with that. I mean, what is 
that about?
    So I am interested in how much help and assistance. If we 
want to get it simplified, we want it nonbureaucratic, we want 
accountability. We know that is the way. But, quite frankly, 
the people need help and assistance at the local level and 
regional level. How much assistance are they getting? Should 
they be getting more?
    Mr. Horn. We recently revamped the way that we deliver 
training and technical assistance to local grantees. In the 
past, there has been, in my judgment, too much emphasis on 
training via conferences and too little emphasis training 
onsite. As a psychologist, I know that, unfortunately, the 
research on training suggests that what you are most likely to 
do after you go to a training conference is what you did before 
you went to the training conference, despite the best 
intentions of everybody, both the trainers and those who 
attend. The best way to get actual behavior change is to work 
onsite, hands on, to provide guided practice and mentoring and 
then do a lot of followup to ensure that the changes are being 
maintained.
    And so what we have done within the Training Technical 
Assistance Network is we are shifting to a more local grantee 
focus, where we have specialists in each of the regional 
offices and their job is to work directly with each of the 
local grantees to encourage more of this local training. So if 
there are difficulties with fiscal management, for example, the 
best thing is not to send somebody off to a conference to learn 
about fiscal management. The best thing is to send someone who 
knows something about fiscal management into the local program, 
review the way they are doing things, make suggestions for 
improvement, and then go back a number of times to ensure that 
those changes are being made.
    So I do believe that we have had not as great as success as 
I would like to see in training local programs to ensure they 
have the skills to be able to manage these programs most 
effectively. Again, I hasten to add, that is not to say that 
most programs are not being managed effectively. I think they 
are. But the problem is that we have to ensure that all the 
programs are being managed effectively and we think this more 
locally-based T&TA structure will go a long way to helping do 
that.
    Senator Kennedy. Could you make a comment?
    Ms. Shaul. One of the things that we saw, Senator, when we 
saw grantees with problems, when we reviewed the files, was 
that oftentimes that was because they had difficulty in 
maintaining a financial officer who knew how to do things. And 
so I think the kind of onsite training that you are talking 
about is important.
    I want to add, though, that I think the training of the 
PRISM reviewers, too, to be sure that they are able to see 
things on the ground when they get there is another training 
element that I believe is important and that you are working 
toward, as well.
    Senator Kennedy. Thank you, Mr. Chairman.
    Senator Alexander. Thank you, Senator Kennedy.
    Senator Enzi?
    The Chairman. Thank you, Mr. Chairman.
    Assistant Secretary Horn, I appreciate the effort on the 
report and your testimony. In your testimony, you listed five 
areas that you believe Congress and the administration should 
work together on the reauthorization. Could you comment briefly 
on each of those five areas and give us a little bit more 
detail for the record, briefly summarize what you think 
Congress should do?
    Mr. Horn. Let me turn to that page to remind me of those 
five specifically.
    Well, the first recommendation is that we believe that 
Congress should find ways to increase the involvement of States 
in the administration of the Head Start program, particularly 
when it comes to coordination of Head Start with pre-K programs 
and their child care programs directed at preschool children. 
As has been pointed out at this hearing, back in 1965, there 
were no States that had a state-run and state-financed pre-K 
program. Today, there are 40 States or more that do so.
    Does it really make sense to have two systems grow up 
parallel with each other and not well coordinated? I think the 
answer is no and the President thinks the answer is no. He 
thinks that we ought to find ways to better coordinate the 
State pre-K efforts with Head Start because when they are not 
coordinated well, it creates inefficiencies and can lead to 
under-enrollment problems.
    Second, we think that Congress should provide the Secretary 
with greater discretion in the use of Head Start dollars, 
particularly related to the current 2 percent set-aside when it 
comes to training and technical assistance. As you know, the 
current statute says that 2 percent of the total budget shall 
be reserved for training and technical assistance, and for some 
years, that may be a reasonable amount. It is a lot of money. 
It is about $160, $165 million. But for other years, it may be 
too much, and why hamstring the Secretary's discretion when in 
any given year, we may make the choice to add more children to 
the program as opposed to spending an exact prescribed amount 
of money on training and technical assistance.
    We would also like greater flexibility in the makeup of the 
monitoring teams that we send out on the PRISM reviews. Right 
now, the statute--and let me read the section that I am talking 
about here. The statute, 641(c)(2), Conduct of Reviews, and 
subpart (c) under that says that the makeup of the reviewers 
shall be conducted by review teams that shall include 
individuals who are knowledgeable about the Head Start programs 
and to the maximum extent practicable the diverse needs of 
eligible children.
    Well, we think the most important thing for the reviewers 
is not necessarily--I mean, they should know something about 
Head Start, but they should really know something about the 
area that they are reviewing. There is no requirement in the 
statute, for example, for fiscal reviewers to be experts in 
fiscal management issues. If you have--under the statute, the 
current statute, have a choice between someone who is expert in 
fiscal management and somebody who knows a lot about Head 
Start, the statute compels us to pick the latter, not the 
former. Does that really make sense? It seems to me that what 
we ought to do is change the statute to make it clear that what 
we want are reviewers with the expertise in the areas that they 
are reviewing.
    The last thing I would say, because I know I am talking a 
lot here, has to do with our ability to replace deficient 
grantees. There are two relevant statutes in this regard. The 
first is Section 641(a)(2), and what this requires is that the 
Secretary shall give priority to the designation of Head Start 
agencies to any local public or private nonprofit or for-profit 
agency which is receiving funds under any Head Start program. 
Now, there are some exceptions in terms of if they are not 
meeting certain performance standards.
    But if you cross-reference that with Section 646(a)(3)--I 
am giving these numbers for the record. I don't imagine 
everyone is following those numbers. But what it says is, it 
says that under this objective, a financial system shall not be 
terminated or reduced and an application for funding shall not 
be denied, and a suspension for financial assistance shall not 
be continued for longer than 30 days unless the recipient has 
been afforded reasonable notice and opportunity for full and 
fair hearing.
    This is kind of unique when it comes to Federal grants 
management. In most cases, when we find a grantee is doing 
something deficient, we can move in and defund them and then we 
sort it out through the appeals process. The current statute 
does not allow us to do that in the Head Start program, and as 
you know, appeals can last a long time. At a minimum--at a 
minimum, and that is assuming that the hearing at the appeals 
level is only 1 day--it requires 240 days for us to go through 
the process, and sometimes the appeals hearing can last months, 
if not, in some cases, years.
    That section prevents us from moving in and defunding that 
grantee. So we would appreciate some greater flexibility under 
the statute to actually protect the taxpayers' money during the 
appeals process.
    The Chairman. As an accountant, I love this detail stuff--
[laughter]--and I have some followups on it, but I will have to 
do that and request those in writing. I have some additional 
questions that I will do for you, too, but they are all 
detailed like that, but they are very important information for 
us to get in order for us to be able to do a good job drafting 
legislation, so I will appreciate your answers to them.
    My time has expired. Thank you.
    Senator Alexander. Senator Murray?
    Senator Murray. Thank you, Mr. Chairman.
    Let me follow up on that, because there seems to be some 
discrepancy between what GAO says you have authority on and 
what you think you have authority on. Ms. Shaul, can you tell 
us what authority you think ACF has to recompete these 
programs?
    Ms. Shaul. Based on our review, we believe that the agency 
has the ability to say that a grantee does not have priority 
status at renewal time if it is not meeting the program or 
financial standards.
    Senator Murray. So you believe they have the authority to 
do that right now, but----
    Ms. Shaul. That was our conclusion.
    Senator Murray [continuing]. I believe that Mr. Horn just 
said he doesn't think they do.
    Ms. Shaul. That was a disagreement. Mr. Horn--Dr. Horn--
agreed with all of the recommendations in our report, 
basically, with the exception of this area where there seems to 
be some lack of clarity and where I think both of us have 
suggested that it would be helpful for the Congress to make 
clearer the circumstances.
    Senator Murray. Well, let me follow up on Senator Kennedy's 
question, as well. Mr. Horn, you talked about what can be done 
to help these programs that do have some fiscal management 
problems, going in and working with the programs and following 
up. How much of that is done today?
    Mr. Horn. Not as much as we should. That is the honest 
answer.
    Senator Murray. And what is precluding that from happening? 
I mean, it is one thing to say to a program, you have got 
fiscal management problems and then to go back the next year 
and say, you have got fiscal management problems, and another 
thing to say, it is our responsibility to give you the training 
and assistance you need to be able to meet the goals we have 
set out for you. So what is the obstacle from making it happen?
    Mr. Horn. First of all, you have to know there is a problem 
before you can solve it, and so what we have been trying to do 
over the last 12 months is to implement systems so that we can 
identify fiscal problems before they become huge problems. One 
of the ways we have done that is by putting into our PRISM 
reviews a series of red flags when it comes to fiscal issues 
that would require that we go back and do a more indepth look 
at what is going on at the grantee level.
    For example, one of the questions is, has the grantee 
borrowed money within the last 12 months? That could show some 
difficulty with cash management. Have vendor payments been 
late? Again, it could be issues with cash management. Has the 
amount of cash reported on the balance sheet decreased over the 
past 3 years, and so forth? These are red flags that were put 
into the PRISM reviews that we require----
    Senator Murray. Are those in place now so that----
    Mr. Horn [continuing]. They are in place now, yes.
    Senator Murray. OK.
    Mr. Horn. The other thing that just recently has come to my 
attention, and we will do a better job of this, is taking a 
look at the financial statements that come to us on an every 6 
months basis from local grantees to ensure that if we see 
substantial drawdowns or changes in drawdowns over the course 
of time, that we go back to the grantee and talk to them about 
that, because the goal--a goal of reviews, in my view, should 
never be just ``gotcha.'' What they should be is they should be 
reviews that are designed to help to improve the program.
    Senator Murray. OK. So in my understanding, are you saying 
since you know these challenges are there for a few of the 
programs, you are now reviewing that more consistently and you 
are flagging that and sending out to these programs some help--
--
    Mr. Horn. Exactly.
    Senator Murray [continuing]. Is that not correct?
    Mr. Horn. Yes.
    Senator Murray. So I would assume that a year from now, 2 
years from now, you would come back with better numbers from 
some of our programs?
    Mr. Horn. I would hope that would be true, yes.
    Senator Murray. Without any changes, correct? Do you have 
the ability to do it now, I assume?
    Mr. Horn. Well, again, there are certain things we don't 
have, in our judgment, the ability to do, such as, for example, 
we do have a disagreement with the GAO as to whether or not we 
are able to recompete grants when we find a grantee deficient 
during the appeals process, which I said can last in some cases 
years. And again, this is unique in the Federal management of 
grants----
    Senator Murray. Right. But I understand, also, that one of 
the problems is ways to identify accurately those programs that 
do have problems so that we are not taking corrective action on 
programs arbitrarily.
    Mr. Horn [continuing]. Well, we should never take 
corrective action on programs arbitrarily, but if I understand 
your point, I agree with it, which is this. The goal of reviews 
is not to defund grantees.
    Senator Murray. Right.
    Mr. Horn. The goal of reviews is to try to have the maximum 
number of quality programs as possible. And so I don't think 
that we should be judged--the Federal Government should be 
judged by if we defunded 50 grantees this year and only 25 last 
year, we did twice as good.
    Senator Murray. OK. But one of the things, if we are going 
to change authority and give you more authority to recompete 
programs, we had better make sure there are really accurate 
identifiers in place so that it is not discriminately targeting 
programs, but it is based on accurate information which we 
don't currently have.
    Mr. Horn. I am always in favor of accurate information.
    Senator Murray. Ms. Shaul, would you agree?
    Ms. Shaul. Yes. One of our recommendations was, in fact, 
that how grantees are determined to be deficient be very clear, 
not only from the standpoint of the agency, but so that also 
grantees know exactly what those circumstances are, that the 
standards be clear and transparent to everyone.
    Senator Murray. And I am hearing you say that is not 
currently the case?
    Ms. Shaul. When we reviewed files in the field, we looked 
at 20 files where we had grantees that looked in the file 
review to have similar numbers of financial problems, similar 
types of financial problems, similar program governance 
problems, and yet half of the grantees were determined 
deficient and half were not. We would have expected pretty 
similar outcomes, whatever the outcome was, for all 20 of those 
files. So I would say that there is not a--has not been a 
consistent standard.
    Mr. Horn. And if I may add one thing, Senator, we are 
concerned about inconsistencies across the regions, and that is 
one of the reasons why this year we are implementing for the 
first time a system of re-reviews of a sample of reviews that 
have been done over the course of the year by specially-trained 
reviewers who go in and basically will act as calibrators 
across the various regions to make sure that each of them are 
reviewing the same information and coming to the same--you 
know, in the same way and coming to the same conclusion. So we 
share the concern about the issue and we are taking steps to 
try to deal with it.
    Senator Murray. I think that is really important, because 
Head Start programs out there are struggling with a lot of 
different challenges--kids who are coming really needy to their 
programs, parents that are struggling, all kinds of things, and 
they want to do a good job. But if we have different ways of 
evaluating different programs, then we are just going to send 
these programs of Head Start into nightmares of trying to do 
all kinds of forms rather than doing what we want them to do, 
which is to make sure kids get the best possible start.
    Thank you, Mr. Chairman.
    Senator Alexander. Thank you, Senator Murray.
    Our ranking member of our subcommittee, Senator Dodd?
    Senator Dodd. Thank you very much, Mr. Chairman. I 
apologize to my colleagues and others for arriving a bit late. 
I have two new young ones, and one with a high fever this 
morning. I am learning the joys of parenthood at this stage, so 
I apologize for arriving late.
    Senator Alexander. We call those field hearings.
    Senator Dodd. Yes. [Laughter.] You know, having written a 
lot of these laws as a single person, I am beginning to 
appreciate the effect of my efforts here now.
    [Laughter.]
    Well, thank you very much, and thank you, Mr. Chairman, for 
doing this. This is very worthwhile and tremendously helpful 
and important and I want to thank GAO for their work. I am 
always impressed with the work that the Government 
Accountability Office does, and certainly it can be very 
helpful in all of this, too.
    I would ask, Mr. Chairman, unanimous consent that some 
opening comments be included in the record.
    Senator Alexander. Without objection.
    [The prepared statement of Senator Dodd follows:]

