Recovery Act
Head Start Grantees Expand Services, but More Consistent Communication Could Improve Accountability and Decisions about Spending Gao ID: GAO-11-166 December 15, 2010This report responds to two mandates for GAO under the American Recovery and Reinvestment Act of 2009 (Recovery Act). First, it is the latest report on the uses of and accountability for Recovery Act funds in selected states and localities. Second, it comments on recipients' reports of the jobs created and retained. The Recovery Act provided $2.1 billion for Head Start and Early Head Start, primarily to expand services. GAO addressed four questions: (1) How have Head Start and Early Head Start grantees used Recovery Act funds, including for expanding enrollment? (2) What challenges have grantees encountered in spending Recovery Act funds? (3) How has the Office of Head Start (OHS) monitored the use of Recovery Act funds? (4) How has the quality of jobs data reported by Recovery Act recipients, particularly Head Start grantees, changed over time? In this report, GAO also updates the status of open recommendations from previous bimonthly and recipient reporting reviews. To address these questions, GAO interviewed grantees, analyzed federal agency and recipient reported data, and interviewed officials.
Grantees reported using Recovery Act funds to expand enrollment and staff in a variety of ways, but new enrollment was lower than anticipated and reported enrollment numbers may not always be reliable. Grantees received funds to increase enrollment from about 890,100 to an additional 60,600; reported enrollment increased by 55,100 by the end of September 2010. Grantees GAO interviewed used different definitions of "enrollment," which OHS does not verify, introducing some unreliability in reporting. Grantees nationwide reported adding significant numbers of staff, but the portion of teachers who met recently increased standards slightly declined. Grantees experienced challenges in spending first-year Recovery Act funds, including delays in receiving grants and preparing facilities for expanded services, and received mixed messages about what to do with unobligated funds. By the end of the first year of Recovery Act funding, expansion grantees had expended at least 60 percent of their awards. Also, more than half of the grantees GAO interviewed said they were unclear about the policy regarding unobligated first-year funds. Because OHS did not clearly communicate its policy to regional offices, grantees adopted varied spending practices that may not always have directed expansion funds toward programs' highest, current priorities. OHS has engaged a contractor to conduct the large volume of monitoring visits required 1 year after expanded operations begin, but has not always incorporated some risk indicators in planning reviews. OHS has also been conducting other monitoring efforts, including mandatory 1-year visits for Early Head Start expansion grantees. These 1-year reviews include additional coverage of grantee governance and financial management. In response to prior GAO findings of fraudulent enrollment and attendance and enrollment discrepancies among some Head Start grantees, all monitoring visits to new grantees will be implemented as "surprise" visits. A few grantees awarded expansion funds had been earlier identified as high risk by their regional offices, and the HHS Inspector General identified several financial management deficiencies among four of the expansion grantees it reviewed. However, information on identified risks was not always available to OHS reviewers. OHS plans to scope and staff its 1-year reviews of Recovery Act grantees based primarily on their prior experience with Head Start and Early Head Start and whether the grantees have recently received a triennial review. GAO's analysis of the data reported by recipients in Recovery.gov, including jobs funded, shows results similar to previous reporting periods. For example, GAO continued to see a small number of reports for which data issues could prevent linking related reports across quarters. Analysis of Head Start recipient data showed that an earlier concern with calculating full-time equivalent jobs is being addressed. Further, in response to September 2010 Office of Management and Budget guidance on transparency of narrative descriptions, OHS reported that additional agency reviews resulted in recipients clarifying their reports. GAO recommends OHS verify the definition of enrollment, clearly communicate it to grantees along with policies for extending the use of Recovery Act funds, and incorporate known risks into review planning. HHS generally agreed with GAO's recommendations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Cornelia M. Ashby Team: Government Accountability Office: Education, Workforce, and Income Security Phone: (202) 512-8403GAO-11-166, Recovery Act: Head Start Grantees Expand Services, but More Consistent Communication Could Improve Accountability and Decisions about Spending
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United States Government Accountability Office:
GAO:
Report to the Congress:
December 2010:
Recovery Act:
Head Start Grantees Expand Services, but More Consistent Communication
Could Improve Accountability and Decisions about Spending:
GAO-11-166:
GAO Highlights:
Highlights of GAO-11-166, a report to the Congress.
Why GAO Did This Study:
This report responds to two mandates for GAO under the American
Recovery and Reinvestment Act of 2009 (Recovery Act). First, it is the
latest report on the uses of and accountability for Recovery Act funds
in selected states and localities. Second, it comments on recipients‘
reports of the jobs created and retained. The Recovery Act provided
$2.1 billion for Head Start and Early Head Start, primarily to expand
services.
GAO addressed four questions: (1) How have Head Start and Early Head
Start grantees used Recovery Act funds, including for expanding
enrollment? (2) What challenges have grantees encountered in spending
Recovery Act funds? (3) How has the Office of Head Start (OHS)
monitored the use of Recovery Act funds? (4) How has the quality of
jobs data reported by Recovery Act recipients, particularly Head Start
grantees, changed over time? In this report, GAO also updates the
status of open recommendations from previous bimonthly and recipient
reporting reviews. To address these questions, GAO interviewed
grantees, analyzed federal agency and recipient reported data, and
interviewed officials.
