[Federal Register Volume 84, Number 58 (Tuesday, March 26, 2019)]
[Proposed Rules]
[Pages 11269-11275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05363]



[[Page 11269]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 1302

RIN 0970-AC73


Head Start Service Duration Requirements

AGENCY: Office of Head Start (OHS), Administration for Children and 
Families (ACF), Department of Health and Human Services (HHS).

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Office of Head Start currently requires Head Start 
programs to operate 100-percent of their preschool center-based slots 
for 1,020 annual hours by August 1, 2021, which would substantially 
increase the minimum amount of time preschool children must receive 
Head Start services. We believe the approach to require all center-
based programs to increase their hours of operation was too 
prescriptive and will reduce grant recipients' flexibility to meet the 
needs of the communities they serve. It would be costly for grantees to 
meet the increased service-duration requirement and would likely result 
in a reduction in the number of children served by Head Start. For 
these reasons, we propose to remove the 100-percent service duration 
requirement from the HSPPS. We also propose technical changes to our 
Program Structure regulations.

DATES: Submit either electronic or written comments by May 28, 2019.

ADDRESSES: You may submit comments, identified by [docket number and/or 
RIN number], by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Office of Head Start, Attention: Director of Policy 
and Planning, 330 C Street SW, 4th Floor, Washington, DC 20201.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted without change to 
http://www.regulations.gov, including any personal information 
provided.

FOR FURTHER INFORMATION CONTACT: Colleen Rathgeb, Office of Head Start, 
Planning, Oversight, and Policy Division Director, (202) 358-3263, 
[email protected]. Deaf and hearing impaired individuals may call 
the Federal Dual Party Relay Service at 1-800-877-8339 between 8 a.m. 
and 7 p.m. Eastern Standard Time.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    Executive Order 13771
    Head Start and Service Duration
    Goal of This NPRM: Reducing Burden on Local Grantees
II. Statutory Authority To Issue NPRM
III. Section by Section Discussion on Proposed Changes to the HSPPS 
Final Rule
    Section 1302.21 Center-Based Option
    Section 1302.24 Locally-Designed Program Option Variations
IV. Regulatory Process Matters
    Regulatory Flexibility Act
    Unfunded Mandates Reform Act
    Treasury and General Government Appropriations Act of 1999
    Federalism Assessment Executive Order 13132
    Congressional Review
    Paperwork Reduction Act of 1995
    Regulatory Planning and Review Executive Order 12866, Executive 
Order 13563, and Executive Order 13771
V. Regulatory Impact Analysis
    Need for Regulatory Action
    Transfer Analysis
    Cost-Benefit Analysis
    Accounting Statement: Table of Quantified and Non-Quantified 
Benefits, Costs, and Transfers
    Table 1: Benefits and Costs of Removing the 100 Percent Service 
Duration Requirement
List of Subjects

I. Background

    We reviewed the HSPPS final rule, 81 FR 61294, September 6, 2016. 
Through our review, we identified the 100-percent service duration 
requirement for center-based programs at Sec.  1302.21(c)(2)(iv) as a 
regulatory provision that could interfere with how local programs 
determine what works best for their communities. This requirement would 
also impose a high cost on providers and result in fewer children being 
served in the Head Start program.
    We propose to remove the 100-percent service duration requirement 
from the HSPPS. We also propose technical changes to Subpart B--Program 
Structure. The first change removes reference to the requirement for 
Head Start programs to operate 50 percent of their center-based slots 
for 1,020 annual hours. In January 2018, the Acting Secretary exercised 
his authority to waive this requirement, which effectively eliminated 
it by lowering the 50 percent requirement to 0 percent. Additionally, 
we propose several other technical changes within Subpart B to remove 
references to 1,020 annual hours and to remove an outdated provision. 
These changes are technical fixes that will not alter the substance of 
the HSPPS final rule, but will ensure that active Head Start 
requirements are transparent to the public.

Head Start and Service Duration

    The HSPPS are the foundation on which local programs design and 
deliver comprehensive, high-quality individualized services to support 
school readiness for the approximately one million children Head Start 
programs serve each year. Since its inception in 1965, Head Start has 
been a leader in helping these children reach kindergarten more 
prepared to succeed in school.
    When we revised the HSPPS in 2016, it was the first comprehensive 
revision of the standards since the standards were originally published 
in 1975. This update reorganized and streamlined the HSPPS with a goal 
of making it easier for grantees to implement requirements and for the 
general public to understand them. This revision also reduced the 
number of federal requirements by approximately one-third with a goal 
of lessening the regulatory burden on programs.
    Our decision to require, in the HSPPS, all Head Start center-based 
programs to offer at least 1,020 annual hours of service for all 
preschoolers by August 1, 2021, was grounded in the latest research on 
child development and promotion of school readiness for low-income 
children. We consulted with experts, researchers, and practitioners, as 
well as recommendations from the Secretary's Advisory Committee Final 
Report on Head Start Research and Evaluation.\1\ The Committee 
considered the results of the Head Start Impact Study, a randomized 
controlled trial that studied a sample of children who participated in 
Head Start in 2002-2003 and followed them through third grade.\2\ The 
Committee concluded that the initial impact of Head Start is ``in line 
with the magnitude of findings from