                   Opening Statement of Senator Dodd

    Mr. Chairman, I'm pleased to join you in holding this 
hearing today. I know we share a common goal that our Nation's 
poorest children have access to a high quality preschool 
program.
    Of course, Head Start is much more than a preschool 
program, offering comprehensive services to 900,000 children 
throughout the country. I often refer to Head Start as a 
stealth health program because without Head Start, hundreds of 
thousands of poor children each year would not receive the 
health care, dental care, vision screening, and screenings for 
potential developmental delays that the program provides to 
help poor children enter school ready to succeed.
    As we all know, the children that participate in Head Start 
enter with great deficiencies compared to their counterparts 
who are better off financially. That's why it is so important 
that Head Start programs remain the gold standard for early 
learning and preschool.
    The Government Accountability Office has found some 
troubling breakdowns within the monitoring system for 
overseeing Head Start programs. I welcome GAO's recommendations 
and look forward to working with GAO and the Administration for 
Children and Families to ensure that both Head Start programs 
and the monitoring system designed to help guide and oversee 
their operation work as intended.
    Head Start has a more comprehensive, extensive monitoring 
system than any other preschool or pre-kindergarten program in 
the Nation. That's by design, a system that has evolved over 
the years as the science about early learning has grown matched 
only by our desire to ensure that each Head Start program meets 
the quality performance standards, which have evolved over the 
years as well.
    When I look at the number of monitoring tools available 
within the Head Start oversight process, it is clear that the 
monitoring tools are in place. But, somehow, both at the Head 
Start grantee level and within HHS, the tools have become just 
another check-off item in the process.
    I suspect that local Board governance and oversight is a 
problem for grantees with serious or chronic problems. It seems 
to me that with the extensive monitoring system that applies to 
Head Start, potentially stronger local Boards could pick up on 
problems in the self-assessment, the monthly financials, and 
the annual audits.
    I know that the PRISM review is comprehensive, it has 
nearly 1,800 program requirements, including 573 requirements 
in fiscal management alone. And, it speaks to the quality of 
the monitoring system that such a comprehensive review occurs 
onsite for every Head Start grantee every 3 years. But, that 
review represents the back-end of the monitoring system in my 
view.
    We need to figure out a way to strengthen Board training, 
management, oversight, and systems review on the front-end as 
the first step in program governance and program oversight. 
This is a role for HHS, not one where HHS should say ``go find 
your own training.'' The local Boards need to be actively 
engaged in each program and knowledgeable about program rules.
    No Head Start agency begins the day asking what program 
violations can they commit today? I am hopeful that this 
hearing will offer many recommendations to further strengthen 
Head Start as we begin drafting reauthorization legislation in 
the weeks ahead. We need to reform the monitoring system so 
that it serves as a management tool, not a check-off list of 
items that is ignored upon completion. If we invest in 
appropriate training on the front-end, including management and 
systems training, we will have stronger programs and better 
outcomes for children.
    Senator Dodd. Let me, if I can, I would like to focus, if I 
could, on what I consider to be sort of the absence of some 
real management tools, if I can, Mr. Horn, with the kind of 
review we are looking at here. Let me sort of state, if I can, 
my concerns here about this approach.
    I don't think that boards of these Head Start centers begin 
the day by saying to themselves, ``I wonder what violations we 
can commit today?'' I work off the presumption, and I assume 
you do, that these are very good, very talented, committed 
people who believe that Head Start makes a significant 
contribution, and it seems to me it is in our common interest, 
then, to try and do what we can to strengthen these boards.
    My concern basically comes down to this, and that is 
whether or not we are putting enough emphasis on the front end 
of this process rather than the back-end of the process, 
whether or not we are providing these boards with the kind of 
management skills and tools that they can conduct the kind of 
reviews of how these centers are being run rather than sort of 
waiting at the end of the process and going in with an 1,800--
look at the size of this thing. I mean, it is a huge thing, 
these PRISMs, that go in and go back and review this. It seems 
to me you can--catching the violation.
    If we are truly interested in making Head Start work, then 
we ought to be doing what we can to see to it that these 
institutions have the tools necessary. Why don't we put up, if 
you want, that chart there on these management tools. I know 
you are familiar with all of these, but it seems to me it is 
important to look at it.
    So I begin on that presumption. I presume you do, as well--
--
    Mr. Horn. Yes.
    Senator Dodd [continuing]. That these people are not out to 
somehow violate the law, but rather want to do a good job and 
the question is, can HHS provide them with the necessary tools 
to make it possible for them to do a better job so we minimize 
the very things that the Government Accountability Office has 
encountered in their review, and that is really the essence of 
my question for you, I suppose.
    When I look at the number of tools available within the 
Head Start oversight process, it is clear that the monitoring 
tools are in place, as you see them here. These are the 
management tools, and those are pretty good tools, and pretty 
comprehensive, because I was reading them last night, going 
back over them. They are rather significant. But somehow, both 
at the Head Start grantee level and within the HHS, the tools 
have become just another checkoff system in the process. Has 
the annual self-assessment been done? Check. Have the monthly 
financial reports been given to the board? Check. Did the 
financial audit get completed? Check.
    What I would like to know from Dr. Shaul at GAO is how many 
of the violations are related to the operation of the local 
grantee boards, for instance? We can get to the answer in a 
minute, if you would. I expect that board governance and 
oversight is a problem for grantees with serious or chronic 
problems.
    And for Dr. Horn, while I appreciate your testimony today 
about the reforms that you are making, frankly, when I looked 
at your Head Start management initiative, I didn't see anything 
in it with regard to the board training, board management, 
board oversight, and systems review by the boards. So it seems 
to me that with the extensive monitoring system that applies to 
Head Start, potentially stronger boards could pick up on the 
problems in the self-assessment, the monthly financials and the 
annual audits, rather than just going and saying they have been 
done and checking them off, but rather really getting into 
them.
    The review, in my opinion, represents--what we are looking 
at here, the PRISM review, while it is comprehensive, but that 
is the review, in my opinion, that represents the back end of 
the monitoring system. What steps could HHS take to provide 
management assistance and program oversight assistance to the 
boards themselves is what I am getting at here.
    So that is really my question to both of you. Why don't we 
begin with you, Dr. Shaul, and how many of these problems did 
you encounter as I raised here related to the operation of the 
local grantee boards?
    Ms. Shaul. Senator, when we looked at the kinds of issues 
that came up most often with grantees, they turned out to be 
areas of program governance, just what you suggested that they 
might be. It is things like not having systems in place so that 
the agency would generate the kinds of reports on finances and 
program results that would allow the board to have--to know 
what is going on at the agency on a regular basis and be able 
to provide guidance to the executive director and the staff. 
The Federal Government can do the systems approach, but the 
day-to-day oversight of the agency really is the board's 
responsibility, and so they are very, very key.
    And some of our other examples of problems that we saw in 
grantees that we mentioned in our report, what we sometimes saw 
was poor communication between the board and the executive 
director, the board not knowing what was going on with the 
audits, and so on. So in those situations, it happens that 
grantees can get off track when the board doesn't have the 
information it needs to provide the oversight. So you have 
identified a very key element.
    Senator Dodd. And to you, Mr. Horn, then why don't we do 
this? If we are truly interested--if you begin with the 
assumption that people aren't getting up in the morning on 
these things and saying, ``I wonder what violations we can 
commit today,'' but rather, ``How can we do a better job?'' 
wouldn't it make some sense to really provide that kind of 
assistance?
    And I know you are providing some money already. I am 
anticipating a response to this will be some of the resources 
you are putting into that. But as I looked over the amount of 
money, a one-time $3,000 grant to boards, presumably to 
purchase their own training somewhere, or that you once 
provided satellite video to boards, it seems to me we might 
want to revisit a sampling of Head Start grantees to do an 
additional PRISM, which may or may not be necessary, but it may 
fit into this process a little more in a more worthwhile way. 
What is your answer to that?
    Mr. Horn. Well, first of all, may I say for the record I do 
agree with you that people do not get up every day and wonder 
what kind of violations----
    Senator Dodd. I should have acknowledged your head was 
nodding affirmatively when I said that.
    Mr. Horn [continuing]. And governance of any nonprofit is 
really critical to the effective functioning of that 
organization, and that is particularly true in Head Start 
because there is a unique piece of the governance structure in 
Head Start, which is the Parent Policy Council. One of the 
things that I think is so extraordinary about Head Start and I 
think is very, very well worth preserving no matter what 
reforms we do is the idea that parents themselves should be in 
the majority status when it comes to the Parent Policy Council 
and that that is a way to ensure that parents have input into 
the program and that the program reflects the needs and desires 
of the parents of the children being served.
    The problem, however, or maybe not a problem, but the 
challenge is that means that we are dealing with probably some 
governance boards which are not very sophisticated initially 
and that puts a special obligation, it seems to me, on the 
Federal managers to ensure that we build in that sophistication 
and that expertise in the Parent Policy Councils, in 
particular. That is why last year we did dedicate about $6.7 
million in supplemental funding to local programs to do 
training in terms of governance.
    It is also one of the reasons why we have restructured our 
Training and Technical Assistance System to be more local 
program based and focused as opposed to focused to a large 
extent on conference training. And what we are doing is with 
the Training and Technical Assistance Specialists assigned to 
each of the local programs is we are trying to figure out what 
are their most compelling needs. And I agree with you that one 
of the most compelling needs of many programs may be better 
training in a governance system.
    So we hope--this is a new system that is really focused on 
local programs and getting the training done at the local 
program level as opposed to a distance learning. But I am 
hopeful that that will help us strengthen the governance 
structures within local programs.
    Senator Dodd. That is a good point, but actually, we need 
to do both. I mean, I think the boards and the policy councils, 
it is not an exclusivity here. They both need the help. And it 
seems to me particularly, since the boards themselves are the 
governing body, in a sense, that to the extent we can take some 
of these scarce resources, and they are scarce and I appreciate 
that. You don't have unlimited resources. But rather than, as I 
mentioned earlier, sort of revisiting a sampling of these Head 
Starts, to take those resources and put them into training, so 
if you are the new board, here is what your obligations are, 
here is what your responsibilities are, and early on, we get 
them involved.
    I am assuming, again, a good board wants to know what is 
going on and wants to be able to make the kind of corrections, 
be an effective board, my point being it seems to me that would 
make more sense than coming in after the fact, as we have done 
here and as Dr. Shaul, I think, agrees with me in a sense from 
your comments there, to really put the emphasis on the front 
end, at least as much on the front end as we do on the back end 
of the process. Do you agree with that?
    Mr. Horn. Yes, I do. Look, it is always better to prevent a 
problem from beginning in the first place than trying to cure a 
problem. It is cheaper for everybody and the kids are going to 
be far better off when problems are prevented from happening.
    I think we need to do both. We need to do a better job of 
up-front training and we also need to do a better job of our 
oversight of the way that the programs are actually being 
implemented. But in terms of poor training, I think that is a 
very critical issue and I take your recommendation quite 
seriously.
    Senator Dodd. Maybe, Mr. Chairman, we might take a look at 
that at some point, maybe just even have a witness or two come 
and give us some ideas of how we might strengthen that aspect 
of this.
    But again, I thank GAO and I thank the chairman for doing 
this today. Thank you very much for coming.
    Senator Alexander. Those are very constructive suggestions 
and this has been very helpful testimony, Dr. Horn and Dr. 
Shaul. Thank you for your work.
    Senator Alexander. We will now invite the second panel to 
come to the table. While they are doing that, I will introduce 
them, to save a little time. As we discussed with them before, 
we have your statements and either have read or will read them. 
We will ask each of the witnesses, who will be introduced in 
just a moment, if you could summarize your comments in 5 
minutes or less, and that will give the Senators--we will try 
to restrain the Senators to 5 minutes, as well--that will give 
us a chance to ask more questions and to have a better, more 
indepth discussion.
    I will introduce two of the witnesses and then I am going 
to ask Senator Dodd if he would like to introduce Olivia 
Golden. Would you like to do that? And then Senator Roberts is 
coming over to introduce Dr. Caccamo.
    The two witnesses that I will introduce: first, it gives me 
great pleasure to present A.C. Wharton, who is the Mayor of 
Shelby County. Shelby County surrounds Memphis. It is our 
largest county in Tennessee and A.C. Wharton is one of our most 
distinguished public servants. He has been the Shelby County 
Public Defender. He has been Chairman of the Tennessee Higher 
Education Commission.
    He is a law professor, a pioneer in a great many areas, and 
he is invited here today because he has been for the last 3 
years tackling problems with the Head Start grantee in Shelby 
County. And while we have been hearing in this first set of 
panels the difficulties in managing and controlling and, if 
necessary, defunding a grantee as between Washington and the 
grantee, I hope we will hear from Mayor Wharton and from others 
on this panel what it is like to try to take control of a local 
agency that is having problems.
    I would like to also introduce Yvonne Atkinson Gates, who 
is a County Commissioner from Clark County in Nevada. Senator 
Ensign strongly recommended that we hear your story, Ms. Gates. 
She attended Clark County High School, graduated from the 
University of Nevada-Las Vegas in 1978 with a Bachelor's degree 
in political science and journalism, and has a distinguished 
career locally. We welcome you and thank you for coming such a 
long distance to let us hear from you.
    Senator Roberts is here. Senator Roberts, would you like to 
make an introduction, and then we will go to Senator Dodd.
    Senator Roberts. I certainly would, Mr. Chairman. I 
apologize for the lateness of my arrival, but we were 
discussing some intelligence matters with some of our allies in 
the Intelligence Committee, and it was a good meeting. I don't 
want to alarm anybody.
    [Laughter.]
    Mr. Chairman and members of the committee, I am honored to 
introduce Dr. Jim Caccamo, a true expert and an advocate in the 
field of early learning. I am pleased that the doctor is here 
with us today to discuss the past and current financial 
management of a Kansas City Head Start grantee and his thoughts 
on what steps could have been taken to avoid the financial 
problems which are becoming more egregious and a big press item 
out in our part of the world and I think through all the Head 
Start world and pose a great challenge to us.
    The doctor is a respected leader in the greater Kansas City 
area for his work and his dedication to early childhood issues. 
He has an extensive background in early childhood, ranging from 
his work as an Assistant Superintendent for Special Programs 
for the Independence, Missouri School District to his work as 
the Director of the Metropolitan Council on Early Learning. The 
council is a highly respected organization which specializes in 
metropolitan planning for early learning for the bi-state 
Kansas City region. The vision of the council is that all 
children will enter school prepared for success. They work with 
an extensive network of community partners from the public and 
private sector to develop and implement an early learning 
system that supports families and prepares children for success 
in school.
    It is also important to note the good doctor's past work as 
Executive Director for the Partnership with Children. That 
partnership is a Kansas City-based organization whose mission 
is to work on a collaborative basis to protect and improve the 
quality of life for children and youth through research, 
through education, through mobilization and capacity building. 
The partnership is now known for its annual report cards, which 
actually measure the status of children in a variety of areas 
in the five-county metropolitan area.
    The doctor also spearheaded the Number One Question 
campaign, an effort the organization launched back in 1997. The 
Number One Question campaign encourages everyone in their 
communities to ask the question, is it good for the children? 
So before making any decision, ask the question that should be 
asked. Now, this is a cause which I proudly championed here in 
the Senate a few years ago with the National Association of 
Child Care Resource and Referral Agencies.
    As you can gather from his credentials, it is no secret 
that the doctor is a dedicated and passionate leader in early 
childhood issues. I am confident his testimony will provide 
great insight into the Head Start financial situation, which is 
very egregious in Kansas City, and also provide positive steps 
we need to take to ensure a similar situation does not occur in 
the future.
    Doctor, I thank you for taking the time out of your busy 
schedule to be here today. I look forward to your testimony, 
and I thank my colleagues for their patience, and thank you, 
Mr. Chairman.
    Senator Alexander. Thank you, Senator Roberts.
    Senator Dodd, would you like to introduce Dr. Golden, and 
then we will go down the line.
    Senator Dodd. I would be honored to introduce Dr. Golden. 
Truth in advertising, I am a fan of Dr. Golden's. This is a 
remarkable individual, Mr. Chairman, who has made, really 
dedicated a substantial part of her professional life to these 
very, very issues and today is the Senior Fellow at the Urban 
Institute.
    Many of my colleagues may recall actually working with Dr. 
Golden in the past. She has served recently, prior to the Urban 
Institute, as the Director of Child and Family Services 
Agencies here in the District of Columbia, leading that agency 
out of receivership, I might add, into a solvent condition, and 
I congratulate you on that.
    And then Dr. Golden, previous to that, served in two 
Presidentially-appointed positions within the U.S. Department 
of Health and Human Services, first as the Commissioner for 
Children, Youth, and Families, and then as the Assistant 
Secretary for Children and Families. In those roles, she was 
responsible for over 60 Federal programs, including Head Start; 
Early Head Start, which was created during her tenure to extend 
benefits to Head Start to babies and toddlers age 0 to 3 
Federal child care programs, which I was deeply involved in 
with Senator Hatch in drafting initial legislation in that 
area; child abuse and neglect programs, including the 
implementation of the Adoption and Safe Families Act of 1997.
    She was also Director of Programs and Policy for the 
Children's Defense Fund, a lecturer at the Kennedy School at 
Harvard, and Budget Director for the Executive Office of Human 
Services in the Commonwealth of Massachusetts. She is an author 
on poor children and welfare reform, just an extensive 
background, very, very knowledgeable and tremendously helpful 
to have as a part of any discussion about Head Start.
    I didn't get a chance at the opening of my comments just to 
State what I said. Head Start is--obviously, every program 
deserves to be looked at and we need to address issues that can 
emerge from it, but I am a strong believer that Head Start has 
made such a tremendous positive difference in people's lives, 
and we take some parochial pride in that the author of Head 
Start, of course, is a Connecticut resident and a long-time 
friend of mine who advocated the program of Head Start back, I 
guess about 40 years ago now. So we take particular interest in 
the program and how we can sustain it and strengthen it in the 
coming years.
    So again, I thank the chairman for having this hearing, and 
Dr. Golden, it is truly an honor to see you once again and have 
you before us.
    Senator Alexander. Now that we have introduced the members 
of the panel, we welcome Senator Clinton, as well.
    Why don't we go on to the 5 minutes of summarized testimony 
and then we Senators will plunge in with some questions. Why 
don't we start with Jim Caccamo and go right down the line with 
the Mayor, then Yvonne Gates, then Olivia Golden.