What GAO Found:
Grantees reported using Recovery Act funds to expand enrollment and
staff in a variety of ways, but new enrollment was lower than
anticipated and reported enrollment numbers may not always be
reliable. Grantees received funds to increase enrollment from about
890,100 to an additional 60,600; reported enrollment increased by
55,100 by the end of September 2010. Grantees GAO interviewed used
different definitions of ’enrollment,“ which OHS does not verify,
introducing some unreliability in reporting. Grantees nationwide
reported adding significant numbers of staff, but the portion of
teachers who met recently increased standards slightly declined.
Grantees experienced challenges in spending first-year Recovery Act
funds, including delays in receiving grants and preparing facilities
for expanded services, and received mixed messages about what to do
with unobligated funds. By the end of the first year of Recovery Act
funding, expansion grantees had expended at least 60 percent of their
awards. Also, more than half of the grantees GAO interviewed said they
were unclear about the policy regarding unobligated first-year funds.
Because OHS did not clearly communicate its policy to regional
offices, grantees adopted varied spending practices that may not
always have directed expansion funds toward programs‘ highest, current
priorities.
OHS has engaged a contractor to conduct the large volume of monitoring
visits required 1 year after expanded operations begin, but has not
always incorporated some risk indicators in planning reviews. OHS has
also been conducting other monitoring efforts, including mandatory 1-
year visits for Early Head Start expansion grantees. These 1-year
reviews include additional coverage of grantee governance and
financial management. In response to prior GAO findings of fraudulent
enrollment and attendance and enrollment discrepancies among some Head
Start grantees, all monitoring visits to new grantees will be
implemented as ’surprise“ visits. A few grantees awarded expansion
funds had been earlier identified as high risk by their regional
offices, and the HHS Inspector General identified several financial
management deficiencies among four of the expansion grantees it
reviewed. However, information on identified risks was not always
available to OHS reviewers. OHS plans to scope and staff its 1-year
reviews of Recovery Act grantees based primarily on their prior
experience with Head Start and Early Head Start and whether the
grantees have recently received a triennial review.
GAO‘s analysis of the data reported by recipients in Recovery.gov,
including jobs funded, shows results similar to previous reporting
periods. For example, GAO continued to see a small number of reports
for which data issues could prevent linking related reports across
quarters. Analysis of Head Start recipient data showed that an earlier
concern with calculating full-time equivalent jobs is being addressed.
Further, in response to September 2010 Office of Management and Budget
guidance on transparency of narrative descriptions, OHS reported that
additional agency reviews resulted in recipients clarifying their
reports.
What GAO Recommends:
GAO recommends OHS verify the definition of enrollment, clearly
communicate it to grantees along with policies for extending the use
of Recovery Act funds, and incorporate known risks into review
planning. HHS generally agreed with GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-166] or key
components. For more information, contact Cornelia M. Ashby at (202)
512-7215 or ashbyc@gao.gov or Yvonne D. Jones at (202) 512-6878 or
jonesy@gao.gov.
[End of section]
Contents:
Letter:
Background:
Grantees Report Expanding Program Options, Staff, and Enrollment, but
Enrollment Figures May Be Unreliable:
Following Low Expenditure Rates in the First Year, Mixed Messages from
OHS about Spending Policy Led to Varied Spending Practices:
OHS Hired a Contractor to Both Prepare for and Conduct On-Site
Reviews, but Has Not Incorporated Some Risk Indicators in Planning for
Reviews:
Oversight of Recipient Reporting Data Quality Continues for the Fifth
Round of Reporting:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Health and Human Services:
Appendix III: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
Appendix IV: GAO Contacts and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Use of Recovery Act Funds:
Table 2: Reported Changes in Selected Features of Head Start and Early
Head Start Programs Nationwide, before and after the Recovery Act:
Table 3: Legal and Nonlegal Definitions of Head Start Enrollment:
Table 4: First-Year Drawdown Rates for Grantees by Program Type, as of
the beginning of November 2010:
Table 5: Monitoring Reviews Planned by April 30, 2011, for Different
Types of Recovery Act Early Head Start Expansion Grantees:
Table 6: Status of OHS Monitoring Activities:
Table 7: Grantees Visited or Interviewed by GAO:
Figures:
Figure 1: Estimated vs. Actual Federal Outlays to States and
Localities for All Programs under the Recovery Act:
Figure 2: Allocation of $744 Million in Expansion Funds Awarded for
the First Year of the Grant, as of September 30, 2010:
Figure 3: Full-Time Equivalent Positions Reported Funded by Head Start
and Early Head Start Expansion Grantees Using Recovery Act Funds:
Figure 4: Mean Full-Time Equivalent Positions Reported Funded per Head
Start and Early Head Start Expansion Grantee:
Figure 5: Number of Children and Families Funded to Be Served and
Reported Head Start and Early Head Start Enrollment, October 2009-
September 2010:
Figure 6: Minimum Percentage of Recovery Act Expansion and COLA/QI
Funds Drawn Down (Expended):
Figure 7: Cumulative Fiscal Year 2010 Recovery Act Expansion Awards
Timeline and Drawdown:
Figure 8: Regularly Scheduled Monitoring Visits and Planned Recovery
Act 1-Year Reviews, May 2010-April 2011:
Abbreviations:
ACF: Administration for Children and Families:
COLA: cost-of-living adjustment:
Danya: Danya International:
FTE: full-time equivalent:
HHS: Department of Health and Human Services:
OHS: Office of Head Start:
OIG: Office of the Inspector General:
OMB: Office of Management and Budget:
PIR: Program Information Report:
PMS: Payment Management System:
QI: quality improvement:
Recovery Act: American Recovery and Reinvestment Act of 2009:
SAC: State Advisory Councils:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
December 15, 2010:
Report to the Congress:
In the 22 months since the American Recovery and Reinvestment Act of
2009 (Recovery Act)[Footnote 1] was enacted, the Department of the
Treasury has paid out approximately $181.9 billion in Recovery Act
funds for use in states and localities to promote economic recovery.
