The Office of Human Development Services' Coordinated Discretionary Program

In response to a congressional request, GAO conducted a survey to determine whether: (1) the Office of Human Development Services (OHDS) has the authority to pool the funds appropriated for several individual programs for use in its Coordinated Discretionary Program (CDP) and to what extent the combining of funds inhibited determining from which program specific amounts of money are withdrawn; (2) Head Start funds were improperly used for a particular grant; and (3) an OHDS Assistant Secretary's involvement in grants awarded to a former employer was improper.

GAO found that the extent to which OHDS combines funds does not inhibit tracing from which program specific amounts of money are drawn, even when grants are cofunded by several programs. OHDS does not consolidate as a single fund the various funds of the programs that participate in CDP, but only consolidates the decision processes used in making grant awards. Fiscal accountability is maintained because funds remain in program accounts until obligated for grant expenditures and program funds are reported separately in grant-related documents. GAO did not substantiate an allegation that OHDS made improper use of Head Start funds in awarding a grant for a project that proposed innovative financing arrangements to relieve fiscal stress on local governments that provide services to OHDS program beneficiaries. The original justification for this award was consistent with Head Start's statutory purpose; however, after grant award, the project shifted emphasis to aid for the elderly. After discovering the shift in emphasis, the grant was not terminated, but unexpended Head Start funds were credited and replaced with social services discretionary funds. In addition, GAO found that an Assistant Secretary's involvement in grant awards to a former employer was not improper but gave the appearance of a lack of impartiality. Finally, GAO found that the transfer of three grants to a principal investigator when he left the original grantee organization to begin his own business was a customary practice.