 STATEMENTS OF JIM CACCAMO, DIRECTOR, METROPOLITAN COUNCIL ON 
 EARLY LEARNING, KANSAS CITY, MO; A.C. WHARTON, MAYOR, SHELBY 
 COUNTY, MEMPHIS, TN; YVONNE GATES, DIRECTOR FOR MARKETING AND 
    COMMUNITY RELATIONS, CENTER FOR ACADEMIC ENRICHMENT AND 
   OUTREACH, CLARK COUNTY, NV; AND OLIVIA A. GOLDEN, SENIOR 
                    FELLOW, URBAN INSTITUTE

    Mr. Caccamo. Thank you, Mr. Chairman and members of the 
committee, for allowing me to be here today to testify.
    One of the early adopters of the Number One Question 
campaign in Kansas City was KCMC Head Start. Using the Number 
One Question, each and every program was reviewed and, where 
necessary, changes were made so that they could say, yes, Head 
Start is good for the children. For over 3 decades, Head Start 
has delivered high-quality comprehensive services to children 
and families. The KCMC executive director devoted his 27-year 
career to developing innovative approaches to educating young 
children and supporting their families. Through his leadership, 
KCMC reaches over 2,700 children and their families annually.
    His strong sense of importance for early childhood helped 
engage the private philanthropic community to make sizeable 
contributions toward continued program improvement in both Head 
Start, but in the broader early childhood area within our 
community. It is ironic that such a solid agency 
programmatically experienced such financial and governance 
mismanagement.
    The financial and governance mismanagement problems began 
to surface 4 years ago. The controller and chief financial 
officer was engaged in a kickback scheme and in February 2002 
plead guilty to bribery and money laundering. He is currently 
serving a 51-month sentence in prison and was ordered to pay 
$800,000 in restitution.
    In March of 2002, Kansas City, Missouri School District 
began trying to collect payments of approximately $1.5 million 
for Head Start services they provided. These serious problems 
should have caused intensive scrutiny and supervision of all 
financial and governance practices at KCMC, but clearly, 
whatever interventions occurred were not sufficient.
    In October 2003, some 18 months after learning of the 
controller's abuse, the Kansas City Star reported on the KCMC 
board's paying the executive director an excessive salary. 
Revelations about fiscal mismanagement continued to unfold, and 
in February 2004, the executive director resigned. And in 
December of 2004, the agency gave up the Head Start grant. It 
is estimated that KCMC is as much as $3 million in debt.
    The financial mismanagement, excessive salary, employee 
kickback problems could have been avoided with tighter 
oversight on the part of the board and the executive director. 
Since last winter, the Community Development Institute in 
Denver, Colorado has run the Head Start program. The programs 
for children and families served by the agency remain strong, 
without noticeable interruption in service, throughout this 
period.
    There is strong community interest in seeing that Head 
Start continues to be a flagship program. Our best community 
organizations have come together to talk about responding to 
the RFP when it is published. Our community will respond with a 
strong application that reflects our commitment to quality, 
comprehensive services to children and families and to ensuring 
strong fiscal management. Fiscal and governance problems that 
occurred at KCMC have been identified, and local experts are 
responding to the RFP, are trying to put together careful 
attention to ensuring these issues do not happen again.
    All of us who care deeply about supporting low-income 
children and their families during these early years must 
ensure that the Head Start monitoring process helps programs 
provide the best possible support to children and families.
    I have participated in Head Start reviews over my career 
and found them to be rigorous and thorough. In fact, it seems 
to me that Head Start reviews are more complex and rigorous 
than many of the other program reviews with which I have taken 
part. Clearly, these reviews are necessary and the GAO's 
recommendations seem appropriate.
    In KCMC's case, rules and regulations were in place, but we 
must be committed to having all financial aspects closely 
attended to by the board and the director. I believe that there 
are some additional steps that could be taken, and let me 
outline them for you.
    First, board membership should include community members 
from the delegate agency and school board members from one or 
more of the contracting school districts.
    Two, increased involvement in board program and fiscal 
accountability with closer review in monitoring the budget, 
ensuring that payments are made in a timely manner, and that 
each budget year is closed out using only current fiscal year 
money.
    Three, insistence that delegates and subcontractors notify 
the executive director and treasurer of the board in writing 
when payment for services is more than 60 days in arrears, and 
notification of the executive director, treasurer of the board, 
and regional ACF office if those payments are 90 days in 
arrears.
    Internal controls on financial transactions, such as 
procurement, accounts payable, payroll, expense reimbursement, 
must be strengthened and fiscal review must attest that the 
agency is following all of ACF's financial regulations.
    And last, staff development for senior management and the 
board of directors should be required, including a review of 
ACF's budget practices, budget planning, and ethical 
leadership.
    Ensuring that financial and governance problems don't occur 
is a matter of ethics, integrity, accountability, and active 
engagement of the board of directors.
    In conclusion, I want to thank the committee for their 
focus on helping to improve one of our national treasures. For 
almost 40 years, Head Start has served our Nation's low-income 
children and their families to help ensure their physical and 
emotional health and to prepare these children to be successful 
in school. Head Start has made a difference to millions of our 
children. Strict rules and regulations are necessary, but 
communities must also assure that their local Head Start 
programs are doing the best possible job fiscally and in 
governance. In Kansas City, we believe that Head Start is good 
for the children. Thank you.
    [The prepared statement of Mr. Caccamo follows:]

             Prepared Statement of James M. Caccamo, Ph.D.

    Mr. Chairman and members of the committee, thank you for allowing 
me the opportunity to testify this morning.

Introduction

    For the past 34 years I have been actively working to improve the 
status of children in Metropolitan Kansas City. My name is Jim Caccamo 
and I am the director of the Mid America Regional Council's 
Metropolitan Council on Early Learning.
    For our young children and their families, the words of Rogers and 
Hammerstein's song from the musical Oklahoma, couldn't be truer, 
``everything's up to date in Kansas City.'' Over the past dozen years, 
our community has worked hard to improve early learning with the vision 
that every child will begin school ready to learn. Civic, business, and 
philanthropic leaders have formed partnerships with many agencies and 
organizations to promote the well-being of our children.
    Eight years ago, Kansas City began a campaign to help focus our 
community's attention to the well being of our children. We asked every 
citizen to use what we called Kansas City's #1 Question--Is it good for 
the children?--as a guide for making decisions at home, in schools, in 
the workplace, in places of worship, and in their neighborhoods.
    One of the early adopters of the #1 Question Campaign was KCMC--
Head Start. Using the #1 Question as a guide, each and every program 
was reviewed and, where necessary, changes were made so that they could 
answer ``yes''--it is good for the children.
    For over 3 decades Head Start has delivered high quality 
comprehensive services. KCMC's Executive Director devoted his 27-year 
career to the enhancement and development of innovative approaches to 
educating our young children and supporting their families. Through his 
leadership KCMC reaches over 2,700 children and their families 
annually. His strong sense of the importance of early childhood helped 
engage our private philanthropic community to make sizable 
contributions toward continued program improvement in both Head Start 
and the broader early childhood community. Understanding the value of 
Head Start's comprehensive approach to children and families, there has 
been and continues to be extremely strong community support for Head 
Start in Kansas City.
    KCMC delivered outstanding care to young children. The agency 
stressed quality in every programmatic aspect of its Head Start program 
and was a leader in ensuring that its sites moved toward accreditation 
by the National Association for the Education of Young Children.
    It is so ironic that such a solid agency programmatically, still 
experienced financial and governance mismanagement.

What Happened in Kansas City?

    The financial and governance problems at KCMC began to surface 4 
years ago, in April 2001. The Controller/Chief Financial Officer was 
engaged in a kickback scheme and in February of 2002, pled guilty to 
bribery and money laundering. He was sentenced to 51 months in prison 
and ordered to pay over $800,000.
    In March of 2002, the Kansas City Missouri School District began 
trying to collect the delinquent payments of approximately 1\1/2\ 
milliom dollars from KCMC for operating Head Start programs.
    These serious problems should have caused significant and intensive 
scrutiny and supervision of all financial and governance practices at 
KCMC.
    But clearly, whatever interventions occurred were not sufficient. 
In October 2003, some 18 months after learning of the comptroller's 
abuses, the Kansas City Star reported that the KCMC Board was paying 
the Executive Director an excessive salary. Revelations about fiscal 
mismanagement continued to unfold. In February of 2004, KCMC's 
Executive Director resigned. In December of 2004, the agency gave up 
the Head Start grant. It is estimated that KCMC is as much as 3 million 
dollars in debt.
    The fiscal mismanagement, excessive salaries, and the employee 
kickback problems could have been avoided with tighter oversight on the 
part of the Executive Director and Board.
    Since last winter, the Community Development Institute in Denver 
Colorado has been running the Head Start program. During all of this, 
the programs and services for children and families served by the 
agency continued to be strong without a noticeable interruption in 
services.
    There is a strong community interest in seeing that Head Start 
continues to be one of our ``flagship'' programs. The very best of our 
community organizations have come together to talk about responding to 
the RFP that will soon be published. Our community will respond to the 
RFP with a strong application that reflects our commitment to quality 
comprehensive services for children and their families and to ensuring 
strong fiscal management.
    The financial and governance problems that occurred at KCMC have 
been identified and local experts who are working on responding to the 
RFP are bringing particular attention to ensuring that these issues do 
not reoccur.
    Kansas City has been driven by a strong vision that all children 
will start kindergarten ready to learn. We are committed to continue to 
provide the strong early education experiences that our children need.

What Steps Could Have Been Taken That Could Have Avoided the Situation 
                    in the First Place?

    All of us who care so deeply about supporting low-income children 
and their families during these early years must come together to 
ensure that the Head Start monitoring process helps programs to provide 
the best possible support for children and families.
    The Government Accountability Office's recommendations to improve 
program oversight and financial management seem appropriate.
    I have participated in Head Start reviews over my career and found 
them to be rigorous and thorough. In fact, it seems to me that the Head 
Start reviews are more complex and rigorous than any other program 
reviews with which I am familiar. Clearly, these reviews are necessary 
and as I said the GAO's recommendations seem appropriate.
    In KCMC's case, rules and regulations were in place. But, we must 
be committed to having all financial aspects closely attended to by the 
Board and the Executive Director.
    I believe that there are additional steps that can be taken at the 
community level. These include but are not limited to:
    1. Increased Board membership to include community members such as 
a member from a delegate agency and a school board member from one of 
the contracting school districts.
    2. Increased involvement of the Board in program and fiscal 
accountability with closer review and monitoring of the budget, 
ensuring that payments are made in a timely manner, and ensuring that 
each budget year is closed out so that the current fiscal year's bills 
are not paid with next fiscal year's dollars.
    3. Insistence that delegates and subcontractors notify the 
executive director and treasurer of the Board, in writing, when payment 
for services is more than 60 days in arrears. They should also be 
instructed to notify the executive director, treasurer of the Board, 
the regional office of ACF if payments are over 90 days in arrears. 
These red flags, if they occur, should be enough for ACF fiscal 
oversight to become very engaged.
    4. Internal controls on financial transactions such as procurement, 
accounts payable, payroll, and expense reimbursement, must be 
strengthened and fiscal review must attest to the agency's following 
all of the financial regulations of ACF.
    5. Staff development for the senior management and the Board of 
Directors should be required. This development should include a review 
of ACF's budget practices, budget planning, and ethical leadership.
    Ensuring that financial and governance problems don't occur is a 
matter of ethics, integrity, accountability, and active engagement of 
the Board of directors.

Conclusion

    In conclusion, I want to thank the committee for their focus on 
helping to improve one of our national treasures. For almost 40 years, 
Head Start has served our Nation's low-income children and their 
families to help ensure their physical and emotional health and to 
prepare the children to be successful in school. Head Start has made a 
difference for millions of children.
    Please keep in mind that strict rules and regulations are necessary 
but communities must also be committed to ensuring that their local 
Head Start programs are doing the best possible job for children and 
families.
    In Kansas City, we believe that Head Start is good for the 
children. Thank you.

    Senator Alexander. Thank you, Dr. Caccamo, and Mayor 
Wharton, welcome.
    Mayor Wharton. Thank you and good morning, Mr. Chairman. I 
can only echo what Dr. Caccamo said with respect to the Kansas 
City program. I noted in my written testimony that while the 
GAO's report is well, as far as it goes, as indicated by the 
previous testimony, I think it would be presented in a vacuum 
if we did not go all the way down to the delegate agency level. 
The problem is not so much how we detect wrongdoing but what we 
are able to do about it once we detect it.
    I agree fully with the premise of Senator Dodd's question 
to the effect that, or observation to the effect that most 
employees do not get up in the morning thinking of what kind of 
wrongdoing they can engage in. Out of the 800 or so employees 
we have down in the Shelby County Head Start program, I know 
that that is correct.
    However, there were a few members on the board who did, in 
my opinion, wake up each morning and see what kind of excesses 
they could become involved in. And even when we detected those 
wrongful activities, the hoops we had to go through were 
unbelievable. Now, I have a legal services background. I have 
worked with boards. I am a former public defender. I have no 
problem with the shared governance concept.
    I do believe, however, that there are certain areas in 
which we need a bit more direct control at the grantee level, 
specifically the business side--buying gasoline, buying trucks, 
signing contracts. I, quite frankly, don't believe most of the 
parents I come in contact with wish to serve on a policy 
council to deal with where you buy your gasoline or where you 
buy your insurance. They want to make sure that during the day, 
when their little children are there, that there is a caring, 
educated, trained caregiver, teacher, whatever, aide, whatever, 
who is going to make sure that that child is progressing as he 
or she should and that any deficiencies that child might 
exhibit at an early age are corrected in the most effective 
manner.
    If you will look at the areas in which most of the excesses 
took place, they were not in how well the children were 
actually cared for. They were in these other areas of business. 
One thing I would suggest is that we remove from that area of 
shared governance those strictly financial and business 
decisions. Yes, parents ought to have a direct say-so in what 
their child is taught, what challenges they face to encourage 
them to be ready to learn when they reach our schools. If we 
could simply pull back a part from the parental involvement 
aspect of it, those are the business decisions. That is where 
they get into trouble.
    But even again, after we identified the deficiencies there, 
it is virtually impossible to do anything. The delegate 
agencies have a right to continue operating, and guess what, 
they have a right to continue spending the money to fight you 
as you try to straighten it out. I believe in due process. But 
in these instances where we have programs being literally 
imploded in front of us, we lose so much respect for the public 
that it is impossible for us to regain the credit that the 
community has to give us if Head Start is going to continue to 
be an effective program.
    Mr. Chairman, I heard you mention the higher education 
model in which Congress does not get involved in the day-to-day 
affairs of a given college or university. That is correct. But 
you do, from the standpoint of whether a student is making 
satisfactory educational progress. If they are not, then that 
college or university has clear and direct authority to say, 
you will not come back next September, or if you come back, you 
will not get financial assistance, and it is precise. It is 
exact. We need to be certain with respect to Head Start.
    I, again, emphasize the fact that this is not to assail 
shared governance. But keep in mind, in many instances, you 
have your policy committee, you have your policy council, and 
in my case, I had a county commission. So while I was able to 
tangibly see what was going wrong, it took me almost a year to 
correct it. And even then, I had to take a page out of your 
book, Mr. Chairman, when you were sworn in as Governor down 
there when your predecessor was selling the pardons down there 
and you had to go in early. I didn't know whether I had the 
authority to do it or not. I basically pulled the financial 
operation physically and literally into my Finance Office. I 
had the books there. That is the only way we straightened it 
out now. Had I had to go through the policy council, that never 
would have happened.
    One final observation, if I might. In many of our 
communities where the Head Start programs operate, a Head Start 
program is political gold. You build a lot of influence. If you 
take a powerful Head Start policy council, they can go head-to-
head with an elected official any day. Again, please do not 
confuse any of this with the idea or the suggestion that 
parents should not be involved. But in certain areas that are 
ripe for political interference, that are ripe for graft and 
the other things that we are seeing, I think we need to pull 
those out of the shared governance model and hold us all 
strictly accountable for those financial and business matters.
    I will be more than glad to respond to any questions later 
on.
    [The prepared statement of Mayor Wharton follows:]

         Prepared Statement of the Honorable A.C. Wharton, Jr.