[Footnote 2] These funds have been used to support and preserve
services in a wide range of areas including health, education,
transportation, and child development. In particular, the Recovery Act
provided $2.1 billion for Head Start and Early Head Start,[Footnote 3]
primarily to expand the program from about 890,100 to about an
additional 60,600 children and families.[Footnote 4] Since its
inception, the program has provided comprehensive early childhood
development services intended to promote the school readiness of low-
income children.
The Recovery Act requires that GAO conduct bimonthly reviews of how
Recovery Act funds are being used and whether they are achieving their
stated purposes to preserve and create jobs, as well as assist those
most affected by the recession.[Footnote 5] The Recovery Act also
requires GAO to comment and report quarterly on estimates of job
creation and retention as reported by recipients.[Footnote 6]
In this report, the eighth in a series responding to the act's
mandate, we update and add new information on the use of Recovery Act
funds by the Head Start program, and on the quality of recipient job
reports. Specifically, we examined (1) how Head Start and Early Head
Start grantees used Recovery Act funds, including for expanding
enrollment; (2) what challenges grantees have encountered in spending
Recovery Act funds; (3) how the Office of Head Start (OHS) has
monitored the use of Recovery Act funds; and (4) how the quality of
jobs data reported by Recovery Act recipients, particularly Head Start
grantees, has changed over time. To address these questions, we
analyzed grant awards, agency data, and relevant federal laws and
regulations, as well as federal agency guidance. We spoke with
relevant program officials at the Department of Health and Human
Services' (HHS) OHS and an OHS contractor. We conducted interviews
with 16 grantees in 11 states, 4 of which were among the 16 states on
which GAO has reported in previous bimonthly reviews. We followed up
with 9 grantees that we have previously reported on in these 4 states,
while the remaining 7 we selected by analyzing HHS expenditure data to
identify grantees with low drawdown rates as of July 2010. These 16
grantee interviews are not generalizable to the approximately 1,600
Head Start and Early Head Start grantees nationwide in fiscal year
2009. In addition, we assessed recipient reports nationwide for the
quarter ending September 30, 2010, as well as those of Head Start
grantees for completeness and reliability. We also analyzed Head Start
grantees' reported "full-time equivalent" jobs data across time.
Our oversight of programs funded by the Recovery Act has resulted in
more than 80 related products (see Related GAO Products at the end of
this report) with numerous recommendations. This report updates agency
actions in response to recommendations from previous bimonthly and
recipient reporting reviews that have not been fully implemented (open
recommendations) in appendix III, including our prior recommendations
regarding the use of Recovery Act funds for Head Start.
We conducted this performance audit from August 2010 to December 2010
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
Total Recovery Act Outlays to States and Localities:
Actual federal outlays to states and localities for all programs under
the Recovery Act, including Head Start, totaled approximately $181.9
billion through November 26, 2010. Of that amount, about 9.5 percent--
$17.3 billion--has been paid out since the start of federal fiscal
year 2011 on October 1, 2010.[Footnote 7] Figure 1 shows the estimated
federal outlays (in billions of dollars) to states and localities for
Recovery Act programs for fiscal years 2009 through 2016.
Figure 1: Estimated vs. Actual Federal Outlays to States and
Localities for All Programs under the Recovery Act:
[Refer to PDF for image: vertical bar graph]
Federal fiscal year (Oct. 1-Sept. 30): 2009;
Original estimate: $48.9 billion;
Actual as of November 26, 2010: $52.9 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2010;
Original estimate: $107.7 billion;
Actual as of November 26, 2010: $111.7 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2011;
Original estimate: $63.4 billion;
Actual as of November 26, 2010: $17.3 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2012;
Original estimate: $23.3 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2013;
Original estimate: $14.4 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2014;
Original estimate: $9.1 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2015;
Original estimate: $5.7 billion.
Federal fiscal year (Oct. 1-Sept. 30): 2016;
Original estimate: $2.5 billion.
Source: GAO analysis of CBO, Federal Funds Information for States, and
Recovery.gov data.