[[Page 11270]]

other scaled-up . . . center-based programs for preschoolers . . .'' 
but also acknowledged that ``larger impacts may be possible, e.g., by 
increasing dosage in . . . Head Start or improving instructional 
factors in Head Start.'' \3\ The report determined that a key factor 
for Head Start to realize its potential is ``making quality and other 
improvements and optimizing dosage within Head Start.'' While exposure 
to more high-quality early education services can benefit low-income 
children in terms of developmental outcomes, the tradeoffs associated 
with providing longer services for some children at the expense of 
providing no services for other children are too severe.
---------------------------------------------------------------------------

    \1\ Advisory Committee on Head Start Research and Evaluation: 
Final Report. (2012). Washington, DC: Office of Head Start, 
Administration for Children and Families, U.S. Department of Health 
and Human Services. See https://www.acf.hhs.gov/sites/default/files/opre/eval_final.pdf.
    \2\ Puma, M., Bell, S., Cook, R., Heid, C., Broene, P., Jenkins, 
F., & Downer, J. (2012). Third grade follow-up to the Head Start 
impact study final report. U.S. Department of Health and Human 
Services Office of Planning, Research and Evaluation.
    \3\ Ibid. (p.30).
---------------------------------------------------------------------------

    We also considered that in order to support longer service 
duration, programs would likely have to serve significantly fewer 
children in order to increase service hours. During the public comment 
period for the 2015 notice of proposed rulemaking (NPRM) that proposed 
longer service duration requirements for Head Start centers, most 
comments were on the proposed service duration requirements. 
Specifically, the NPRM did propose to require Head Start center-based 
programs to operate at a minimum of 6 hours per day and 180 days per 
year. The NPRM was more rigid in that it required specific hours per 
day programs were required to operate, rather than a more flexible 
annual hours approach, or a phase-in period, which would have afforded 
programs time to meet this requirement. Moreover, it did not allow the 
Secretary flexibility to lower the requirement if sufficient funding 
was not available to mitigate a slot loss. Some commenters supported 
these requirements regardless of available funding. However, the vast 
majority of commenters stated that while longer service duration may be 
more beneficial for children, they would not support the policy without 
adequate funding because it would deprive many children of early 
learning opportunities due to a decrease in available Head Start slots. 
Another group of commenters opposed longer service duration 
requirements regardless of funding because such requirements would 
impose a one-size-fits-all model by the federal government and might 
prevent creative and innovative program designs that would be more 
responsive to community needs.
    In response to commenters' concerns and in recognition of the 
concerns about a potential reduction in children served, the HSPPS 
final rule provided the Secretary flexibility to balance the policy 
goal of providing all Head Start preschoolers with increased service 
duration against the potential disruption and slot loss such a policy 
might create in the absence of additional funding from Congress. If the 
Secretary made a determination that sufficient funding would not be 
available to mitigate a substantial reduction in Head Start slots, he 
or she could choose to lower the 50-percent duration threshold on or 
before February 1, 2018 and the 100-percent duration threshold on or 
before February 1, 2020.\4\
---------------------------------------------------------------------------

    \4\ See Sec.  1302.21(c)(3) in the HSPPS final rule.
---------------------------------------------------------------------------

Goal of This NPRM: Reducing Burden on Local Grantees and Maximizing 
Grantee Flexibility

    The goal of this NPRM is to eliminate the 100-percent requirement 
to reduce burden on grantees, restore programs' flexibility to design 
program schedules that best meet their community needs, and prevent a 
possible large reduction in children served in Head Start programs as 
the result of a federal requirement. Programs can still offer full-day, 
full-year services if that schedule meets their community needs and is 
approved through their grant application.
    We believe the requirement to provide 1,020 annual hours of 
services for all preschool center-based slots by August 1, 2021 may be 
overly prescriptive and may not allow programs enough autonomy to 
decide what is best for the communities and families they serve. We 
believe that by eliminating the 100-percent service duration well in 
advance of the August 1, 2021 effective date, we can ensure programs do 
not make unwanted and unnecessary changes to their program operations.
    In addition, given that Congress has not appropriated sufficient 
additional funding to support increased service duration since the 
publication of the 2016 HSPPS final rule, it is unlikely that the 100-
percent requirement will be fully funded prior to the date when 
programs will have to comply. For fiscal year (FY) 2018, Congress 
appropriated $260 million to increase service duration. However, this 
available funding is not sufficient for Head Start programs to move 
100-percent of their slots to 1,020 annual hours. Therefore, if the 
100-percent requirement were to go into effect, it would likely result 
in a substantial reduction in the number of children served by the Head 
Start program. If we eliminate this requirement through the rulemaking 
process, rather than wait for the Secretary to make a determination 
closer to February 1, 2020, we will provide grantees additional time to 
thoughtfully plan for how to best use existing federal resources to 
continue to prepare children from low-income families to succeed in 
school and in life. Even if we receive additional funding in the next 
fiscal year to increase service duration, we believe programs are in 
the best position to decide whether or not full-day/full-year services 
work best for the communities they serve.