    During my campaign for the office of Mayor of Shelby County, 
Tennessee, I stressed that my first three priorities would be 
education, education, and education. By that statement I was attempting 
to project that a sound education was the bedrock of any progress 
Shelby County might make. By ``education'' I include preschool 
exposures that will ensure all children are ready to learn upon 
entering kindergarten, and that their families receive the appropriate 
assistance in developing support tools to help their children thrive.
    Based upon that philosophy, upon taking office in September 2002, I 
first set my intentions to make an inquiry about Shelby County's 
troubled Head Start operation. News reports often chronicled the 
difficulties within Shelby County's largest delegate agency, an entity 
known as Head Start, Inc.
    Shelby County Government was and is the official grantee for all 
Head Start funds. As Mayor of Shelby County, I believed I had full 
authority over the program, and I knew I had a moral obligation to 
ensure that it was adequately serving the children and families in my 
community.
    Drawing on my background as a trial lawyer, I poured through, 
literally, many feet of files, investigative reports, and assessments. 
Additionally, many concerned citizens beat a path to my door to tell me 
of the troubles of Head Start. After thoroughly researching the issues 
and listening to the concerns of citizens, I had a clear vision of the 
immediate and long-term changes required for us to have a successful, 
stable and well managed Head Start program in Shelby County.
    What I could not anticipate was how the political realities, 
created largely by the obstructive albeit well-intentioned governance 
structure for Head Start, would prevent swift and decisive action.
    I was elected with 62 percent of the vote, due in large part to the 
fact that I had bipartisan endorsement. My support base crossed all 
racial, demographic, and political lines. Given this broad support, I 
assumed that when I set out to correct what I believed to be obvious 
deficiencies in this most critical program, I would be able to 
accomplish the task. Unfortunately, I found that my motivations were 
questioned and that it was not going to be the efficient task it should 
be.
    As a defense lawyer, I am well respectful of the due process rights 
our Constitution accords our citizens. I feel, however, that the 
hurdles I had to face in ridding Shelby County of an ineffective, and 
perhaps illegally operated program, went far beyond our founding 
fathers' notion of due process.
    With this in mind, it is my belief that all Head Start grantees, 
such as Shelby County Government, should upon receipt of their grant or 
as a condition of receipt of their grant, be allowed to develop a local 
governance and operations program that determines how best to select 
delegate agencies and how to terminate those contracts efficiently when 
needed. Once this due process program is approved, it should rest 
solely with the grantee to determine when a contract is to be 
terminated. The role of the Federal Government should be simply to 
ensure that the grantee has complied with its due process plan it 
submitted to HHS and which has been approved by HHS. The best interest 
of the intended recipients of Head Start programs should be the focus 
of any due process review.
    While I understand and support the provisions of the policies that 
set forth the parameters for the policy councils' authority, my 
experience is that the resulting practice serves to delay and 
overcomplicate the termination process. The broad and expansive role 
given to the policy committees adds other areas in which delay occurs. 
Additionally, in the case of Shelby County, a vote of the Shelby County 
Commission was required. With each member of this body being elected by 
the public, there obviously is room for much political interference.
    It is my opinion that our present Head Start scheme is one in which 
process has trumped product. Head Start was designed as a compensatory 
education project for culturally deprived children. The purpose was to 
ensure that these children receive services and attention that would 
prepare them to be ready to learn once they enter school.
    Because of the complicated procedural regulations, more time is 
given to ``the process'' of running the Head Start programs, and all of 
the attendant politics, than is given to the intended product, namely 
well cared for, and well taught children, ready to learn when they 
enter school.
    Nothing herein should be construed to mean that governments or any 
other grantee should be allowed to ride roughshod over the dignity that 
should be accorded all participants and Head Start programs whether 
they are grantees, policy councils, policy committees, or certainly 
children and parents. What I do feel emphatically is that the pendulum 
has swung too far in an effort to correct the excesses that accompanied 
the origin of our many War on Poverty programs in which those from the 
outside came in and professed to know what was best for the service 
recipients, giving them no voice, but only imposing on them their 
designs for a greater society. We need to pull the pendulum back to a 
middle ground which gives the appropriate respect to the desired end of 
participant involvement while at the same time not bogging down the 
programs with procedural hoops that detract from the overall goals of 
the Head Start program.
    Again, I wish to emphasize that in my legal services experience, I 
worked closely with citizen boards. I have also worked closely with 
citizen boards in many other civic programs. I emphasize that because I 
want to make it clear that this is not a call for eliminating policy 
committees and policy councils. I do feel, however, that the role of 
the policy councils in such areas as the selection or termination of 
delegate agencies should be reviewed carefully. As it now stands, 
regardless of the severity of mismanagement within a delegate agency, 
the grantee, in this case Shelby County Government, faces unnecessary 
barriers in bringing about an immediate termination of the delegate 
agency contract, creating a feeling of hopelessness that ultimately 
weakens the entire program.
    In order to understand the seriousness of this dilemma, one must 
understand the down to earth politics which often accompany Head Start 
programs. Many of the parents who are on the policy council may feel 
somehow indebted to those who operate the program. In many instances, 
their children are attending various Head Start programs, and they have 
been accorded a level of dignity and respect which they have never 
received before. The operators of delegate agencies are often 
politically well fixed because they provide a substantial number of 
jobs in the community.
    What we're faced with is not merely a benign situation in which an 
errant agency through no bad intent runs afoul of the guidelines. In 
many instances the wrongdoings and shortfalls are calculated to bring 
about the political empowerment or financial enrichment of those who 
profit from the wrongdoing.
    The GAO report focuses on financial management. Based upon my 
personal observations and experience, this report and its 
recommendations will stand in a vacuum if the governance problems are 
not also considered. Head Start grantees cannot correct financial 
mismanagement at the delegate level if they face obstruction by the 
politics of an unnecessarily complicated governance structure. Without 
the authority to quickly access records or take appropriate action on 
personnel issues when mismanagement has been identified, Head Start 
grantees cannot safeguard the financial security of this country's most 
effective and proven program to support at risk children and families.
    In an article entitled ``Life Way After Head Start,'' the New York 
Times Magazine chronicled the research findings of the High Scope Perry 
Preschool--the precursor to Head Start--over the course of more than 4 
decades. Looking at the school participants and non-participants side 
by side, the results are nothing less than staggering. Considering a 
variety of factors from social service requirements to wealth creation, 
the analysis suggests a return on investment of 17:1 for the Perry 
Preschool. The need to ensure Head Start's success goes beyond a moral 
obligation and has implications for our country's future prosperity. We 
should not allow any policy or practice to stand in the way of ensuring 
this program's success.
    Response to Question of Senator Alexander by Mayor A.C. Wharton
    Question. You made reference to the GAO recommendations and the 
effects you believe they will have on ensuring program accountability. 
You have also made specific additional recommendations that would focus 
on the local level, either the grantee or local governments. How do you 
see Congress supporting the efforts of communities and organizations 
like yours to implement the recommendations made by the GAO?
    Answer. While the statutory preference accorded existing grantees 
should remain, there should be exceptions carved out in those instances 
where there is clear evidence of financial impropriety. Similarly, 
local governments serving as grantees should also have the authority to 
move much more expeditiously in terminating contractual arrangements 
with delegate agencies in whose operations there is clear evidence of 
financial impropriety or irregularity.
    Specifically, the shared governance provisions which call for 
policy council approval of the termination of delegate agency contracts 
or employees of delegate agencies should be modified to allow the 
immediate suspension or termination of such agencies or employees with 
any due process provisions to take place promptly following the adverse 
action.
    I would also suggest that the extent of due process to be accorded 
any employee or agency should be tailored by the grantee, and once 
approved by the Administration for Children and Families (ACF) as a 
part of the grant agreement, it should be final and binding.
    Clarification is also needed in defining exactly who or what body 
is the ``grantee.'' In Shelby County, Tennessee, for example, the 
Office of Shelby County Mayor and the Shelby County Commission are 
listed as grantees. Accordingly, the executive branch may find itself 
in disagreement with the local legislative body or a significant number 
of members thereof, thereby creating the possibility of gridlock when 
it comes to terminating failing employees or agencies.

    Senator Alexander. Thank you, Mayor Wharton, and thank you 
for coming here today.
    Senator Ensign, would you like to introduce Yvonne Gates?
    Senator Ensign. Thank you, Mr. Chairman, I would. I welcome 
one of our esteemed County Commissioners to the panel and 
before this committee. She is a terrific public servant in 
Southern Nevada, former Chairman of the Clark County Commission 
and a person who represents most of the areas that take 
advantage of the Head Start program. She has been very active 
on these programs including, the oversight and pointing out a 
lot of the problems that we have had with our Head Start 
grantee. We have worked with Commissioner Gates on many 
occasions and are jointly working together to try to come up 
with some solutions that will make a big difference and 
actually serve kids instead of, as the Mayor was just talking 
about, serve the particular interest of individuals feathering 
their own nests.
    So I welcome Commissioner Gates here and look forward to 
her testimony, I look forward to working with you, Mr. Chairman 
in the future on trying to fix the problems that we have going 
on in Southern Nevada.
    Senator Alexander. Thank you, Senator Ensign.
    Commissioner Gates?
    Ms. Gates. Thank you, Mr. Chairman and members of the 
committee. Good morning. I am Yvonne Atkinson Gates and I am a 
County Commissioner representing 8,000 square miles. It is 
almost as large as the State of New Jersey. I wish to thank 
Senator Ensign for inviting me here to appear before you today.
    Clark County's population is now over 1.5 million and we 
have 118,782 children under the age of 5. Unfortunately, 22,468 
of that total includes children living in poverty. As a growing 
community, Las Vegas attracts many immigrants who are 
interested in developing a better way for their families and 
for their lives. Like many cities in the southern part, many of 
those newcomers, however, are poor and have language barriers 
where English is not their native tongue.
    Presently, our school system has a majority of the students 
of a minority background. As such, it faces a dual challenge of 
assimilating many of these students into the American culture 
while at the same time addressing many of their limited English 
language skills. No Child Left Behind is more than an 
educational mantra, but rather a larger goal of our society. We 
believe that Head Start programs, with this focus on the youth 
and their families, is a key tool in providing the necessary 
foundation for their lives. Children coming from these poor 
families need additional compensatory education. We believe 
that the sooner we begin this process, the greater likelihood 
is that the children will experience future successes.
    Children are society's greatest resources, as they 
represent our future and our collective hope for a better 
world. The promise of the Head Start program is to erase 
inequities among our citizens and to give all of our children 
an opportunity and a level playing field in achieving their 
academic achievements.
    In my community, a Head Start provider is a Community 
Action Agency and has been funded to enroll approximately 1,723 
children providing Head Start at 15 sites. As a local elected 
official, I have worked with my colleagues on the County 
Commission, the Clark County School District, the City of Las 
Vegas, Henderson nonprofit agencies, and faith-based groups to 
build state-of-the-art Head Start programs and early childhood 
development centers in our community.
    I have provided you with a review and a short package 
showing several of these centers, which were funded by 
community partners using Federal Community Block Grant funds, 
city and county general funds, private loans, and land 
contribution and long-term leases. Included in this packet are 
also several personal testimonies about the importance of Head 
Start programs and its participants as well as their families.
    With the growth of the Federal budget deficit, we must 
identify new ways to enhance program accountability to serve 
our community service development system. Our goal should be to 
reward and enhance performers toward specific goals rather than 
the continuance of funding Head Start providers who are unable 
to document their successes.
    I wish to commend the GAO Accounting Office for their 
recent review of the Head Start program. Their insight relating 
to the weaknesses of the Federal oversight process can help us 
together build a stronger Federal and local review system so 
that these Federal programs can achieve its promise of 
preparing our children for their future. This GAO study seems 
to indicate that much of the weakness of this program occurs at 
the Federal level, where inadequate Federal monitoring and 
oversight, combined with the lack of clear and sufficient 
sanctions allows the continuation of funding for Head Start 
providers who continue to come up short.
    To improve in oversight, the Administration for Children 
and Families, ACF, needs to be given the support and the 
necessary staff resources to take a more proactive role. ACF 
needs to engage in more direct intervention to assist 
substandard performers achieve targeted benchmarks, levels, and 
in cases such as a lack of performance, to take the necessary 
hard step in closing and providing opportunities for others to 
utilize these resources rather than to keep funding a poor 
current performer.
    We need to recognize that should Head Start programs be 
defunct by ACF, it will create a critical and immediate 
community challenge as ACF and others will need to seek new 
providers to continue the operation of these programs so that 
the children and their families are not negatively impacted by 
the program service interruption, recognizing that these 
provider relationships may have been forged over decades. 
Identifying and selecting new providers will take time and must 
be acknowledged that breaking up is hard to do.
    To diversify program delivery, Congress may wish to 
consider restricting and prohibiting the ACF from allocating 
all of its Head Start funding to one organization in a single 
large metropolitan area. Utilizing multiple agencies can 
provide an immediate back-up should a current grantee no longer 
be able to effectively deliver the service.
    Our goal should be to expand local oversight of the chosen 
grantee. I know as a County Commissioner that my office 
frequently has received and fielded calls from disgruntled 
parents who think that we have a direct resolve in their issue 
with the Federal Head Start grantee as they do not recognize 
that the Federal local grant does not flow through the county. 
We believe that local government needs to be more actively 
engaged in the local review and evaluation process for the use 
of these Federal programs. Local government is closer to the 
people and we have an opportunity to provide technical and 
mentoring assistance to our local nonprofit partners, and 
additionally to help provide other resources to expand the 
scope of service for the operation of these programs.
    As shown in my handout, Mr. Chairman and members of the 
committee, a number of the Head Start and early childhood 
development centers were a direct result of local funding 
commitment to this Federal program reflecting a keen awareness 
of the importance that preschool education can make a 
difference for our children.
    Additionally, the Federal Government may wish to require 
Head Start grantees to work with local governments and 
potentially require local government oversight review in an 
annual review process. As the grant manger for other Federal 
funds, State agencies are also uniquely qualified to serve in 
this facilitory role as they currently supervise and administer 
many other Federal grants, including the Department of Health 
and Human Services.
    In assisting this reform initiative as part of the 
reauthorization of Head Start programs, we must be careful not 
to overreact to this GAO study and to use it as an exercise to 
terminate or reduce Federal funding for this critical human 
development program because of its current weakness shared by 
both the Federal and local level. Our children are too 
important to this Nation's future to be caught up in Federal 
deficit reduction efforts.
    As fundamentally as their future successes are critical to 
our Nation's competitiveness on the world stage, where other 
countries have discriminated toward its citizens due to gender, 
Americans continue to be a shining light in the heel of all of 
our citizens have an opportunity to succeed based on their 
ability and hard work. This is the meritocracy envisioned by 
Thomas Jefferson, where people's ability would be only limited 
to their ultimate life successes rather than preconditioned 
race, sex, or economic status.
    Senator Alexander. Ms. Gates, if we could wrap up in about 
one----
    Ms. Gates. I am. I am just finishing, Mr. Chairman.
    Senator Alexander [continuing]. Thank you.
    Ms. Gates. Let us work together to build a Head Start 
program, achieve its original promise as a compensatory 
educational program to help our most vulnerable and youngest 
Americans and their families achieve the Jeffersonian 
meritocracy.
    Thank you, Mr. Chairman and members of the committee.
    [The prepared statement of Ms. Gates follows:]