[End of figure]
To facilitate accountability over the use of Recovery Act funds, the
act requires that nonfederal recipients of Recovery Act funds--
including those with grants, contracts, or loans--submit quarterly
reports that are to include a list of each project or activity for
which Recovery Act funds were expended or obligated and information
concerning the amount and use of funds and jobs created or retained by
these projects and activities, among other information. [Footnote 8]
The latest of these recipient reports covered the projects and
activities as of the Recovery Act's passage through the quarter ending
September 30, 2010.
The Head Start Program:
Established in 1965, Head Start provides for services to young, low-
income children and their families.[Footnote 9] It promotes pre-school
aged children's development and school readiness by enhancing their
cognitive, social, and emotional development through providing a range
of individualized services. The Early Head Start program, begun in
1994, focuses on serving children from birth to age 3 and pregnant
women. Both Head Start and Early Head Start are overseen by OHS,
within the Administration for Children and Families (ACF) at HHS. OHS
awards grants directly to public and private nonprofit and for-profit
agencies. Grants policy is established by ACF and HHS.
Head Start Funds under the Recovery Act:
Under the Recovery Act, OHS received $2.1 billion for Head Start and
Early Head Start. Of that amount, OHS designated about $1.5 billion to
expand the number of children and pregnant women served. The Recovery
Act required OHS to obligate all funds--mostly by awarding funds to
grantees--by September 30, 2010.[Footnote 10] To serve additional
children and families with Recovery Act funds, OHS awarded Head Start
expansion grants generally for a period of 2 years. Consistent with
the Recovery Act,[Footnote 11] OHS designated a portion of these funds
for training and technical assistance to the expansion grantees. In
addition to expanding services, the Head Start Act directs a portion
of Recovery Act funds to be allocated to increase salaries, improve
program quality, develop state advisory councils, and monitor
grantees, as shown in table 1. About $600 million was dedicated to
these purposes.
Table 1: Use of Recovery Act Funds:
Category: Head Start expansion;
Purpose: To expand Head Start services to additional pre-school
children;
Recovery Act funds: $200 million.
Category: Early Head Start expansion;
Purpose: To expand Early Head Start services to additional infants,
toddlers, and their families;
Recovery Act funds: $1.18 billion.
Category: Head Start and Early Head Start training and technical
assistance;
Purpose: Used to hire or obtain expertise on developing a Head Start
or Early Head Start program and conforming to the Head Start
Performance Standards;
Recovery Act funds: $114 million.
Expansion subtotal: $1.49 billion.
Category: Quality improvement;
Purpose: Existing grantees were permitted to use these funds for
improvements such as upgrading facilities, improving compensation,
training staff or improving staff qualifications, and increasing the
hours of operation. Awarded mostly in September 2009, these funds were
available until September 30, 2010;
Recovery Act funds: $354 million.
Category: Cost of living adjustment;
Purpose: Existing grantees were eligible to receive cost of living
adjustment funds of 1.8 percent for each eligible staff member. These
funds were awarded mostly in September 2009;
Recovery Act funds: $122 million.
State Advisory Councils (SAC);
Purpose: Designated by governors, SAC members are charged with
ensuring statewide coordination and collaboration among early
childhood programs and services, including Head Start, child care, and
pre-kindergarten programs and services;
Recovery Act funds: $100 million.
Category: OHS monitoring of expansion grantees;
Recovery Act funds: $33 million.
Nonexpansion subtotal: $609 million.
Category: Total;
Recovery Act funds: $2.1 billion.
Source: GAO analysis of OHS data.
[End of table]
As of September 30, 2010, OHS had awarded about 99 percent of the $1.5
billion in Recovery Act funds designated for expanding Head Start and
Early Head Start, primarily for staffing.[Footnote 12] OHS awarded
$744 million for the first year of the expansion grant period, or
fiscal year 2010. As shown in figure 2, after staffing, the second
largest budget category to which funds were dedicated was "other"
costs, which can be used for activities such as insurance, food, and
administrative costs.[Footnote 13] Funds from the third largest budget
category, "contractual," may be used to engage entities such as start-
up planning consultants, agencies to which grantees delegate funds to
operate Head Start or Early Head Start programs, or food service
providers.
Figure 2: Allocation of $744 Million in Expansion Funds Awarded for
the First Year of the Grant, as of September 30, 2010:
[Refer to PDF for image: pie-chart]
Staffing: 41%;
Contractual: 13%;
Supplies: 12%;
Equipment: 6%;
Facilities construction: 6%;
Indirect costs: 3%;
Travel: 1%;
Other: 15%.
Source: FAA data.
[End of figure]
As we reported in May 2010, OHS had awarded most expansion funds
within a year of the law's enactment, but had not met its goal of
awarding Early Head Start expansion grants by the end of September
2009.[Footnote 14] Instead, the first Early Head Start awards were
made in November 2009, and the last one was made in July 2010. OHS
officials explained that several factors slowed the process of making
Early Head Start awards, such as the high volume of applications. The
prolonged award-making process contributed to a low drawdown
(expenditure) rate. It also put pressure on grantees because OHS
shortened the period designated for start-up in some cases.[Footnote
15]
Like typical Head Start and Early Head Start grants, expansion
grantees receive funding 1 year at a time partly to ensure that
grantees expend funds prudently.[Footnote 16] Consistent with its
general practice, OHS awarded the first year of Recovery Act funds
between September 2009 and July 2010 for expenditures by September 29,
2010.[Footnote 17] Near the end of the same fiscal year, OHS awarded
the balance of all funds for the final, second fiscal year of the
expansion grants.