II. Statutory Authority To Issue NPRM

    OHS publishes this NPRM under the authority granted to the 
Secretary of Health and Human Services under sections 641A and 644, of 
the Head Start Act (Act) (42 U.S.C. 9836a and 9839), as amended by the 
Improving Head Start for School Readiness Act of 2007. In these 
sections, the Secretary is required to establish performance standards 
for the Head Start and Early Head Start programs, as well as federal 
administrative procedures. Specifically, the Act requires the Secretary 
to ``. . . modify, as necessary, program performance standards by 
regulation applicable to Head Start agencies and programs.'' \5\
---------------------------------------------------------------------------

    \5\ See Sec.  641A(a)(1) of the Head Start Act, 42 U.S.C. 9836a.
---------------------------------------------------------------------------

III. Section-by-Section Discussion on Proposed Changes to the HSPPS 
Final Rule

    We propose the following changes to the HSPPS final rule, under 
Subpart B part 1302 Program Operations at Sec. Sec.  1302.21 and 
1302.24. We believe these changes will reduce costly regulatory burden 
and to afford programs optimum flexibility to decide what is best for 
their communities. These changes will ensure the HSPPS are accurate, up 
to date, and transparent for the public.

Section 1302.21 Center-Based Option

    This section includes provisions that would require programs to 
increase hours of program operations in Head Start centers from 
previous minimums equivalent to 448 annual hours to 1,020 annual hours 
by August 1, 2021, with an interim requirement for 50 percent of 
center-based slots to operate for 1,020 annual hours by August 1, 2019. 
We propose to remove language related to the 50-percent requirement, 
which the Secretary effectively eliminated with his determination in 
the Federal Register, at 83 FR 2743, to reduce the requirement to zero 
percent as of January 2018, and to eliminate the requirement for 100 
percent of Head

[[Page 11271]]

Start center-based slots to operate for 1,020 annual hours by August 1, 
2021.
    Additionally, we propose to remove all pertinent language that 
requires Head Start center-based programs to operate for 1,020 annual 
hours. Specifically, in paragraphs (c)(2)(i) and (ii) of this section, 
we propose to remove the phrase, ``Until a program is operating all of 
its Head Start center-based funded enrollment at the standard described 
in paragraph (c)(2)(iv) or (v) of this section.'' We also propose to 
remove paragraphs (c)(2)(iii), (iv), and (v) and (c)(3), (4), and (5) 
in their entirety. Finally, we propose to re-designate paragraph (c)(6) 
as paragraph (c)(3). The proposed changes to this section would leave 
in place the long-standing Head Start center-based service duration 
minimums described in paragraphs (c)(2)(i) and (ii): A minimum of 3.5 
hours per day for 160 days per year if operating 5 days per week or 128 
days if operating for 4 days per week and a minimum of 3.5 hours per 
day for 128 days per year if operating double sessions four days per 
week.

Section 1302.24 Locally-Designed Program Option Variations

    This section allows programs to request to operate non-standard 
program options to better meet the unique learning needs of the 
children and community, while still delivering the full range of Head 
Start services and achieving program goals. This section allows 
programs to request to waive requirements in Sec.  1302.21(c)(2)(iii) 
and (iv) for longer service duration. Because we propose to remove all 
of the requirements related to longer Head Start center-based service 
duration from the final rule, we propose to remove any related 
references in this section.
    In Sec.  1302.24(c)(1), we propose to remove references to Sec.  
1302.21(c)(2)(iii) and (iv) and replace with a reference to paragraph 
(c)(2). We also propose to remove Sec.  1302.24(c)(3) entirely, and we 
propose to re-designate Sec.  1302.24(c)(4) as paragraph (c)(3). We 
propose to re-designate Sec.  1302.24(c)(5) as paragraph (c)(4), 
wherein we propose to change the reference to the former Sec.  
1302.24(c)(4) to new paragraph (c)(3), and replace references to Sec.  
1302.21(c)(2)(iii) and (iv) with a reference to Sec.  1302.21(c)(2).
    Finally, we propose to remove Sec.  1302.24(d) in its entirety. 
This provision references July 31, 2018, a date that has passed, and 
therefore is no longer necessary.