              Prepared Statement of Yvonne Atkinson Gates

    Mr. Chairman, and members of the committee, good morning, my name 
is Yvonne Atkinson Gates, and I am a Clark County Commissioner 
representing an 8,000 square mile area as large as the State of New 
Jersey, located in southernmost part of the State of Nevada. Clark 
County is also the home of the City of Las Vegas, a world renown 
tourist destination and Nellis Air Force Base, one of the key fighter 
pilot training facilities for the defenders of the free world.
    I wish to thank Senator John Ensign for inviting me and giving me 
the opportunity of appearing before you today to talk about the 
importance of the Head Start Program to our community.
    Clark County's population is now over 1.5 million and we have 
118,782 children under the age of 5 years of age. Unfortunately, 22,468 
of that total include children who come from poverty households. As a 
booming growth community, Las Vegas attracts many immigrants who are 
interested in developing a better life for their families. Like many 
cities in the southwest, many of those newcomers are, however, poor and 
have a language barrier where English is not their native tongue. 
Presently, our school district has a majority of students from minority 
backgrounds. As such, it faces the dual challenge of assimilating many 
of these students into American cultural life while at the same time 
addressing, for many, their limited English language skills.
    ``No Child Left Behind'' is more than an educational mantra, but 
rather the larger goal of our society. We believe that the Head Start 
program with its focus on the youth and their families is a key tool in 
providing the necessary foundation for their life success. Children 
coming from these poor families need additional compensatory education. 
We believe that the sooner we begin this process, the greater 
likelihood that these children will more quickly assimilate into 
American society.
    Children are every society's greatest resource, as they represent 
our future and our collective hope for a better world. The promise of 
the Head Start Program is to erase inequities among our citizens and to 
give our children, all our children, a level playing field for their 
future academic success.
    In my community, our current Head Start provider is a community 
action program agency and it has a funded enrollment of 1,723 children, 
providing Head Start services at 15 sites. This Head Start program is a 
key lifeline for these children as 804 children have no health 
insurance and 511 children are receiving dental care and 1,532 have 
received preventative dental care.
    As a County Commissioner, I have worked with my colleagues on the 
County Commission, the Clark County School District, and the Cities of 
Las Vegas and Henderson, nonprofit agencies, and the faith based 
nonprofits to help build state-of-the-art Head Start/Early Childhood 
Development Centers in our community. I have provided for your review a 
short package showing several of these centers which were funded by our 
community partners using Federal Community Development Block Grant 
funds, County and City General Funds, private loans, and land 
contributions and long term leases. Included in this package are also 
several personal testimonies about the importance of the Head Start 
programs to program participants and their families.
    With the growth in the Federal budget deficit, we must identify new 
ways to enhance program accountability of our service delivery systems 
to ensure that our children, and their families, receive top value for 
the investment of our tax dollars in their pre-development education. 
Our goal should be to reward and enhance performance toward specified 
goals, rather than continuance of funding to Head Start providers 
unable to document their successes.
    I wish to commend the United States Government Accountability 
Office for their recent review of the Head Start Program. Their 
insights relating to the weaknesses of the Federal oversight process 
can help us together to build a stronger Federal and local review 
system so that this Federal program can achieve its promise of 
preparing our children for their future lives of promise and 
achievement in what is an ever diverse and competitive world 
environment.
    This GAO study seems to indicate that much of the weakness of this 
program occurs at the Federal level, where inadequate Federal 
monitoring oversight combined with the lack of clear and sufficient 
sanctions allows the continuation of funding to Head Start providers 
who continue to come up short. This GAO study provides a unique 
opportunity for the Federal Government to get its own house in order. 
While clear weaknesses have been identified relating to the 1,700 Head 
Start grantees nationwide, this Federal report gives us a unique 
opportunity to step back and develop new systems to measure 
accountability and to better control the administration of Federal 
funds at both the Federal and local levels.
    To improve this Federal oversight, the Administration for Children 
and Families (ACF) needs to be given the support and the necessary 
staff resources to take a more proactive role. Rather than letting 
program problems continue to fester, ACF needs to engage in more direct 
intervention efforts to assist substandard performers achieve the 
targeted benchmark levels, and in cases of continued lack of 
performance, to take the hard steps of closing and providing 
opportunities for others to utilize these funds rather than continue, 
by inertia, to keep funding the current poor performers.
    As part of this reform effort, the Federal Government may wish to 
re-think how Federal funds should be disbursed to run this important 
program. As an alternative to the current Federal grantor/local 
nonprofit agency grant recipient relationship, we would propose that 
this funding relationship be modified whereby State and local 
governments potentially be selected to serve as local administrators, 
and that the review and evaluation process be expanded to include more 
local stakeholders.
    We need to recognize that should a Head Start program be defunded 
by ACF, that this will create a critical and immediate community 
challenge as ACF and others will need to seek new providers to continue 
the operation of these programs so that the children and their families 
are not negatively impacted by program service interruptions. 
Recognizing that these provider relationships may have been forged over 
decades, identifying and selecting new providers will take time and we 
must acknowledge that ``breaking up is hard to do.'' To diversify 
program delivery and to reduce the government tendency to utilize fewer 
grantees for their own ease in monitoring and program administration, 
Congress may wish to consider restrictions prohibiting the ACF from 
allocating all its Head Start funding to a single organization within a 
single large metropolitan area. Utilizing multiple providers can 
provide an immediate backup should a current provider no longer be able 
to effectively deliver the service.
    Our goal should be to expand local oversight of the chosen 
grantees. I know as a County Commissioner that my office frequently has 
had to field calls from disgruntled parents who think that we can 
directly resolve their issues with a Federal Head Start grantee as they 
do not recognize that this is a Federal/local grant that does not flow 
through the County.
    We believe that local government needs to be more actively engaged 
in the local review and evaluative process for the use of these Federal 
programs. Local government is closer to the people, and we have the 
opportunity of providing technical and mentoring assistance to our 
local nonprofit agency partners, and additionally may be able to 
provide other resources to expand the scope of services for the 
operations of these programs. As shown by my handout, a number of these 
new Head Start/Early Childhood Development Centers were the direct 
result of that local funding commitment to this Federal program 
reflecting our keen awareness of the importance that preschool 
education can make for our children.
    Additionally, the Federal Government might wish to transfer these 
Head Start funds to local governments as a block grant, which would 
provide for local oversight of these monies. Local governments 
currently administer a number of block grant programs, and provided 
that sufficient administrative monies are available to cover staff and 
monitoring costs, the Head Start program might be transferred to this 
local level whereby local government, rather than a more distant 
Federal Agency, has day to day oversight monitoring responsibilities 
for the Head Start program, and serves as the immediate contracting 
grantee for the program.
    As the grant managers for other Federal funds, State Agencies are 
also uniquely qualified to serve in this facilitator role as they 
currently supervise the administration of many other Federal grants, 
including those from the Department of Health and Human Services. 
Secondly, being geographically closer to the grant recipients, they may 
have increased opportunities to provide critical oversight, technical 
assistance, and mentoring assistance to enable those nonprofit grant 
recipients to achieve full compliance with all the applicable Federal 
regulations as the Head Start program is but one of many grants that 
States make available to these nonprofit grant recipients, for which 
the States are already responsible.
    In assessing this reform initiative as part of the reauthorization 
of the Head Start program, we must be careful not to overreact to this 
GAO study and use it as an excuse to terminate or reduce Federal 
funding for this critical human development program because of current 
weaknesses shared at both the Federal and local levels. Our children 
are too important to this Nation's future to be caught up in Federal 
deficit reduction efforts, as fundamentally their future successes are 
critical to our Nation's competitiveness on the world stage.
    Where other countries have discriminated toward others due to 
gender discrimination, America continues to be a shining light on the 
hill as all our citizens have an opportunity to succeed based on their 
abilities and hard work. This is the ``meritocracy'' envisioned by 
Thomas Jefferson, where a person's abilities would be the only limit to 
their ultimate life success, rather than pre-conditions of race, sex, 
and economic status.
    Let us work together to help the Head Start Program achieve its 
original promise as a compensatory educational program to help our most 
vulnerable youngest Americans and their families achieve this 
Jeffersonian ``meritocracy.''

    Senator Alexander. Thank you very much, Commissioner Gates.
    Dr. Golden?
    Ms. Golden. Thank you. Mr. Chairman, Senator Dodd, and 
members of the subcommittee, my name is Olivia Golden and I am 
a Senior Fellow at the Urban Institute. I am honored to appear 
before you today.
    My perspective on Head Start and on tough and effective 
management has been shaped by a range of experiences as a 
researcher and a practitioner at the Federal, State, and local 
levels, as you heard from Senator Dodd. I spent 8 years at HHS, 
including 3 as Assistant Secretary for Children and Families, 
and in 1993 was a member of the bipartisan Advisory Committee 
on Head Start Quality and Expansion, which included staff from 
both parties of this committee. The Advisory Committee's 
unanimous final report provided a rigorous blueprint for 
quality, including strengthening Federal oversight capacity.
    As a result of reforms put in place by HHS and the 
Congress, beginning with the 1993 Advisory Committee, the 1994 
Head Start reauthorization, and the 1996 publication of tough 
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, a point that Dr. 
Caccamo also made. This emphasis on accountability paid off in 
clear results in the late 1990s. As GAO's report indicates, a 
historically unprecedented 144 grantees were terminated or 
relinquished their grants between 1993 and 2001.
    GAO's report provides useful next steps for Federal 
oversight that build on these earlier reforms. Before turning 
to the suggestions I would like to make for implementing GAO's 
recommendations, though, I would like to highlight two themes 
from the research that are explained in much more detail in my 
written testimony.
    First, and I think this came through in several questions 
earlier, Head Start serves extremely vulnerable children and 
families who experience multiple and complex problems. And 
second, Head Start programs make a positive difference for 
these very disadvantaged children and their families. Research 
demonstrates both Head Start's positive results for children 
and the generally high quality of local programs--and I just 
want to note in reference to Chairman Alexander's earlier 
question that, interestingly, the research suggests a very high 
level of consistent quality, much more than in those other 
education systems you described. So there is a lot of 
consistency in the good quality of Head Start programs when 
researchers go out and look.
    To me, these themes underline the importance of 
accountability in Head Start. Federal oversight has got to live 
up to the crucial importance of Head Start's mission.
    Let me turn now to five suggestions for strong Federal 
oversight detailed in my written testimony. These suggestions 
draw on my experience raising the bar on accountability during 
the 1990s. They are lessons both about what works and about 
what is perennially 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 
focused and hands-on Federal oversight.
    So lesson one, the foundation for strong Federal oversight 
and for results for children is the tough, rigorous, and 
research-based requirements in the performance standards. As a 
result of the Advisory Committee recommendations and the 1994 
reauthorization, we thoroughly revamped and strengthened the 
performance standards in 1996, bringing them in line with the 
latest research. These rigorous standards are especially 
important because emerging research indicates a link between 
strong and effective implementation of the standards, on the 
one hand, and results for children on the other.
    Lesson two, terminating grantees and aggressively 
negotiating relinquishments are important and realistic 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 included 
in the 1994 reauthorization and the 1996 regulations. As GAO 
indicated in its 1998 report, HHS moved quickly and 
aggressively to use that authority. My own experience was that 
personal and hands-on involvement was very important. In one 
example, I flew out to Denver to speak with parents and board 
members at a grantee about the gravity of our monitoring 
findings so they could make a more informed decision about 
relinquishment.
    Lesson three, and this is a point that came up, I know, in 
Senator Dodd's questions, continuity for successful grantees is 
just as important as turnover for unsuccessful grantees. For a 
Head Start program to do a truly excellent job at linking 
children to services in a community takes time, it takes 
consistency, it takes relationships among partners developed 
over many years. So that means that strong technical assistance 
to get to programs at the beginning, keep successful programs 
on track, is a critical partner to strong monitoring in the 
Federal oversight strategy. That also means that recompetition 
should be limited to unsuccessful programs.
    Two more quick lessons. Lesson four, the Federal oversight 
strategy needs to integrate fiscal accountability with program 
results at every stage.
    And finally, the oversight strategy must include a focus on 
Federal staff, both in the central office and in the regions, 
including training, professional development, and their ability 
to make consistent decisions.
    In conclusion, for 40 years, the Head Start program has 
played a critical role, as you have heard, from the Nation's 
most impoverished and vulnerable children, continuing to evolve 
and innovate in response to family needs. For Head Start to 
continue this success requires an equally strong, innovative, 
and vigorous Federal oversight role.
    I want to say thank you to the members of this committee 
for your consistent and historic support for the program and I 
look forward to any questions that you may have.
    Senator Alexander. Thank you, Dr. Golden. It is very 
helpful to have your perspective, given your involvement for 
such a long period of time.
    [The prepared statement of Ms. Golden follows:]

                 Prepared Statement of Olivia A. Golden

    Mr. Chairman, Senator Dodd, and members of the subcommittee, 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 8 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 8 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 decisionmaking 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\
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    \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.
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    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.
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     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\
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    \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.
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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;
     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 indepth site visits. They found evidence 
that ``full implementation [of the performance standards] contributes 
to a stronger pattern of impacts.'' \6\
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    \6\ Administration for Children and Families (June 2002), p.6.
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    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 1 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.
---------------------------------------------------------------------------
    \7\ U.S. General Accounting Office. 1998. Head Start: Challenges in 
Monitoring Program Quality and Demonstrating Results, p. 3.
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    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.
    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 decisionmaking 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 decisionmaking--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;
     use multiple approaches to strengthen Federal staff 
capacity.
    For more than 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 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 subcommittee'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.
         Response to Questions of Senator Enzi by Olivia Golden
    Thank you for the opportunity to testify before the subcommittee 
and for the opportunity to answer these additional questions.\1\
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    \1\ The views expressed in this response are those of the author 
and should not be attributed to the Urban Institute, its trustees, its 
employees, or its funders.
---------------------------------------------------------------------------
    Question 1. You made reference to the GAO recommendations and the 
effects you believe they will have on ensuring program accountability. 
You have also made specific additional recommendations that would focus 
on the local level, either the grantee or local governments. How do you 
see Congress supporting the efforts of communities and organizations 
like yours to implement the recommendations made by the GAO?
    Answer 1. Both GAO's report and my testimony focused on Federal 
accountability: how the Federal Government can best ensure that local 
Head Start programs live up to the high standards that are key to the 
success of Head Start. In my testimony, I provided five broad themes 
that I recommended Congress and HHS keep in mind as they implement 
GAO's recommendations. I appreciate the opportunity to address the 
implications of these themes for local as well as Federal quality and 
accountability.
    First, I emphasized the critical role that Head Start's tough, 
research-based performance standards have played in the program's 
success. I stressed that Congress should ensure a continued commitment 
to those standards. In addition, to support local grantees in meeting 
these standards, Congress could examine whether they consistently have 
the tools to do so, including both the knowledge and resources. Key 
provisions in the statute for achieving these aims are the quality set-
aside and the technical assistance set-aside, discussed more fully 
below. Clearly, the effectiveness of these set-asides, particularly the 
quality set-aside, which is a percentage of expansion dollars, depends 
not only on the authorizing statute but also on the level of 
appropriations. Congress may want to review the evidence from the last 
several years to determine whether the absence of resources dedicated 
to quality has made it more difficult for programs to meet the 
performance standards.
    Second, I emphasized in my testimony that when local Head Start 
programs do not succeed in meeting the standards, a hands-on Federal 
role is key to terminating them. At the hearing, local witnesses 
argued, in at least two of the three examples, that Federal involvement 
was ``too little, too late.'' Whether this is an issue of Federal 
resources, training and skills of Federal staff, or priorities is hard 
for an outside observer to know. But the Congress may want to focus on 
enhancing training, skills, and possibly staffing levels for the 
Federal functions that directly support Head Start grantees, including 
but not limited to monitoring.
    Third, I emphasized the critical role of Federal technical 
assistance in ensuring continuity for good Head Start programs. In 
addition to the broad availability of technical assistance to all 
programs, I suggested targeting high-quality and immediately available 
technical assistance to programs identified as at risk through GAO's 
proposed early-warning system. At the hearing, the testimony of the 
local witnesses seemed to me to support this idea of immediate, high-
quality technical assistance as soon as problems are identified. (For 
example, in the case of Shelby County, Tennessee, the Mayor was the 
grantee yet apparently perceived that he was not able to get timely and 
helpful Federal assistance in enforcing accountability on his delegate 
agencies.) These observations about the role of high-quality, 
responsive, and timely technical assistance in accountability and 
performance suggest the continuing importance of the technical 
assistance set-aside in the Head Start statute.