In the event that a grantee cannot use all its funds within a single,
annual "budget period," Head Start has provisions for generally using
such funds in the following year.
* First, to allow for an orderly transition between budget periods,
all Head Start grantees can expend obligated funds in a subsequent
budget period without additional OHS approval if the funds were
obligated for expenditure by the end of the year for which they were
awarded. Obligated funds must be expended within 90 days of the close
of the budget period. For Recovery Act grants, this means that
grantees generally have until December 29, 2010, to expend funds
obligated before September 29, 2010.
* Second, to use unobligated funds in a future budget period, grantees
must receive approval from an OHS regional office to "carry over"
unobligated funds. HHS and OHS policy states that grantees must apply
in advance and in writing, and must name specific items for which the
funds will be used in the next budget period. For first-year Recovery
Act grants, requests are due 90 days after the close of the fiscal
year, which ends September 29, 2010.
* Third, for grants that are not being renewed, OHS can approve a
grantees' request for an extension of time to complete a project,
called a "no-cost extension." Grantees must also apply in advance for
a no-cost extension, which cannot be used if the primary purpose of
the extension is to permit the use of unobligated funds. If no
extension is approved and the grantee does not receive further Head
Start grants (potentially allowing the grantee to use the Recovery Act
funds to start another project with a longer time frame), unused
Recovery Act funds will be returned to the U.S. Treasury.
In addition, oversight of spending is a key internal control. As
described in GAO's internal control standards, managers need current
information on expenditures to detect problems and proactively manage
risks associated with unusual expenditure patterns, such as overly
rapid or slow expenditures.[Footnote 18] Slow expenditures would
present special challenges to meeting the Recovery Act's goals of
assisting persons affected by the recession and infusing funds into
the slowing economy.
Monitoring and Oversight of Head Start Grantees:
OHS uses various strategies to monitor Head Start grantees for
adherence to program standards as specified by the Head Start Act.
These strategies include comprehensive reviews conducted every 3
years. The Head Start Performance Standards cover many activities
designed to protect and teach children, promote health, and
responsibly manage federal funds. The central OHS office provides
guidance to grantees and monitors them through centralized data
systems. Staff in OHS regional offices directly monitor grantees by
following up on any concerns that are raised, such as low enrollment,
and by coordinating with contractors on the administration of
triennial reviews. OHS is also required to review any newly funded
grantee--such as the Early Head Start grantees that received funds for
the first time under the Recovery Act--immediately after the
completion of the first year it carries out a Head Start program.
[Footnote 19]
The 2007 reauthorization of the Head Start Act also increased
credential requirements for some teachers.[Footnote 20] In particular,
Early Head Start center-based teachers are required to have a Child
Development Associate credential and to have been trained (or have
equivalent coursework) in early childhood development by the end of
September 2010.
In 2008, we made recommendations to enhance the use of risk management
strategies in management of Head Start.[Footnote 21] In its response,
HHS cited in part a more comprehensive risk assessment that was
developed and implemented in two regions. This and other activities,
it reported, evolved into a programwide risk management process that
officials stated was on track for national implementation in early
2008. Through this process, officials noted that OHS would better
identify risks, challenges, and opportunities that Head Start programs
might be experiencing.
A central component of OHS's risk management process is the Risk
Management Meeting. The goals of the meetings are to recognize grantee
strengths, identify areas of performance that need improvement, and
use this information to collaborate in producing a comprehensive
action plan that addresses those areas in need of support and
improvement. While all grantees are to have at least one Risk
Management Meeting each year, additional Risk Management Meetings
might be held to gauge progress in meeting goals or sustaining
improvements, or when a grantee was determined to have deficiencies or
a significant number of noncompliances.
Recent Accountability Community Findings:
We and a federal inspector general have documented specific risks
through recent reviews and investigations of Head Start and its
grantees. In a September 2010 report, we found that in 8 of 13
instances, staff at Head Start centers fraudulently misrepresented
information to register children who did not meet the income-
eligibility requirements.[Footnote 22] The undercover tests found that
seven Head Start employees lied about applicants' employment status or
misrepresented their earnings, leaving these programs at risk that
over-income children might be enrolled while other eligible children
are put on wait lists. These grantees had received small amounts of
Recovery Act funds for cost-of-living adjustments and quality
improvement. Additionally, five of them had received expansion funds.
We also examined attendance records for two other grantees that were
the subject of FraudNet reports[Footnote 23] and found that attendance
was substantially different from reported enrollment in both cases.