IV. Regulatory Process Matters

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA),\6\ as amended by the Small 
Business Regulatory Enforcement Fairness Act, requires federal agencies 
to determine, to the extent feasible, a rule's economic impact on small 
entities, explore regulatory options for reducing any significant 
economic impact on a substantial number of such entities, and explain 
their regulatory approach.
---------------------------------------------------------------------------

    \6\ See 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The term ``small entities,'' as defined in the RFA, comprises small 
businesses, not-for-profit organizations that are independently owned 
and operated and are not dominant in their fields, and governmental 
jurisdictions with populations of less than 50,000. Under this 
definition, some Head Start grantees may be small entities. However, in 
accordance with the RFA, we certify this proposed rule would not have a 
significant economic impact on a substantial number of small entities.
    In this NPRM, we are not imposing a negative impact on small 
entities so we do not need to consider relief. The action we propose 
here is intended to ensure accountability for federal funds is 
consistent with the purposes of the Head Start Act and is not 
duplicative of other requirements. If you think your business, 
organization, or governmental jurisdiction qualifies as a small entity 
and this rule would have a significant economic impact on it, please 
submit a comment (see ADDRESSES) explaining why you think it qualifies 
and how and to what degree this rule would economically affect it.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA) \7\ was enacted to 
avoid imposing unfunded federal mandates on state, local, and tribal 
governments, or on the private sector. Section 202 of UMRA requires 
that agencies assess anticipated costs and benefits before issuing any 
rule whose mandates require spending in any one year of $100 million in 
1995 dollars, updated annually for inflation. In 2018, that threshold 
is approximately $150 million. This rule does not contain mandates that 
will impose spending costs on state, local, or tribal governments in 
the aggregate, or by the private sector, in excess of the threshold.
---------------------------------------------------------------------------

    \7\ See 2 U.S.C. 1501 et seq.
---------------------------------------------------------------------------

Treasury and General Government Appropriations Act of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires federal agencies to determine whether a policy or 
regulation may negatively affect family well-being. If the agency 
determines a policy or regulation negatively affects family well-being, 
then the agency must prepare an impact assessment addressing seven 
criteria specified in the law.
    We believe it is not necessary to prepare a family policymaking 
assessment,\8\ because the action we propose in this NPRM will not have 
any impact on the autonomy or integrity of the family as an 
institution. However, if you think this action would have a negative 
effect on family well-being, please submit a comment explaining why 
(see ADDRESSES).
---------------------------------------------------------------------------

    \8\ See Public Law 105-277.
---------------------------------------------------------------------------

Federalism Assessment Executive Order 13132

    Executive Order 13132 requires federal agencies to consult with 
state and local government officials if they develop regulatory 
policies with federalism implications. Federalism is rooted in the 
belief that issues that are not national in scope or significance are 
most appropriately addressed by the level of government close to the 
people. This proposed rule will not have substantial direct impact on 
the states, on the relationship between the federal government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, it is determined that this action does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

Congressional Review

    The Congressional Review Act (CRA) allows Congress to review 
``major'' rules issued by federal agencies before the rules take 
effect.\9\ The CRA defines a major rule as one that has resulted or is 
likely to result in (1) an annual effect on the economy of $100 million 
or more; (2) a major increase in costs or prices for consumers, 
individual industries, federal, state or local government agencies, or 
geographic regions; or (3) significant adverse effects on competition, 
employment, investment, productivity, or innovation, or on the ability 
of United States-based enterprises to compete with foreign-

[[Page 11272]]

based enterprises in domestic and export markets.\10\ This action is a 
major rule because it will likely result in an annual effect of more 
than $100 million in transfers on the economy.
---------------------------------------------------------------------------

    \9\ 5 U.S.C. 802(a).
    \10\ 5 U.S.C. Chapter 8.
---------------------------------------------------------------------------

Paperwork Reduction Act of 1995

    Section 1302 does not contain new information collection 
requirements. The Office of Management and Budget regulations define 
``information'' as any statement or estimate of fact or opinion, 
regardless of form or format, whether numerical, graphic, or narrative 
form, and whether oral or maintained on paper, electronic or other 
media.\11\ This includes requests for information to be sent to the 
government, such as forms, written reports, and surveys, recordkeeping 
requirements, and third-party or public disclosures.\12\ This action 
does not include any information collection requirements.
---------------------------------------------------------------------------

    \11\ 5 CFR1320.3(h).
    \12\ 5 CFR 1320.3(c).
---------------------------------------------------------------------------