    Question 2. A common theme in this hearing is that the Head Start 
program is a direct Federal to local program. That's been the model for 
the program since its inception, roughly 40 years ago. Have we come to 
a point where a State or local role would be appropriate, such as 
allowing States to compete for Head Start grant funds?
    Answer 2. The goal of Head Start is to help children get ready for 
school, through a strong classroom program, active parental 
involvement, and comprehensive services that help children learn. To 
achieve that goal, as noted in the question, the community-level focus 
of Head Start has been a central feature of the program's design since 
its inception. A Head Start program that is strongly grounded in the 
local community will be able to recruit extremely disadvantaged 
families who may be suspicious of other institutions, engage parents in 
their children's education and well-being, and develop linkages with 
other local programs and institutions that ensure Head Start children 
and families get the services they need, such as family support, 
health, and mental health services. For all these reasons, I believe 
that Head Start's community-based, Federal to local, design is a key 
programmatic strength.
    Given this community-based design, strongly underlined in the 
performance standards, I do not think that State Agencies would be 
appropriate applicants for Head Start grants. In addition, as I 
suggested earlier in these responses and in my testimony, other key 
elements of quality supported by the research are the strong and 
consistent Federal performance standards and the strong Federal 
monitoring and technical assistance infrastructure. Thus, the current 
Federal to local design builds in the elements that research suggests 
are most important for quality: close connection to the family and 
community on the one hand, along with high, research-based standards 
implemented through technical assistance and monitoring on the other.
    However, I think that many kinds of partnerships between State 
Agencies and local Head Start programs are key to enhancing child and 
family well-being. Many of these partnerships already exist and others 
can be encouraged through the mechanism of the State collaboration 
grants, as described below. For example, in those States that fund 
early childhood activities for infants, toddlers or preschoolers, 
including pre-kindergarten programs, a range of partnerships are 
possible: Head Start programs may compete for these State grants, or 
may share materials and training opportunities with other local 
providers, or may develop strategies for funding programs together that 
can reach more children or reach children for a longer school day or 
year than any of the programs could do alone. In addition, State 
Medicaid programs and other health care services for low-income 
children and families are key partners for Head Start as well as for 
other early childhood programs.

    Question 3. As you all know, each State operates a collaboration 
office. What role do you see those offices playing in helping to 
improve the accountability process and more successfully integrating 
programs with a common interest across State and local boundaries?
    Answer 3. Through the bipartisan commitment of the Congress in the 
1994 reauthorization, I am very proud that while I was at HHS, we were 
able to follow the recommendation of the Advisory Committee on Head 
Start Quality and Expansion and expand the State collaboration grants 
from just over 20 States to all States. The State collaboration offices 
have an important role to play in improving results for children, 
particularly at a time when States have shown considerable interest in 
investing in programs for young children and when there are promising 
examples of collaborations that link Head Start, child care, and other 
early childhood education programs for the benefit of children. Drawing 
on the lessons from these examples as well as promising experiences in 
related fields, I would suggest several particularly useful areas for 
the State collaboration offices to focus on:
    a. In terms of accountability, one promising role for the 
collaboration offices is to work with States that fund early childhood 
programs toward strong, rigorous, research-based quality standards 
across multiple programs--for example, incorporating the Head Start 
performance standards into State approaches to funding model infant-
toddler or pre-K programs.
    b. A related role is to expand joint training opportunities, where 
staff in multiple early childhood programs, including Head Start and 
state-funded programs, receive high-quality training in the development 
and education of young children, parent involvement and family support, 
or management topics that are shared across the different settings.
    c. The collaboration offices should be exploring a whole range of 
strategies for helping all programs reach for and achieve high 
standards of quality. For example, they may be able to identify ways to 
more fully involve the State's higher education system in preparing the 
early childhood workforce, working with Head Start and state-funded 
programs to place students in internships, and providing quality 
assessments that help programs figure out where they are strong and 
where they could improve.
    d. In terms of integrating systems, one way for the collaboration 
offices to improve the quality of care for all children is to work 
toward statewide memoranda of understanding that can connect both Head 
Start programs and state-funded child care and early childhood programs 
to other services that all need, such as health and mental health 
services funded by Medicaid or other State programs.
    I very much appreciate the opportunity to testify as well as the 
opportunity to answer these additional questions. Please feel free to 
e-mail me (at [email protected]) or call (202-261-5699) if I can 
provide any additional information.

    Senator Alexander. We will now go to questions from the 
Senators and we will try to limit those to 5 minutes to have 
the maximum amount of time for that.
    Mayor Wharton, let me go back to you because, let us assume 
for a moment that, as Dr. Golden says, a lot of work has been 
done to try to create what Mr. Caccamo said was a thorough sort 
of Federal review. But what you are really telling us is a 
little different. You are saying that between Washington and 
Memphis there may be a pretty good review, but when it gets 
down to Memphis and somebody has to do something about it, it 
is hard to get it done.
    Now, let me make sure I understand this. The grant in the 
case of Shelby County, it is a lot of money. It is about $12 
million, is----
    Mayor Wharton. Twenty-two million.
    Senator Alexander [continuing]. Twenty-two million. How 
many children are affected?
    Mayor Wharton. About 3,100.
    Senator Alexander. Thirty-one-hundred children.
    Mayor Wharton. It should be 10,000 if we could ever get 
straightened out down there.
    Senator Alexander. The grantee was not the county 
government but was a separate entity, is that right?
    Mayor Wharton. If I do not--thank you, Mr. Chairman. If I 
do not make anything else clear here, I hope I will be able to 
make this distinction, because as I read reports throughout the 
Nation, there is a blurring of identity there. Shelby County 
Government was the grantee, not to be confused with your 
various delegate agencies who signed contracts with the 
grantee.
    Senator Alexander. OK. So when you came into office 3 years 
ago----
    Mayor Wharton. Three years ago.
    Senator Alexander [continuing]. You found that your 
government to which you were elected had a responsibility with 
the Federal Government to manage this program for low-income 
children and you found a lot of problems. What I think is 
important for us to understand is precisely why it was so hard 
for you to fix the problems and what we can change in the law 
to make it easier for local officials like you to fix the 
problems.
    Mayor Wharton. Sure. Out of the roughly 3,000 enrollees, 
children, 2,095 were in the hands of an agency known as Head 
Start, Incorporated.
    Senator Alexander. That is a delegate agency.
    Mayor Wharton. That is correct. It was a delegate agency 
which, in turn, had other, I guess I could call them sub-
delegates or whatever you wish, but a very complicated 
structure and a very powerful structure politically. Again, any 
time you are spending $20 million in some impoverished 
communities, you develop power, and the individuals used it to 
the hilt.
    When I had the goods on a particular director, it wasn't 
enough for me to say, you have violated this, you have violated 
that. I had to go through the policy council.
    Senator Alexander. Now, for example, what were the goods? I 
mean, what was done wrong?
    Mayor Wharton. Well, simply not accounting for the funds. 
Where are they? Some of these matters are still in court and 
various investigative processes, so I don't want to prejudice 
anything that might come out of that, but, for example, one 
entity, I am still trying to find $90,000 worth of playground 
equipment. The program had some, I have forgotten how many 
millions issued in bond funds to build three Head Start 
centers. They built one. I don't know where that money is and I 
take it I will never find out where it is.
    Senator Alexander. I interrupted you. You were about to say 
that when you saw you needed to do something and you were 
willing to take on the political challenge, you then had to do 
what to get something done?
    Mayor Wharton. I had to go to the policy council, which is 
called for in the regulations here. And again, I have no 
problem with shared governance. But to go to the council, many 
of whom had very close relationships, very cozy, with the prior 
administration of this delegate agency. I was an outsider. The 
folks who were running that program had much more influence 
than I did and the difficulty was getting the votes to get them 
out.
    Senator Alexander. Were there other hoops that you had to 
jump through? You described hoops in your testimony.
    Mayor Wharton. Once you get through that, I had to come 
back to the actual county commission. I had terminated them 
one, but Atlanta told me that, no, you have now got to go back 
to another political body and get seven of the 13 votes before 
you can take over that program. Had I not gone ahead and just 
exercised self-help and pulled the financial operation then--I 
basically said, stay out there, but I am taking the books away 
from you and brought them in-house--we would have had much more 
waste than we have uncovered already. So it was to go through 
the policy council and then through an elected county 
commission before I could get to the process of getting them 
out of there.
    Senator Alexander. You have got other things to do as the 
mayor of the largest county in the State. How much of your time 
did this take in relationship to other projects or problems you 
were working on?
    Mayor Wharton. Without quantifying it in any numerical 
sense, I would say an inordinate amount of time, and let me say 
this. Shelby County Government, as you well know, counties in 
the State of Tennessee are responsible for funding all public 
education, half of my budget. It is one of my preeminent 
responsibilities to ensure that what goes into our public 
schools are children who are ready to learn. I don't mind 
focusing on that, but I should not have to spend all the time 
on where did you buy the gas, where is the credit card, where 
did you buy the car tires, where did you get the bus, where is 
this, and that is what I was spending my time on, not the 
processes that were going on in these little classrooms. Too 
much time, Senator, to answer your question.
    Senator Alexander. Thank you, Mayor Wharton.
    My time is up, but I would like to conclude with this 
observation. I used a little earlier the higher education 
model, which is a model that we are familiar with whereby we 
give thousands of institutions a great deal of autonomy and 
then expect them to produce a result rather than, for example, 
turn it over to the States or some intervening management 
agency.
    I have--let me just say this to my colleagues. I have 
skepticism about how well in the end a Federal Washington-based 
agency can manage 20,000 classrooms, 1,700 agencies, and many 
more delegate agencies, and I think it is critical that we find 
a way to, if we are going to have autonomy for so many 
different agencies to spend so many Federal dollars, that once 
that autonomy is centered somewhere, that that person, such as 
the mayor or the county commissioner or whomever it is, have 
the authority to be accountable and to do what we expect to be 
done. Thank you.
    Senator Dodd?
    Senator Dodd. Thank you, Mr. Chairman. Does the chairman of 
the committee want to go? Are you all right?
    Thank you very much. Let me thank all of you for being here 
today and sharing your thoughts with us. It is very, very 
helpful.
    Let me, if I can--by the way, I mentioned earlier--I forgot 
to mention Ed Ziegler's name. I was talking about the person in 
Connecticut who was responsible as the author of Head Start 40 
years ago, and Ed is still very much involved in these issues 
and writes extensively on them. We couldn't have a hearing 
about Head Start and not mention the significant contribution 
of Dr. Ziegler along the way.
    Let me, is it Dr. Caccamo?
    Mr. Caccamo. Yes.
    Senator Dodd. Doctor, let me, if I can, ask you to maybe 
address a little bit more the issue of the boards. I happen to 
agree with you as to your recommendations about the board 
involvement. It is not a question of increasing the size of the 
membership but rather the type of individuals that serve on the 
board and the training and the skills that they ought to have 
in order to be an effective board, it seems to me. I wonder if 
you might share with us anything about the training of the KCMC 
board itself, what your experience has been there, and also 
what might be an effective on-the-ground management training 
for senior management within the Head Start agencies 
themselves.
    It seems to me, again, going back to the questions that I 
raised with the previous panel, if you had to pick out one area 
to really work on, assuming for a second the broader question 
of block granting Head Start and so forth, but how can you make 
this more effective in dealing with the front end of the issue, 
and that is getting the right people in place?
    And by the way, Mayor, I think your suggestion about the 
family council and the board, separating out the roles, make 
some sense to me for the very reasons you identified. The 
family council members are more inclined to be interested in 
whether or not children are getting the kind of learning they 
need. I am not as aware about all this. I was sort of surprised 
to hear that they would also be asked to be involved in the 
minutiae of financial management. But if that is the case, I 
think your suggestion makes some sense.
    But if you might comment on what your experience is 
regarding board training.
    Mr. Caccamo. Yes, Senator. I think it is critical. Board 
members have to understand that when they say ``yes'' to being 
on a board that they take on a great deal of responsibility, 
fiduciary and programmatic responsibility. It is critical that 
they do that.
    And, you know, if you look at local public schools, one of 
the things that happens in local public schools is there is 
some limit to the length of time people can spend on boards. 
Those particular school districts, at least in our area, do a 
great deal of board training. They have board retreats where 
they talk about fiduciary responsibility, where they talk about 
how to read a budget, where they talk about ethics and ethical 
leadership around performance of that school board.
    I think those same kinds of things should be done at the 
local Head Start. They have not been, or weren't, and I think 
part of the problem, and I think Mayor Wharton said it very 
well about the political influence that you begin to build as 
you spend years engaged in organizations like that.
    The executive director, very, very excellent in 
programmatic work. I don't think you will find a Head Start in 
this Nation that would take Kansas City and place it in second. 
We do fabulous work with our children. All of that work is done 
with a great deal of community partners. All of the fiscal 
stuff is done sort of without many partners, behind closed 
doors, which adds to, I think, the responsibility of the board 
having to be well trained.
    So I think it has to be done. I think there are great 
models in every community about board training and I think it 
has to be a requirement that boards undergo some training 
around their programmatic and fiduciary responsibilities.
    Senator Dodd. Sort of a Sarbanes-Oxley approach to 
corporate governance is what we are sort of looking at here, I 
suppose, what I hear you saying.
    Mr. Caccamo. Yes.
    Senator Dodd. Let me jump to you, Dr. Golden, if I can. I 
am going to get to the recompetition issue because I think it 
is an important question.
    First of all, let me ask you three questions regarding it 
and have you address those. What would be an appropriate time 
frame for citing of a deficiency before a grant is recompeted? 
I would be interested in your views on that.
    What do you think the criteria ought to be for the 
recompetition of the Head Start grants?
    And what types of training and technical assistance can 
really make Head Start agencies--make a difference in Head 
Start agencies with regard to the systems management, sort of 
going back to the same question I asked Dr. Caccamo.
    Ms. Golden. OK. Well, on the first two points about 
deficiencies, I think what is key is to know what is in the law 
and the rules now and then to think about whether what you need 
is more aggressiveness by HHS and more effectiveness, or 
whether you need additional statutory change.
    The framework that is in the law right now from the 1994 
reauthorization and the regulations we did after that says no 
more than a year, and at the most, if an agency has got a 
deficiency, you can give them a year. If it is a threat to 
children's health and safety or the fiscal problems are there, 
threatened Federal dollars, then you give them less.
    And the definition in the law--I mean, again, Senator, the 
dilemma Senator Alexander has highlighted, the definition in 
the regulations is pretty clear, but it doesn't go into so much 
detail that it would apply just like a cookie cutter. It says 
that if an agency can't substantially accomplish the purposes, 
you can't do early childhood successfully, you can't do health 
care, or if you are not using--if you are misusing the dollars.
    What it takes to implement that effectively, I think, is, 
first of all, really good fact finding. You need Federal 
reviewers that have the skill and the capacity and the travel 
money to get out there and look.
    Second, it needs good training and analytic skills for the 
reviewers because they have to look at these list of things and 
try to figure out what is going on. So Assistant Secretary 
Horn's suggestions there, I think, are appropriate in terms of 
improving his capacity to do that.
    But then it circles back to your technical assistance 
question in the end, it seems to me, because once you have 
looked, you have seen a problem, the question is not just how 
many days have you let go by, but have you done something? Have 
you gotten in there the intensive help to try to make a 
difference?
    And so I agree completely with your earlier points that I 
think were also made by others, that training and technical 
assistance are key both in prevention and in getting into some 
of those problematic grantees and turning them around, and I 
would list as key areas, I share the perspective on the board 
governance that has been highlighted by everybody here.
    I would also say what affects the core of Head Start's 
ability to provide services is the quality of its teachers and 
its classrooms and their training. So you can't put programs or 
the Federal TA system in the position of stealing the money 
away for governance from the dollars required for training and 
TA in the classroom.
    And then the third piece I would put in is the ability of a 
community program to link to all the rest of the services that 
children need, mental health or health care. I think some of 
the excellent programs we have heard about do that well. To do 
that, they have to have training both to understand the 
programmatic and to understand the fiscal implications, because 
it can be complicated in accounting terms to do all that 
together.
    Senator Dodd. Very good, and my time is up. I know Dr. Horn 
talked about a 240-day process in his testimony, and I will 
leave it to a later time to get into that with you on why 
particularly that length of time. I am curious if you know 
any----
    Ms. Golden. Well, I assume that that must be cases that 
they play out in the legal system. As the example I gave in my 
testimony, I think that if you lay out the evidence, 
particularly given, as you have heard, people often are very 
invested in the way they are doing things now, you very often--
a grantee will choose to relinquish because they understand 
that what you have said to them is, we are going to terminate 
it. Here is the evidence we have got. You, the parents on the 
board whose children are in here, didn't get up in the morning 
wanting to be running a program that we are going to be taking 
you through the court. So I assume that he may have been giving 
an example of one that played out all the way without that kind 
of negotiation.
    Senator Dodd. Thank you all very, very much. Again, Mr. 
Chairman, thank you for holding the hearing.
    Senator Alexander. Thank you, Senator Dodd.
    Senator Enzi?
    The Chairman. Thank you, Mr. Chairman, and I am glad that 
Senator Dodd mentioned Sarbanes-Oxley because he and I are both 
on the Banking Committee, as well, and about 3 years ago, we 
had the opportunity to take a look at what was happening with 
corporations in the United States, board governance. 
Corporations, of course, were doing some things with private 
money, manipulation, and we were absolutely appalled and we 
took drastic action.
    Now we are talking about some things where Federal money is 
being used with nonprofit organizations and we are rising to 
the defense of bad governance. That surprises me a little bit. 
We are not talking about eliminating a program, we are talking 
about making a program work, making a program better, making 
sure that the money that goes into the program is being used 
for what we intended for it to be.
    I think we ought to be equally appalled with some of the 
things that we are finding out about what is happening with 
Head Start money and try and figure out some ways to make sure 
that we put some rules in place that do that.
    Senator Dodd. I agree with that.
    The Chairman. As a former mayor, I really sympathize with 
what Mayor Wharton is saying. I would ask if you could speak 
specifically to some suggestions that Congress might provide 
for support to local government to take more decisive action if 
a Head Start program is in trouble. What things could we put 
into place that would have helped you?
    Mayor Wharton. Certainly, Senator. One thing I was able to 
do, and I would make this as a recommendation, when I took 
office, we only had one internal auditor in the entire country 
government. I hired six and sent two of those to a couple of 
the Head Start delegate agencies. Once those auditors visited 
both of those troubled agencies, they immediately said, listen, 
we simply cannot comply. Take us over.
    If somehow Congress could as we as grantees submit our 
applications, and I suggested this in my testimony, once a 
grantee or an applicant specifies precisely how it intends to 
govern financially and that is signed off on, then we ought to 
be given full reign to let it rip, to let it go, and that is 
what we did. So we were able to take two agencies out without 
any appeals or whatever because we audited them and they saw 
that they weren't living up and that ended it.
    Second, I would suggest that the purchasing and all of 
those troubled areas, that it be required that they be held 
back from the delegate agencies on a centralized basis so that 
if the folks from Atlanta came in, they do not have to audit 12 
fuel accounts, 12 fuel accounts. They come to me. I would be 
responsible for it, for doing the purchasing on the food or 
whatever and getting it out. That way, you have got one account 
that has to be audited.
    So the premise, underlying premise of all my remarks is to 
separate a lot of these, quote, ``business,'' close quote, 
business activities from the basic purpose of Head Start, which 
is nurturing, family support, instruction, all of those things. 
Our agencies are getting in trouble more, they are causing 
shame to the program more on the financial and business side 
than they are on the original purpose of Head Start from an 
instructional and child care standpoint.
    So two things--three things, actually, when it comes to 
shared governance.
    Now, someone asked the question or made an observation that 
they were not aware that board members actually get into 
financial decisions. That may be true technically, but it is 
the director of a given agency who is making those financial 
decisions and bad decisions and doing wrong in instances. But 
you then have to go to the policy council when you get ready to 
get rid of that delegate agency, or actually to terminate that 
individual.
    Now, that is the most troublesome difficulty there. You 
still have to ask--I was elected with 62 percent of the people, 
but when I catch somebody doing wrong, I have to go out and go 
through two or three levels and ask, is it okay if I get this 
guy out of here? He is stealing from us. And if he has got more 
sway than I do, he gets to stay.
    So keep shared governance. But I think we need to pull it 
back. Parents want to know, again, are you challenging my 
child? Are you enhancing her cognitive abilities? Are you 
teaching her to be a brave little child and to try new things? 
They don't want to come to a board meeting and hear--we have 
arguments that go into the night of whether you should have 
bought the computers over there, whether the gasoline ought to 
come from here. These are the kinds of things we are asking 
parents who come to find out what you are doing for their 
child, and yet they come to a meeting and listen for 3 hours on 
where you bought the gasoline. That is the kind of thing that 
we need to pull out of this shared governance model and that 
would give us--let me get in my defense role, if you might. 
When you focus on grantees.
    The Chairman. My time has run out.
    Mayor Wharton. When you focus on grantees, don't chop us 
off until you have given us the authority to chop those off who 
got us in trouble. That is all I would ask.
    The Chairman. Thank you, and I wish I had time to ask 
Commissioner Gates a couple of questions similar to that, and I 
will in writing, so I appreciate it. Thank you.
    Senator Alexander. Thank you. Senator Clinton has waited 
patiently. Senator Clinton?
    Senator Clinton. Thank you very much, Mr. Chairman, both 
Chairmen, for having this hearing today. I would ask unanimous 
consent that I could submit an opening statement to the record.
    Senator Alexander. Without objection.
    [The prepared statement of Senator Clinton follows:]