In mid 2009, HHS's Office of the Inspector General (OIG) conducted
recipient capability audits of 83 Recovery Act applicants that had not
previously managed a Head Start or Early Head Start program. These
reviews focused on three aspects of program management: financial
viability; adequacy of management systems to account for funds; and
ability to operate a Head Start program according to federal
regulations. Following the reviews, some applicants were excluded from
consideration for a Recovery Act expansion grant. The OIG has also
reviewed selected Head Start grantees for program management issues
and is nearing completion of a series of health and safety audits of
selected Head Start grantees.
Grantees Report Expanding Program Options, Staff, and Enrollment, but
Enrollment Figures May Be Unreliable:
Grantees Expanded Program Options and Staff to Serve More Children and
Families, Although Teachers Hired Did Not Always Meet Qualification
Requirements:
Head Start and Early Head Start grantees received $744 million in
first-year Recovery Act funding to expand services from about 890,100
to about an additional 60,600 children and families, often by
initiating home-based services.[Footnote 24] Most Early Head Start
expansion grantees we interviewed received funding for a combination
of center-based and home-based program options. Under the home-based
program option, children and families receive visits from Early Head
Start staff in their homes, and meet periodically for socialization
activities. In 2009, before Recovery Act funds were awarded, Early
Head Start grantees provided home-based programs for about 42 percent
of the children and families they served, compared with about 47
percent after Recovery Act funds were awarded, in 2010.
Many of the Early Head Start grantees we interviewed increased their
enrollment in home-based services to compensate for facilities delays
to serve the expanded enrollment for which they were funded. Of the 13
Early Head Start expansion grantees with whom we spoke about program
options, 8 initially planned to offer more center-based services than
home-based. Among the 13 grantees, there were a total of 684 center-
based slots and 487 home-based ones.[Footnote 25] However, as a result
of delays in receiving awards, licensing concerns, difficulties in
preparing facilities, and other challenges, 7 grantees reported that
they changed their expansion plans, resulting in more home-based slots
(667) than center-based ones (520) among the 13 grantees.
Five grantees converted some of their center-based slots to home-based
slots. Four of these five changes were temporary--while grantees
waited for centers to be constructed, renovated, or licensed--but one
change will remain throughout the duration of the 2-year grant. In
moving some of its center-based slots to home-based ones, officials of
one grantee in Illinois told us that they had received approval from
their regional office to enroll 16 more children and families than
they had initially planned.
In addition to beginning home-based programs and constructing and
renovating facilities for center-based programs, grantees used
Recovery Act funds to support their expansion of services. Facilities
and other program features are tracked in OHS's annual Program
Information Report (PIR) survey of grantees.[Footnote 26] Table 2
shows the growth in selected program features from 2009, before the
awarding of Recovery Act funds, through August 2010, after the funds
were awarded. For example, grantees reported adding 15,571 full-or
part-time staff, including classroom teachers and home-based visitors.
While a portion of these changes may be attributable to changes in the
use of regular grant funds, much of the change is likely due to the
addition of Recovery Act expansion funds between 2009 and 2010.
Table 2: Reported Changes in Selected Features of Head Start and Early
Head Start Programs Nationwide, before and after the Recovery Act:
Center-based slots:
2009 (before Recovery Act awards): 817,770;
2010 (after Recovery Act awards): 864,594;
Change: + 46,824 (+6%).
Home-based slots:
2009 (before Recovery Act awards): 44,109;
2010 (after Recovery Act awards): 64,195;
Change: + 20,086 (+46%).
Total staff, full-and part-time:
2009 (before Recovery Act awards): 211,951;
2010 (after Recovery Act awards): 227,522;
Change: + 15,571 (+7%).
Classroom teachers, full and part-time:
2009 (before Recovery Act awards): 55,873;
2010 (after Recovery Act awards): 62,612;
Change: + 6,739 (+12%).
Home-based visitors, full-and part-time:
2009 (before Recovery Act awards): 4,538;
2010 (after Recovery Act awards): 6,624;
Change: + 2,086 (+46%).
Buses purchased by grantees:
2009 (before Recovery Act awards): 301;
2010 (after Recovery Act awards): 1,110;
Change: + 809 (+269%).
Source: GAO analysis of OHS's PIR survey.
[End of table]
Consistent with the Recovery Act's goal to preserve and create jobs,
as grantees expanded services, they reported using Recovery Act
funding for the equivalent of about 10,000 full-time positions, also
called "full-time equivalents" (FTE), such as for teachers, from July
through September 2010, as shown in figure 3. The number of FTEs being
lower than the number of total staff grantees reported adding (see
table 2) may be due to several factors, such as some of the newly
hired staff working part-time, which counts for one staff position but
only for a fraction of an FTE; differences in the reporting periods
covered; and the fact that some grantees reporting staffing levels did
not receive Recovery Act expansion grants. FTE data provide insight
into the use and impact of the Recovery Act funds, but recipient
reports cover only direct jobs funded by the Recovery Act. They do not
include the employment impact on suppliers (indirect jobs) or on the
local community (induced jobs).
Figure 3: Full-Time Equivalent Positions Reported Funded by Head Start
and Early Head Start Expansion Grantees Using Recovery Act Funds:
[Refer to PDF for image: stacked line graph]
Reporting quarter: Second (October-December 2009);
Head Start: 518;
Early Head Start: 510;
Both: 55;
Total: 1,083,
Reporting quarter: Third (January-March 2010):
Head Start: 1,007;
Early Head Start: 3,821;
Both: 241;
Total: 5,069.