Regulatory Planning and Review Executive Order 12866, Executive Order 
13563, and Executive Order 13771

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 is supplemental to and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in Executive Order 12866, emphasizing the importance of quantifying 
both costs and benefits, of reducing costs, of harmonizing rules, and 
of promoting flexibility. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action that is likely to 
result in a rule: (1) Having an annual effect on the economy of $100 
million or more in any 1 year, or adversely and materially affecting a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating a serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order. A regulatory impact analysis must be prepared 
for major rules with economically significant effects ($100 million or 
more in any 1 year), and a ``significant'' regulatory action is subject 
to review by the Office of Management and Budget.
    This proposed rule, if finalized, would be considered an E.O. 13771 
deregulatory action. We estimate that this rule generates $395,000 in 
annualized cost savings, discounted at 7 percent relative to year 2016, 
over a perpetual time horizon. Details on the estimated costs of this 
rule can be found in the subsequent analyses.
    HHS believes to reduce the 100-percent service duration threshold 
to zero percent is an economically significant regulatory action within 
the meaning of E.O. 12866 because it will likely have an economic 
impact of $100 million or more on the economy in transfers.
    The $100 million threshold applies, in pertinent part, to the 
impact of the proposed or final regulation in any one year, and it 
includes benefits, costs, or transfers in any one year.
    We present details on the estimated cost savings in terms of 
planning, flexibility, and certainty for programs in the Regulatory 
Impact Analysis (RIA). The RIA below evaluates the economic impact, in 
terms of transfers and attempts to quantify transfers from children who 
would receive longer service duration to children who would lose 
services under the current HSPPS requirement absent additional funding.

V. Regulatory Impact Analysis

Need for Regulatory Action

    OHS included the requirement in the HSPPS final rule for 100 
percent of Head Start preschool center-based slots to receive 1,020 
annual hours of services by August 1, 2021 in an attempt to respond to 
research in early education, as well as advice from experts, on what 
features of early childhood programs promote strong outcomes for 
children. However, this requirement may have been too prescriptive for 
all communities that Head Start serves. Removing this requirement and 
reverting to previous minimums will restore more local flexibility to 
grantees and provide them the ability to determine what length of 
services best meet the unique needs of their communities. Furthermore, 
tens of thousands of Head Start slots would need to be cut in order for 
programs to meet this requirement by the specified deadline.
    While it is clear that exposure to more high-quality early 
education services can benefit low-income children in terms of 
developmental outcomes, the tradeoffs associated with providing longer 
services for some children at the expense of providing no services for 
other children are less clear. For instance we do not have research 
that indicates providing a smaller number of children with longer 
services (for instance, providing 15 children with a full day of Head 
Start, and another 5 children with no Head Start services) is more 
beneficial for society overall than using the same amount of resources 
to provide shorter services for a larger number of children (for 
instance, providing 20 children with a partial day of Head Start). 
There is not sufficient evidence to support favoring longer service 
hours for some children at the expense of providing no services to 
others. As a result, we believe the best option is to provide 
flexibility to service providers so they are able to best serve the 
needs of their community.
    In addition, the HPPSS rule imposes substantial burden of affected 
entities. In particular, transitioning services to meet new regulatory 
requirements requires significant planning. Removing this requirement 
through the rulemaking process promotes transparency from the federal 
government and provides as much notice to grantees as possible, which 
improves their ability to plan while reducing burden. Therefore, 
removing the 100-percent service duration requirement at this time will 
result in cost savings for grantees in terms of planning time.
    Overall, the 100-percent service duration policy is being proposed 
for elimination in order to provide as much flexibility to grantees as 
possible to better serve their individual communities, and to eliminate 
unnecessary regulatory burden.

Transfer Analysis

    Under the current HSPPS, Head Start programs are required to serve 
preschool children in center-based programs for at least 1,020 hours 
per year starting in program year 2021-2022. To estimate the transfers 
associated with removing this requirement for each grantee, we used the 
approach detailed in this section. In general, we rounded cost 
estimates throughout this analysis. These rounded cost estimates should 
not be interpreted as overly precise, but instead represent our best 
estimation given limitations.