              Opening Statement of Hillary Rodham Clinton

    Thank you to all the witnesses for being here today. I 
appreciate your time and energy in coming here today.
    The topic we are discussing today--accountability for Head 
Start programs--is a critically important one. But before I 
speak to that, I want to make sure we do not lose the forest 
for the trees. We are talking today about a program that for 40 
years has provided the only Federal comprehensive early 
childhood intervention for needy families. And while we can 
split hairs on the exact implications of each and every impact 
analysis conducted, the bottom line is that all of the research 
points in the same direction--Head Start works. It is a cost-
effective, long-term investment for our society and it improves 
outcomes for poor children and their families.
    Most recently, Steven Barnett and Jason Hustedt conducted 
an overarching analysis of Head Start's benefits--both long and 
short term. Their conclusion on short term research is, and I 
quote, ``studies have generally shown that programs for 
children at risk, including Head Start, result in increases of 
0.5 standard deviations in IQ and achievement.'' This study 
also cites a rigorously designed, random assignment analysis by 
Abbott-Shim, Lambert, and McCarty, which found that Head Start 
participants benefited substantially compared to non-
participants in the areas of vocabulary, phonemic awareness and 
health-related outcomes. This study also found that parents of 
Head Start children reported more positive health and safety 
outcomes than parents of children not in Head Start.
    A 2001 article in the highly respected Journal of Economic 
Perspectives, which analyzed everything we know about early 
childhood intervention programs, starts off by saying ``This 
review of the evidence concludes that these programs have 
significant short and medium-term benefits, and that the 
effects are often greater for more disadvantaged children. Some 
of the model programs have produced exciting results in terms 
of improving educational attainment and earnings and reducing 
welfare dependency and crime.'' It goes on to say ``a simple 
cost-benefit analysis suggests that Head Start would pay for 
itself in terms of cost savings to the government if it 
produced even a quarter of the long-term gains of model early 
childhood programs.''
    The most recent, highly respected analysis of the longer-
term effects of Head Start, which was published in the American 
Economic Review, found unambiguous evidence of the success of 
this program.
    In short, this paper found that ``whites who attended Head 
Start are, relative to their siblings who did not, 
significantly more likely to complete high school, attend 
college, and possibly have higher earnings in their early 
twenties. African-Americans who participated in Head Start are 
less likely to have been booked or charged with a crime.''
    Now, I am never one to suggest that we rest on our laurels. 
If there are steps we can take to improve Head Start--to make 
it more efficient and more responsive to the families it 
serves--then we should talk about that through a bi-partisan, 
thoughtful, reauthorization process.
    But I have been and remain very deeply concerned about the 
Administration's position on Head Start. In the 2006 budget--
once again--we saw an attempt to turn this successful program 
into a block grant. In fact, the President's entire budget 
increase for Head Start--$45 million--is dedicated to 
supporting block grants in nine States. And while all of this 
talk today is about strengthening performance, the 
Administration has proposed cutting training and technical 
assistance resources in half. Frankly, those decisions make it 
hard to trust this Administration when it talks about Head 
Start. It signals that the Administration's true intention is 
at odds with the will of this committee, which in October of 
2003 unanimously passed a bill that rejected the 
Administration's block grant approach.
    I also think it is at odds with the facts to suggest that 
there is limited accountability for Head Start programs. In 
fact, quite the opposite is true. There are--quite literally--
1,800 program requirements, which evaluate the program on 
virtually every factor imaginable. For example, there are 553 
requirements for early childhood development and health 
services; 206 on family and community partnerships; and 1,038 
program design and management requirements. Head Start managers 
have a number of tools to keep them in compliance, including an 
annual self-assessment, monthly financial reports to the board, 
an annual financial audit, and an annual program information 
report. They have to participate in a triennial Program Review 
Instrument for Systems Monitoring.
    If all of these measures fail, HHS is support to provide 
technical assistance and compliance expectation. And finally, 
HHS may defund agencies that are performing poorly.
    In short, during the Clinton Administration we set up a 
gold standard for Head Start. We have an extensive monitoring 
system. And when you demand that programs meet 1,800 
requirements, you should not be surprised when a small 
proportion of them fail to achieve perfection. And as you can 
clearly see from the GAO report [see chart], relinquishments 
and terminations of poorly performing agencies were much higher 
during the Clinton Administration. Between 1993 and 1999, there 
were 101 relinquishments and 24 terminations. Between 2000 and 
2003, there have been a total of 18 relinquishments, and 3 
terminations. So, I would hope that the first step would be to 
rigorously utilize the oversight systems that are in place.
    Senator Clinton. I want to thank the witnesses. This is one 
of the best hearings that I think I can say I have attended. I 
think the thoughtfulness and the extraordinary interest in this 
program and the recognition of the success of the program 
really stands in very good stead, because what we are looking 
for are solutions to some problems as opposed to some of the 
conversations about Head Start which really seem to overlook 
the years and years of research about the success of this 
program. So I want to thank each of the witnesses.
    As I listened, I think that we are all saying the same 
thing. We are trying to figure out how to get to the point 
where the role of parents, which was one of the very critical 
ingredients in early design of Head Start, is maintained but 
without the kind of lack of training and the problems with 
governance that have been so well outlined here by the 
witnesses.
    I think that the Mayor's very strong argument that what we 
really want to do is build on the strength of Head Start, make 
it even stronger, help people, you know, focus on what is 
important and not get into trouble over what--the bottom line 
is really not that important. I mean, you know, somebody else 
should be really overseeing this.
    I wanted to ask Dr. Golden, as you listen to this, because 
I know you have had so many years of experience in evaluating 
programs, terminating programs--I love your very gentle way of 
saying you go make the presentation and they relinquish the 
program, and there was a lot of that during the Clinton 
administration where we, I think, ended up terminating 27 and 
creating the circumstances for relinquishment of 117.
    Really two questions. One, as you listened to the other 
witnesses, how would you address their very legitimate 
concerns? I mean, Commissioner Gates, who has one of the 
fastest-growing places in the world, I think, with Clark 
County, the Mayor's very specific examples, and Dr. Caccamo's 
comments, as well.
    We tried to do this in the reauthorization and the 
regulations. Clearly, there is more than can be fine-tuned and 
done. So my first question is, what more can we and should we 
do?
    But second, in the testimony from Secretary Horn, I think 
that we heard that there have been cutbacks in the funding for 
technical assistance and there has been a movement to try to 
block grant Head Start, which I think would be a real mistake 
for a lot of the reasons why Head Start has worked. But I 
understand the frustrations of local leaders who themselves 
feel on the line. So how do we get the Federal Government to do 
a better job working with responsible leaders like the three 
witnesses who are here?
    Ms. Golden. Well, it is interesting, because, of course, I 
have been listening to these three and Dr. Caccamo and I, I 
think, both share the fact that KCMC was so exciting and such 
an example that it just feels tragic that it fell apart in this 
way, and in hearing the Mayor's and the Commissioner's 
examples.
    I guess I would say a couple of things. The first is that I 
think we all share the view that not only the underlying 
purpose, but the core standards of Head Start are critical, 
that the research supports them and that the experience we have 
all had about what it takes to reach these impoverished 
children and make a difference in their lives. So that, I 
think, is shared.
    Second, listening to the descriptions of what might be 
important, it makes me want to study these three examples. 
Perhaps the Congress might do some fact finding across a 
broader array to figure out--I am curious whether any of the 
three programs had a visit by a senior HHS official, had 
extensive technical assistance to go through the tangle. I 
don't know whether in the Mayor's example whether anything does 
need to change in the regulations or whether you just didn't 
get the help you needed to operate in a strong way.
    And so I think the question of what it needs to change in a 
regulatory way versus how much of this is about technical 
assistance, I think is an important question. So a commitment 
to the standards, a commitment to strong onsite involvement and 
technical assistance seems to me key.
    And then, I guess, the other piece for me is that in all of 
these examples, I do share your view, Senator Clinton, that 
parent involvement substantively is part of what we know makes 
Head Start work and I think that was shared also by all of the 
panelists. So figuring out if there is a way to strengthen that 
through the training and the board involvement and make sure 
that that is happening in a way that supports the programs 
rather than undercutting them.
    I guess I did share the concern you expressed about the 
idea of cutting the training and technical assistance overall 
as a Head Start strategy, and I think the one thing I would 
say, you mentioned the block grant question. I think what we 
are learning more and more from the research is that what makes 
early childhood programs work for children is high-quality 
standards. As the Mayor said, it is the standards about what 
happens in the classroom, that Head Start has rigorous 
standards that are tied to the research, and that it is much 
more consistent in enforcing them than the State pre-K or child 
care programs.
    So that what we have from Head Start that works for kids is 
very high quality standards and a generally high quality and 
rigorous monitoring, although as we have been seeing, one that 
needs to be consistently supported. So I would go for the focus 
on the high standards and the rigorous enforcement coupled with 
the training, technical assistance, and support that enables 
local leaders to do what they need to do to meet those 
standards.
    Senator Clinton. Mr. Chairman, I thank the witnesses, and 
if I could maybe suggest that--I am so impressed by the 
extraordinary thoughtfulness of each of them that perhaps if 
they would have the time, the questions that Dr. Golden asked 
to really get into the meat of it. I mean, did you get the help 
you needed? Could there have been faster response from the 
Federal Government? How do we streamline that? I see you 
nodding, Commissioner Gates. Would you want to say something 
real quickly?
    Ms. Gates. I couldn't agree with you more. That was exactly 
the problem that happened in Clark County. The Federal 
Government came in too late. By that time, the problem had 
escalated and escalated and it was unresolvable. If local 
government, being the county, if they had taken our suggestion 
and let us come in and help them, they probably would not have 
been as tragic as it was or as it has been. So early 
intervention is really key and important, and local involvement 
is probably the most central point that I am hearing from the 
Mayor, as well. You have to have that local control because 
what happens to this program really hurts the whole community.
    Senator Clinton. Thank you, Mr. Chairman.
    Senator Alexander. I think a good way to end the hearing 
will be to ask each of you if you have 60 seconds that you 
would like to offer as a valedictory, as a last word, and then 
invite you each, as you go back to your homes, within the next 
week--we will keep the record open to write us with any 
specific followups to the discussion that you have heard today, 
following up Senator Clinton's suggestions.
    Senator Ensign?
    Senator Ensign. Thank you, Mr. Chairman.
    Senator Alexander. Did I look over Senator Roberts? I guess 
I did. I am sorry.
    Senator Roberts. Normally, that is pretty tough to do, 
but--
    [Laughter.]
    Senator Alexander. I apologize. Senator Roberts?
    Senator Roberts. I would be happy to yield to Senator 
Ensign. I have a tirade. You probably have a speech.
    [Laughter.]
    Senator Roberts. It all depends, Mr. Chairman. Do you want 
the tirade first and the speech second?
    Senator Alexander. Let us go to Senator Ensign.
    [Laughter.]
    Then we will let the tirade lift us up as we go out.
    Senator Ensign. I appreciate that, Mr. Chairman. I, too, 
have enjoyed the hearing today. I think it is very valuable and 
I think all of us agree that the bottom line is how do we get 
the dollars to help the kids and to help their families.
    As Commissioner Gates has briefly mentioned, we have had 
some serious problems in Southern Nevada. Northern Nevada is in 
the opposite situation. We have an agency up there that is 
functioning well and that is where I wanted to start with you, 
Commissioner Gates. What suggestions specifically do you have 
for us after going through the bad experience that we have had 
in Southern Nevada, and comparing that to what we do have 
Northern Nevada as a little different example? There are things 
that we do better in Southern Nevada than they do in Northern 
Nevada, but this happens to be one case that is just the 
opposite.
    What lessons can we learn from Nevada, as policy makers put 
in place changes to try to prevent these problems and help 
local governments like you, the Mayor and others prevent what 
was going on in Southern Nevada at an earlier stage? What 
specific suggestions can you give to us?
    Ms. Gates. Mr. Chairman and members of the committee and 
Senator Ensign, I think three things that are probably the most 
critical that I would say.
    No. 1, you can't have one agency be in charge of the whole 
caboodle. That is designed for disaster, because if there is a 
problem, then there is no one else to come in and take over and 
to help.
    No. 2, I think local government being involved, and I know 
that the Mayor is involved, but we are not involved in Clark 
County. The granting agency is a nonprofit agency, and if we 
had an opportunity, because we consider ourselves partners 
because we provided so many facilities and built so many 
facilities that it was important for us to be involved, but 
when we went to seek and try to assist, then that assistance 
was turned down. I think it is important that local government 
be involved in terms of providing assistance, providing fiscal 
assistance. That is very critical.
    And the last thing that I would say is that if local 
government could, of course, have an opportunity, as the Mayor 
has suggested, to be in charge of the Federal portion of the 
moneys, overseeing the moneys or at least having some kind of 
leadership role in making sure that those dollars are spent 
properly, that would also be critical.
    So those are the three things that I would suggest as a 
government agency who really is concerned about the health and 
education of all of these children here in Clark County.
    Senator Ensign. Mr. Chairman, when we are talking about the 
reauthorization of this program, I think that everybody is 
concerned that we measure the results. Measure what is working, 
the metrics of the program. I have talked at length about the 
importance of metrics in personal conversations with Chairman 
Enzi and also with the subcommittee chairman--that, first of 
all, I think we need to measure what percentage of the dollars 
are actually going to oversight? What percent of the dollars 
are administrative expenses? And what percentage of the dollars 
are getting to the children and getting to their actual 
education in the classroom, because that is the most critical 
piece to measure.
    We need to ask, are the reforms that we want to put in 
place going to make things worse? Are we going to spend more 