Reporting quarter: Fourth (April-June 2010):
Head Start: 1,235;
Early Head Start: 6,556;
Both: 429;
Total: 8,220.
Reporting quarter: Fifth (July-September 2010):
Head Start: 1,362;
Early Head Start: 8,181;
Both: 501;
Total: 10,044.
Source: GAO analysis of data from Recovery.gov.
Notes: We analyzed recipient reported FTE data for Head Start and
Early Head Start expansion grants. We did not include data from the
first reporting quarter due to concerns about reliability and
comparability. "Both" refers to grantees that received expansion
grants for both Early Head Start and Head Start programs, but only
submitted one recipient report with FTEs.
[End of figure]
Due to various start-up challenges, there was only a gradual growth in
FTEs, as reported by grantees. For the quarter October through
December 2009, only about one-third of grantees reported funding some
portion of an FTE with Recovery Act expansion funds. However, by the
quarter of July through September 2010, about 92 percent of grantees
reported funding at least a partial FTE, as shown in figure 4. As the
number of grantees reporting FTEs increased, the mean number of FTEs
reported increased as well--from 1.4 in the October though December
2009 quarter, to 11.8 in the July through September 2010 quarter, also
shown in figure 4.
Figure 4: Mean Full-Time Equivalent Positions Reported Funded per Head
Start and Early Head Start Expansion Grantee:
[Refer to PDF for image: illustrated horizontal graph]
Reporting quarter: Second (October-December 2009);
Mean FTEs reported: 1.4;
Number of grantees reporting: 767;
Percent of grantees reporting funding at least a partial FTE: 33%.
Reporting quarter: Third (January-March 2010):
Mean FTEs reported: 6.2;
Number of grantees reporting: 817;
Percent of grantees reporting funding at least a partial FTE: 80%.
Reporting quarter: Fourth (April-June 2010):
Mean FTEs reported: 9.8;
Number of grantees reporting: 841;
Percent of grantees reporting funding at least a partial FTE: 89%.
Reporting quarter: Fifth (July-September 2010):
Mean FTEs reported: 11.8;
Number of grantees reporting: 850;
Percent of grantees reporting funding at least a partial FTE: 92%.
Source: GAO analysis of data from Recovery.gov.
Note: We analyzed recipient reported FTE data for Head Start and Early
Head Start expansion grants.
[End of figure]
As grantees added classroom teachers and home-based visitors from 2009
to 2010, as shown in table 2, the proportion of teachers meeting new,
more stringent qualification requirements fell slightly. The
percentage of classroom teachers meeting the new Early Head Start
qualification requirements, which went into effect September 30, 2010,
dropped from 88 to 84 percent from 2009 to 2010.[Footnote 27] OHS
officials told us some grantees experienced challenges hiring staff
with the required qualifications. In addition, the proportion of Early
Head Start classroom teachers and home-based visitors without
credentials rose from 2009 to 2010. Classroom teachers without
credentials increased from 12 to 16 percent. While home-based visitors
are not required to meet any qualification requirements, the
percentage of home-based visitors without credentials increased from
18 to 23 percent. Grantees in focus groups we conducted cited finding
and developing staff as a significant challenge.
Enrollment Increases Were Smaller than Expected, and Some Numbers
Reported by Grantees Were Not Necessarily Reliable:
Reported enrollment of children and families in Head Start services
also increased under the Recovery Act, though less than OHS
anticipated. As we previously reported, by the end of the first year
of the 2-year grant (fiscal year 2010), OHS planned to have used
Recovery Act funding to provide for enrollment of an additional 55,000
pregnant women, infants, and toddlers under Early Head Start and an
additional 14,100 children and families under Head Start, for a total
of 69,100 new enrollees.[Footnote 28] However, OHS funded about 60,600
new Early Head Start and Head Start slots. Because grantees were not
able to enroll and provide services to the numbers of children for
whom OHS had provided funding as rapidly as expected, by the end of
September 2010, reported enrollment for both programs totaled about
55,100, as shown in figure 5. This slow and gradual growth in
enrollment meant that grantees enrolled fewer children and families
for fewer months than OHS had planned.
Figure 5: Number of Children and Families Funded to Be Served and
Reported Head Start and Early Head Start Enrollment, October 2009-
September 2010:
[Refer to PDF for image: multiple line graph]
Date: October 2009;
Reported enrollment: 1,961;
Funded to be served: 13,357.
Date: November 2009;
Reported enrollment: 3,909;
Funded to be served: 30,876.
Date: December 2009;
Reported enrollment: 6,180;
Funded to be served: 56,111.
Date: January 2010;
Reported enrollment: 13,412;
Funded to be served: 56,529.
Date: February 2010;
Reported enrollment: 19,231;
Funded to be served: 57,338.
Date: March 2010;
Reported enrollment: 28,758;
Funded to be served: 59,125.
Date: April 2010;
Reported enrollment: 35,486;
Funded to be served: 59,794.