[[Page 11273]]

    We first calculate the average incremental cost per Head Start 
center-based slot (as opposed to the full cost per slot) to move a slot 
from its current service level to 1,020 annual hours of service. To do 
this, we use information detailed in the applications OHS received in 
FY 2016 from grantees applying for funds to increase service 
duration.\13\ By examining the information from these applications, we 
determine that the average incremental cost to move a slot from its 
current service level to 1,020 annual hours of service is approximately 
$3,700 per slot. We calculate this incremental cost per slot by taking 
the total FY 2016 funding awarded to increase Head Start service 
duration ($254.7 million) \14\ and dividing by the total number of 
slots that grantees moved to 1,020 hours with that funding (69,200 
slots. For simplicity, we assume that the cost per slot does not change 
in real terms over time.
---------------------------------------------------------------------------

    \13\ Congress appropriated $294 million in FY 2016 for Head 
Start grantees to increase service duration.
    \14\ $254.7 million of the $294 million appropriated in FY 2016 
to increase service duration was awarded to Head Start preschool 
programs and the remainder was awarded to Early Head Start (EHS) 
programs to support them in meeting the requirement that all EHS 
center-based slots receive 1,380 annual hours of service.
---------------------------------------------------------------------------

    Based on FY 2018 data from the Head Start Grant Application and 
Budget Instrument (GABI),\15\ we also know that approximately 259,862 
slots would still need to increase service duration to meet the 1,020 
annual hour requirement. By multiplying this number of slots by the 
incremental cost per slot estimated above, we estimate that this 
requirement under the current regulation would require approximately 
$956.6 million in additional resources each year to maintain caseload. 
However, in March 2018 Congress appropriated an additional $260 million 
in the Consolidated Appropriations Act of 2018 to increase hours of 
program operation in Head Start. Therefore, we subtract this amount 
from the $956.6 million estimated above and conclude that the removal 
of this 1,020-hour requirement from the HSPPS would result in annual 
transfers of approximately $696.6 million from the children who would 
have received longer service duration to the children who would have 
lost services under the current regulation, starting in program year 
2021-2022.
---------------------------------------------------------------------------

    \15\ The GABI is a uniform OMB-approved application and budget 
instrument to standardize the format for the collection of program-
specific data grantees provide with a continuation grant 
application. Head Start grantees provide a range of data on their 
proposed budgets including non-federal share, any other sources of 
funding, program options, and program schedules.
---------------------------------------------------------------------------

    We also calculate the amount of Head Start slot loss the 100-
percent requirement would result in if it went into effect beyond what 
has been provided in FY 2016 and FY 2018. We do this by first 
calculating the average total cost of a Head Start slot. We take the 
total Head Start grants awarded in FY 2018 excluding duration funds to 
be awarded by March 31, 2019 ($6,725,686,353) and adjust for inflation 
to make this figure equivalent to 2016 dollars,\16\ which results in a 
total of approximately $6.45 billion. We then divide this figure by the 
total Head Start-funded enrollment for FY 2018 (717,947). This results 
in an average cost per slot of $8,986. We can then divide the total 
cost to increase service duration for the remaining Head Start slots 
($696.6 million) by this average cost of a Head Start slot ($8,986) and 
determine that, under the current regulation, and without additional 
funding, this requirement would result in a loss of approximately 
77,522 Head Start slots. For simplicity, we assume that slot loss due 
to this requirement is fixed over time because of substantial 
uncertainty involving the evolution of appropriations and cost per slot 
over time. We invite public comment on this assumption and on the 
methodology for these calculations.
---------------------------------------------------------------------------

    \16\ Using the Gross Domestic Product Deflator (https://www.bea.gov/).
---------------------------------------------------------------------------

    An alternative course of action would be to do nothing and leave 
the requirements at 1302.21(c)(2)(iv) and (3)(ii) in place. We 
carefully considered this option. Under this option, all Head Start 
programs would be required to provide 1,020 annual hours of program 
operations for 100 percent of their center-based slots by August 1, 
2021; however, the Secretary could also reduce this percentage of slots 
by February 1, 2020 to some lower percentage, including possibly to 
zero percent. Given that the Secretary exercised his authority, this 
course of action would result in substantial uncertainty for Head Start 
grantees and participants and potential Head Start grantees and 
participants in what the service duration requirements would be in the 
next several years. Additionally, without additional funding, an 
estimated 77,522 slots would be lost in order to meet the requirement 
within grantees' existing budgets.

Cost-Benefit Analysis

    By removing the requirement for programs to provide 1,020 annual 
hours of service for 100 percent of their Head Start center-based 
slots, Head Start management staff will realize savings in terms of 
planning time to prepare for the changes that would have been necessary 
to meet this requirement. For most grantees, we assume this would 
involve the time of the program director and the education manager. We 
assume, on average, grantees would require the equivalent of two weeks 
of planning time for the program director, for a total of 80 work 
hours, and 20 hours of planning time for the education manager. We 
request public comment on these assumptions regarding the staff 
involved in planning and the amount of planning time.
    Using data from the 2018 Program Information Report (PIR),\17\ we 
determine that the average annual salary for a Head Start program 
director is $80,330. Assuming 52 paid weeks in a year, and a 40-hour 
work week (2,080 total hours per year), this results in an average 
hourly rate of $38.62 for program directors. We adjust this hourly rate 
to account for overhead and benefits by multiplying by 2, resulting in 
an hourly rate of $77.24. We then multiply this hourly rate by 80 hours 
of planning time, resulting in a cost savings of approximately $6,180 
per program under the proposed rule. We then multiply this figure by 
1,035, which is the total number of programs that have Head Start 
center-based slots not currently meeting 1,020 annual hours, to 
estimate a cost savings of $6.4 million associated with planning time 
for program directors that would no longer be necessary. We adjust this 
figure for inflation to make it equivalent to 2016 dollars, which 
results in a cost savings of approximately $6.13 million associated 
with directors' planning time.
---------------------------------------------------------------------------