money trying to chase the bad money, because frankly, we have 
had some bad actors in this program. We had some bad actors in 
Southern Nevada. It sounds like they had some bad actors in 
Memphis, Tennessee. As they have said, you cannot legislate 
morality. You cannot legislate moral people being involved in 
these agencies. Are we putting into place based on programs 
that are not working, something else that later on, 3 years 
from now, we are going to have another hearing and discover 
that the changes we made to solve the problem aren't working, 
either.
    In other words, I think we have to be careful as we are 
going forward to make sure that the oversight is improved and 
we have as much light shining on it as possible. That is the 
problem that we saw with the EOB, is that they seemed 
unaccountable to anybody. It sounds like with the Mayor that 
you didn't know where the money was. You don't even know how to 
get to the money. But at the same time, we have to make sure 
that we aren't spending so much money going after bad actors 
and that we are spending so much money in the bureaucracy that 
the dollars aren't getting to the classroom. If anybody would 
like to comment on that.
    Mayor Wharton. May I? With respect to your observation on 
not spending a lot more money that could more probably be 
directed to outcomes for the children, I don't think that is 
necessary, quite frankly. As indicated by the example I gave 
just a few minutes ago with respect to the two delegate 
agencies that I was able--that they relinquished or whatever 
the phrase is here, that was strictly local and I simply sent 
an auditor down there and there it was.
    The key is not more Federal money, but more local 
authority. I am not asking--oh, certainly, programmatically, 
when it comes to teaching these children and assessing these 
families and teaching literacy for the families, yes, we need 
more money. But on this side of catching folks doing wrong, I 
am not asking for more money for that. All I am asking for is 
to give me some finality, some authority that when I get you, 
you are gone. It weakens us as a government when I see what is 
happening and I can't do anything about it.
    So no, this is not a call for, give us more money, 
particularly at the local level. Just give us more power to 
straighten things out.
    Ms. Gates. And I would echo those comments, as well.
    Ms. Golden. And I think I would just take them one step 
further to say that I think it is very useful for the committee 
to reflect on that balance, on the fact that--and I think 
Chairman Alexander highlighted it at the beginning, that it is 
both about making sure there is integrity, fiscal integrity, 
and about the results for children, that they are learning.
    Perhaps in my 60 seconds at the end, I will highlight the 
fact that there is a lot of really useful research going on now 
that the committee may want to look at it in its 
reauthorization that highlights what we know about the impact 
that we are having on school readiness and what kinds of 
standards and how it works. So there is a lot of knowledge 
about that now to add to the committee's reflections.
    Senator Ensign. Thank you, Mr. Chairman. I wish I had time 
to stay around for Senator Roberts' tirade. I was kind of 
looking forward to it.
    [Laughter.]
    Senator Alexander. Well, I hope he will forgive me for 
jumping over him. Senator Roberts?
    Senator Roberts. Thank you, Mr. Chairman.
    Jim, again, thank you for taking the time out of your busy 
schedule to be with us. This comes with good timing for bad 
news again.
    Yesterday, the Kansas City Star printed an article--it has 
been an ongoing series of articles for several years about the 
financial abuses of the Kansas City Head Start program, which, 
I might add, as Ms. Golden indicated, all of these should be 
synonymous with integrity. That is an oxymoron in this 
particular case.
    I want to point out that this center is not in Kansas, it 
is in Missouri, and it is in Clay County, Platte County, and 
Jackson County, but we have a very fine Head Start program in 
Wyandotte County just across the river and this example 
basically infected and contaminated all of our efforts.
    The article is alarming. It details the corporate credit 
card abuses of the former executive director of the program. To 
quote the story, the former executive director's charges range 
from items as small as a car wash, and let me point out that 
those car washes cost $12,000, to flights overseas, and I could 
go down the list. It would make your head swim. I am talking 
about Godiva chocolates, wedding and anniversary gifts, trips 
to the Caribbean, cowboy boots. In all, the executive director 
of the Head Start program used his corporate credit card more 
than 1,000 times--1,000 times--on purchases that totaled more 
than $165,000. If there was a case of avarice and greed and 
incompetence and remarkable arrogance, I don't know where there 
is any better case. He got paid $814,000 over a 3-year period.
    Now, what was the reaction? Federal auditors never looked 
at the credit card charges at KCMC in reviews done every 3 
years. Even after KCMC's controller pleaded guilty--he is in 
jail--in 2002 to bribery and money laundering, Federal 
officials acknowledged that auditors failed to scrutinize 
Crompton's credit card or travel expenses in review just 2 
months later. Instead, auditors applauded the KCMC for 
exemplary service. They found the board and management well 
informed, including about agency finances.
    But the board members said last year, 2 years later, that 
they had been unaware of Crompton's spending and the agency's 
financial woes beyond the fraud in December. The agency, 
millions of dollars in debt, gave up its Head Start grant. A 
Denver firm stepped in to operate the program, which serves 
2,700 preschoolers in Jackson, Clay, and Platte County until 
the Federal Government finds a new agency. Jim is probably up 
on that in terms of where we are in that regard.
    Now the Governor of Missouri is launching another 
investigation. It ain't over. It ain't over until it is over. 
This ain't North Carolina and Illinois. It ain't over. And so 
in Wyandotte County, we have to live with that right across the 
river, and I can't tell you how upset I am.
    I have visited a center in Wyandotte County. When I 
visited, this is just about the time this story was breaking 
and people had come up to me and said, ``Do you think this is 
going to endanger the program?'' And I said, ``Well, it sure as 
heck isn't going to help.'' So, consequently, I went in and I 
learned how to brush my teeth better and I read the book 
Curious George to the kids, and then the director and I danced 
to, ``You Are My Sunshine.''
    [Laughter.]
    I was not Fred Astaire. She was Ginger Rogers and the kids 
really got a good kick out of that.
    But at the same time this scandal was actually brewing, and 
it is still not over, why, Mike Castle over on the House side, 
with very good intentions, says, why don't we delegate this? We 
can do it better in Delaware. We can handle it. And so we are 
into devolution and a pilot program, so on and so forth, which 
I oppose.
    So I am upset about this and I am very glad that Jim came 
up to give his testimony. I guess my questions really center on 
the testimony, especially by Ms. Gates.
    Ms. Gates, you said--I am just going to skip to the last--
``Congress may wish to consider restrictions on prohibiting ACF 
from allocating all of its Head Start funding to a single 
organization within a single large metropolitan area.'' With 
your experience, in the Kansas City situation, do you think 
such an approach would have helped?
    And Jim, what in the heck are we doing in Kansas City to 
get this thing back on track so that we don't have these kinds 
of problems in the future?
    Ms. Gates. Mr. Chairman and Senator Roberts, I couldn't 
agree more. That has been the biggest problem in Clark County. 
We had one grantee. And if we had an opportunity to have more 
than one grantee, we probably wouldn't be in the situation that 
we are in today. Obviously, in your situation, you have 
experienced the same thing, but it was a little bit too late 
for the Federal Government to come in.
    And second, the fact that there is no proper training, and 
just for your information, Mr. Chairman and members of the 
committee, I was once on that board as a County Commissioner 
and I got off of that board because of the internal problems 
that the Mayor talked about in terms of the funding and fights 
and so forth. It was better for me to be on the outside, 
although I still helped them.
    But having one agency in charge of over $20 million is 
problematic.
    Senator Roberts. Jim?
    Mr. Caccamo. Yes, Senator. I go back and forth on this 
relative to Kansas City, about whether it should be broken up 
or be one agency. Please remember that what goes on for boys 
and girls, what goes on for parents and comprehensive services 
is very strong. We don't have programmatic problems. What we 
have is finance and government, and I am sorry that Senator 
Enzi left because I want to tell him that we are appalled by 
it. We are appalled. The juxtaposition of an executive director 
who could run such comprehensive programs for children and 
families against the use of the credit card and other 
governance and finance problems has appalled our community.
    Now, to break it up might help, but keep in mind that 
programmatically, it is solid. I think there are other 
solutions in our community that I spoke to already that would 
help resolve the issue of financing government. If in Clark 
County there is another solution, I think the law ought to 
allow--ACF ought to allow for multiple. But I don't think there 
is a cookie cutter. The reason I think Head Start works for so 
many boys and girls and families is that there is community 
reflection in all of these programs, most of the time for the 
good.
    Senator Roberts. Well, thank you, Jim, for your effort, and 
thank all of you for your testimony.
    After my visit in this one center, a young lady came up to 
me, and I said we were singing ``You Are My Sunshine.'' The 
sunshine in that center came from her eyes. She was a graduate 
of that program 20-some years previously and her daughter is in 
that program now and it is a success story. And you are right. 
We are all appalled. This is a case that has been most 
damaging. This particular example is a lot like asking for a 
neck massage from the Boston Strangler in regards to the 
program.
    [Laughter.]
    I am very upset about it and it has taken 3 years to get 
this doggone thing on track and it is not over because now the 
Missouri Governor is going to launch an investigation. I have 
the privilege of representing Kansas, but again, because of the 
border situation, it reflects on the entire program.
    So I really appreciate your efforts for the clean-up, and 
Mr. Mayor, I certainly sympathize with your situation, and Mr. 
Chairman, thank you for your leadership.
    Senator Alexander. Thank you, Senator Roberts.
    This has been an exceptionally good hearing, both from the 
Senators' participation and especially from the witnesses. We 
would like to thank each of you for coming, some of you from 
long distances, to be here today. We know you have busy 
schedules.
    As I mentioned earlier, we are going to keep the record 
open for a week. You have heard the discussion. Maybe it raised 
some thoughts in your mind. We are looking at whether we should 
reauthorize Head Start in the next few months. We need to do 
that. We need to do that working together, and we want to 
improve accountability. We want to make it easier for the money 
we appropriate to help children and we need specific 
suggestions from you. You have already given us some ideas 
about how to do that.
    Now, let us end the hearing. We will go right down the row. 
Why don't we start with you, Mr. Caccamo, and Mayor Wharton, 
Commissioner Gates, Dr. Golden. Sixty seconds, what would you 
like to leave us with?
    Mr. Caccamo. I think I can do it in less than that, 
although the people at home would be surprised.
    [Laughter.]
    Keep in mind that Head Start works. We have high 
performance standards, comprehensive services, parent 
engagement, and community involvement. Those are strengths and 
it works in most of our communities.
    There are bad things, too, and the bad things in our case 
was the governance problem, financial problems, which I think 
came about because of lack of board attention. We will address 
that, Senator.
    Senator Alexander. Thank you, sir.
    Mayor Wharton?
    Mayor Wharton. Thank you, Mr. Chairman, and thanks to you 
and the committee members for convening this hearing. I will go 
back to my basic points. More local control in dealing with 
errant agencies. Give us some finality there.
    I would have a word of caution with respect to having more 
than one grantee, particularly in those instances where, in my 
case, I am responsible for funding public schools. I think what 
we should require is some cooperation or collaboration between 
the Head Start programs and our systems of public education. 
The Governor is getting ready to start a pre-K program, but 
nobody has called me to say, how can you fit that $22 million 
you already get into that? I think if we start breaking it up, 
we may work against the purpose of integrating what is taught 
in Head Start with what goes on from pre-K on up. So I would 
caution against breaking it up.
    Programs should be required to have some CIP program built 
in, not how they are going to correct what they have done wrong 
but how they are going to get better. That ought to be built 
into the program, a continuous improvement process or whatever.
    And I think there should just, again, over and over, more 
local control in dealing with agencies that for whatever reason 
have not complied. Thank you.
    Senator Alexander. Thank you, Mayor Wharton.
    Commissioner Gates?
    Ms. Gates. Mr. Chairman, thank you. Again, I want to just 
reiterate that Head Start does work and it certainly works in 
Clark County. But I would add three things.
    Early Federal intervention with proper training of staff is 
important.
    Expand fiscal review and control by local government, 
making sure that local government is involved.
    And then last, have the flexibility to have more than one 
grantee in a large metropolitan area, such as Clark County.
    Senator Alexander. Thank you, Commissioner Gates.
    Dr. Golden?
    Ms. Golden. I think I would also make three points. I would 
start with the Head Start works point and just note that the 
more that school readiness and early learning are on our minds 
in this country, and we know from the research both that Head 
Start makes a difference and we know some things about how it 
makes a difference.
    So the second point would be that how it makes a difference 
is through high and rigorous standards and strong enforcement 
and strong involvement of partners around those standards, so 
that is key.
    And the third theme, which I have just heard throughout the 
conversation today, is really, I think, a theme about 
balancing, about making sure you have strong programs and 
strong fiscal integrity, that you have strong Federal oversight 
that doesn't squash but invites local partnerships, and I think 
that theme of how to balance those things in the service of the 
goals that we know we all have was really what came through to 
me most strongly.
    Senator Alexander. Thank you. That is very helpful. And for 
my 60 seconds, I think you took about the first 30 seconds of 
it because that balance that you speak of, I think, is 
critically important. It is too frequently the case when there 
is a problem and the Federal Government gets involved that we 
become overly prescriptive about how to fix things from here. 
There is no more wisdom here than there is in Memphis or Kansas 
City or anywhere else, often less. So we need our standards and 
we need to watch the money from here.
    But at the same time, we are likely to get a better result 
if we have, as several of you have emphasized, clear 
accountability at the local grantee level, in other words, 
somebody in charge and somebody who can fix it if it goes 
wrong. And if you can help us keep that balance, we will be 
able to continue to have autonomous units around the country, 
which was the original idea, local control, parent involvement, 
good programming, hopefully better outcomes. The more we have 
learned about preschool education, the more we want, as several 
of you have suggested. More cognitive learning; we want to know 
whether that is happening. We want to know whether there are 
results as a result of the health screenings, those sorts of 
outcomes.
    We want the money to go where it goes, but we don't want to 
squash the ability of local officials to take charge and 
produce good results.
    Thank you very much. The hearing is adjourned.

    [Whereupon, at 12:01 p.m., the subcommittee was adjourned.]

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