    \17\ The PIR is a survey of all grantees that provides 
comprehensive data on Head Start, Early Head Start and Migrant Head 
Start programs nationwide. Data collection for the PIR is automated 
to improve efficiency in the collection and analysis of data. Head 
Start achieves a 100 percent response rate annually from 
approximately 2,600 respondents.
---------------------------------------------------------------------------

    Next, again using data from the 2018 PIR, we determine that the 
average annual salary for a Head Start education manager is $54,541. 
Assuming 52 paid weeks in a year, and a 40 hour work week (2,080 total 
hours per year), this results in an average hourly rate of $26.22 for 
education managers. We adjust this hourly rate to account for overhead 
and benefits by multiplying by 2, resulting in an hourly rate of 
$52.444. We then multiply this hourly rate by 20 hours of planning 
time, resulting in a cost savings of $1,049 per program. We then 
multiply this figure by 1,035, the total number of programs with slots 
not

[[Page 11274]]

meeting 1,020 annual hours), resulting in an estimated cost savings of 
$1.09 million associated with planning time for education managers that 
would not be necessary under the proposed rule. We adjust this figure 
for inflation to make it equivalent to 2016 dollars, which results in a 
cost savings of approximately $1.04 million associated with education 
managers' planning time. Together, this results in a total cost savings 
in planning time for program directors and education managers of $7.18 
million (in FY16 dollars). We assume these costs savings will be 
realized in program year 2020-2021, the year prior to implementation of 
the 100 percent service duration requirement.
    In addition to savings in planning time, this regulation will allow 
grantees more flexibility to provide the duration of services that best 
meets the needs of their communities, including the children living in 
their communities. Head Start has traditionally been a program with 
local flexibility as a core operating principle. Through community 
needs assessments, community partnerships, and other community 
relationships, grantees aim to understand exactly what kinds of Head 
Start services are most needed and wanted by families in their 
community. This regulation will restore grantees' flexibility to meet 
that goal.
    However, programs will also require time to read and understand the 
new requirements set forth in this rule. We estimate that Head Start 
program directors would be responsible for this, and that it would take 
approximately five hours of their time to read, understand, and 
implement these requirements. We request public comment on these 
assumptions regarding the staff involved in the amount of time to read, 
understand, and implement these new requirements. Using the same 
assumptions above for a program director's hourly rate, we assume a 
cost of $386.00 per program to read and understand these requirements. 
We multiply this cost by 1,035 programs for a total approximate cost of 
$400,000.
    We subtract this cost from the cost savings in planning time 
described above, resulting in a net cost savings of $6.78 million 
associated with this rule (in FY16 dollars). We assume these costs 
savings will be realized in program year 2020-2021, the year prior to 
implementation of the 100 percent service duration requirement.

Accounting Statement--Table of Quantified and Non-Quantified Benefits, 
Costs, and Transfers

    As required by OMB Circular A-4, we have prepared an accounting 
statement table showing the classification of the impacts associated 
with implementation of this final rule. We decided to use a 10-year 
window for this regulatory impact analysis. As required by the Office 
of Management and Budget (OMB), we discount costs at 3 percent and 7 
percent and have included total present value as well as annualized 
value of these estimates in our analyses below.
    Most of the costs associated with this rule will be realized in the 
first year after publication (2019-2020). Most of the cost savings 
associated with this rule will be realized in the program year prior to 
the one in which the 100 percent duration requirement would have gone 
into effect (2020-2021). Finally, the transfers associated with this 
rule will recur annually.
    These costs and cost savings were then discounted and annualized 
using the 10 year window and the OMB discounting rates. In total, the 
10-year present value of the costs associated with the proposed changes 
in this NPRM are estimated to be $355,395, discounted at 3 percent, and 
$305,158, discounted at 7 percent. The annualized costs of the proposed 
changes in this NPRM are estimated to be $41,971.82 discounted at 3 
percent, and $49,853.05, discounted at 7 percent.
    The 10-year present value of the cost savings associated with the 
proposed changes in this NPRM are estimated to be $6,190,163, 
discounted at 3 percent, and $5,116,457 discounted at 7 percent. The 
annualized cost savings of the proposed changes in this NPRM are 
estimated to be $731,052.91 discounted at 3 percent, and $604,249.15, 
discounted at 7 percent.

Table 1--Benefits and Costs of Removing the 100 Percent Service Duration
                               Requirement
------------------------------------------------------------------------
                                     Annualized value by discount rate
                                                (millions)
     Benefits (cost-savings)     ---------------------------------------
                                       3 Percent           7 Percent
------------------------------------------------------------------------
Quantified Cost Savings.........               $.73                $.60
------------------------------------------------------------------------
Qualitative Benefits............    Allows grantees more flexibility to
                                   provide the duration of services that
                                    best meets the needs of their local
                                    communities, including the children
                                       and families living in those
                                               communities.
------------------------------------------------------------------------
Costs                                     3 Percent           7 Percent
------------------------------------------------------------------------
Quantified Costs................               $.42                $.50
------------------------------------------------------------------------
Transfers
------------------------------------------------------------------------
Quantified Transfers............   $696.6 million annually from 2019 to
                                   2028, starting in 2021, from children
                                  who would have received full-day, full-
                                      year services under the current
                                  requirements to children who would not
                                     have received services under the
                                           current requirements.
------------------------------------------------------------------------


[[Page 11275]]

List of Subjects in 45 CFR Part 1302

    Education of disadvantaged, Grant programs--social programs.

Lynn A. Johnson,
Assistant Secretary for Children and Families.
    Approved: November 2, 2018.
Alex M. Azar II,
 Secretary.

Proposed Regulation Text

    For reasons stated in the preamble, we propose to amend 45 CFR part 
1302 as follows:

PART 1302--PROGRAM OPERATIONS

0
1. The authority citation for part 1302 continues to read as follows:

    Authority:  42 U.S.C. 9801 et seq.

0
2. In Sec.  1302.21, revise paragraph (c) to read as follows:


Sec.  1302.21  Center-based option.

* * * * *
    (c) * * *
    (2) Head Start. (i) A program must provide, at a minimum, at least 
160 days per year of planned class operations if it operates for five 
days per week, or at least 128 days per year if it operates four days 
per week. Classes must operate for a minimum of 3.5 hours per day.
    (ii) If a program operates a double session variation, it must 
provide classes for four days per week for a minimum of 128 days per 
year and 3.5 hours per day. Each double session class staff member must 
be provided adequate break time during the course of the day. In 
addition, teachers, aides, and volunteers must have appropriate time to 
prepare for each session together, to set up the classroom environment, 
and to give individual attention to children entering and leaving the 
center.
    (3) Calendar planning. A program must:
    (i) Plan its year using a reasonable estimate of the number of days 
during a year that classes may be closed due to problems such as 
inclement weather; and,
    (ii) Make every effort to schedule makeup days using existing 
resources if hours of planned class operations fall below the number 
required per year.
* * * * *
0
3. In Sec.  1302.24, revise paragraph (c) and remove paragraph (d).
    The revision reads as follows:


Sec.  1302.24  Locally-designed program option variations.

* * * * *
    (c) Waiver requirements. (1) The responsible HHS official may waive 
one or more of the requirements contained in Sec.  1302.21(b), 
(c)(1)(i), and (c)(2); Sec.  1302.22(a) through (c); and Sec.  
1302.23(b) and (c), but may not waive ratios or group size for children 
under 24 months. Center-based locally-designed options must meet the 
minimums described in section 640(k)(1) of the Act for center-based 
programs.
    (2) If the responsible HHS official determines a waiver of group 
size for center-based services would better meet the needs of children 
and families in a community, the group size may not exceed the limits 
below:
    (i) A group that serves children 24 to 36 months of age must have 
no more than ten children;
    (ii) A group that serves predominantly three-year-old children must 
have no more than twenty children; and
    (iii) A group that serves predominantly four-year-old children must 
have no more than twenty-four children.
    (3) To receive a waiver under this section, a program must provide 
supporting evidence that demonstrates the locally designed variation 
effectively supports appropriate development and progress in children's 
early learning outcomes.
    (4) To receive a waiver of service duration, a program must meet 
the requirement in paragraph (c)(3) of this section, provide supporting 
evidence that it better meets the needs of parents than the applicable 
service duration minimums described in Sec.  1302.21(c), Sec.  
1302.22(c), or Sec.  1302.23(c), and assess the effectiveness of the 
variation in supporting appropriate development and progress in 
children's early learning outcomes.

[FR Doc. 2019-05363 Filed 3-25-19; 8:45 am]
 BILLING CODE 4184-01-P