Date: May 2010;
Reported enrollment: 40,084;
Funded to be served: 59,988.
Date: June 2010;
Reported enrollment: 41,278;
Funded to be served: 60,280.
Date: July 2010;
Reported enrollment: 40,737;
Funded to be served: 60,462.
Date: August 2010;
Reported enrollment: 48,440;
Funded to be served: 60,575.
Date: September 2010;
Reported enrollment: 55,124;
Funded to be served: 60,668.
FY 2010 goal: 69,100.
Source: GAO analysis of OHS data on end-of-month enrollment.
Note: Reported Head Start and Early Head Start enrollment leveled off
during the summer months of 2010 because most Head Start programs only
operate during the school year.
[End of figure]
Officials from 14 Early Head Start expansion grantees we interviewed
reported the following reasons:
* Delays in receiving expansion grant awards. As we reported in May
2010, OHS did not meet its initial goal to award the Early Head Start
expansion grants by the end of fiscal year 2009.[Footnote 29] Awarding
of Early Head Start expansion grants began in November 2009 and
continued through July 2010. The prolonged award-making process
resulted in a shortened start-up period for some grantees, and seven
grantees we spoke with cited this as a cause for their delay in
enrolling children and families.
* Delays in leasing, constructing, and renovating facilities. Six
grantees to whom we spoke experienced difficulties and delays in
securing leases, or constructing or renovating facilities in which to
provide Early Head Start services, which caused enrollment delays.
* Delays in licensing facilities. Four expansion grantees we
interviewed cited delays in receiving inspections or approval for
state child care licenses for their centers as a cause for delays in
enrollment.
Apart from challenges in expanding enrollment, differences in
grantees' interpretation of OHS's enrollment policies suggest that
reported enrollment figures may not always be reliable. We discovered
differences in how grantees interpreted "enrollment" for purposes of
the end-of-month enrollment report. Five of the nine expansion
grantees we interviewed about enrollment reported children as
"enrolled" when all paperwork was complete, which is consistent with
the Head Start definition of enrollment.[Footnote 30] For example, one
of these five grantees reported children on its monthly enrollment
report after the family completed forms documenting health
information, income eligibility, and residency. On the other hand,
four out of the nine expansion grantees we interviewed about
enrollment reported children as enrolled only when they had begun
receiving regular services, which is more consistent with the
definition of enrollment used in Head Start's annual PIR instructions.
[Side bar: Continuing Federal Interest in Facilities:
Grantees using Recovery Act expansion funds to renovate or construct
new facilities for their center-based programs must follow regulations
designed to protect the federal interest.[A] For example, grantees are
required to record a Notice of Federal Interest when grant-funded
construction, purchase, or major renovation begins with respect to a
facility. Although the title to a newly acquired or renovated facility
may vest with the grantee involved, such facilities may not be
mortgaged, used as collateral, sold or otherwise transferred to
another party without the written permission of HHS. If funding for
Early Head Start is not appropriated at Recovery Act levels beyond
fiscal year 2011, OHS officials told us they will work with individual
grantees to find alternate ways to use the new facilities. For
example, OHS may suggest that grantees move Head Start children to new
construction from rental properties or less suitable grantee-owned
facilities.
[A] 45 C.F.R. §§ 1309.20 - 1309.23 (2009). End of side bar]
Grantees use different interpretations of enrollment for two reasons.
First, "enrollment" is defined differently in different sources, as
shown in table 3.
Table 3: Legal and Nonlegal Definitions of Head Start Enrollment:
Sources used by grantees: Head Start Regulations, 45 U.S.C. §
1305.2(b) (2009);
Description of source: Regulations implementing the law authorizing
Head Start and Early Head Start;
Definition: "The official acceptance of a child by a Head Start
program and the completion of all procedures necessary for a child and
family to begin receiving services."
Sources used by grantees: PIR instructions;
Description of source: Yearly grantee survey, nonlegal;
Definition: Children--and, for Early Head Start, children and pregnant
women--who are not only enrolled but for whom at least one-time
services have been provided.
Sources used by grantees: End-of-month report instructions;
Description of source: Monthly grantee survey, nonlegal;
Definition: "Report the total number of children and/or pregnant women
enrolled on the last operating day of the month. Report the total
number of enrollees, not the number in attendance."
Source: Code of Federal Regulations and OHS.
[End of table]
Second, during routine on-site monitoring visits, OHS does not verify
that grantees are consistently defining enrollment for purposes of
monthly reporting. Instead, OHS checks that grantees' records of
enrollment, however defined, are consistent with their end-of-month
reports to OHS. The monitoring protocol does not require that
reviewers verify the definition of enrollment that grantees employ in
recordkeeping or monthly reporting. Having a consistent measure of
enrollment, a key performance indicator for Head Start and Early Head
Start, is crucial to helping OHS oversee the programs and to providing
transparency to outside entities.
Because OHS has not established a consistent definition for enrollment
reporting and does not verify during routine monitoring how grantees
are reporting enrollment, the grantee-reported enrollment numbers may
be an unreliable measure of grantee performance. For example, our
prior work compared two grantees' enrollment information submitted
through the PIR with information obtained from daily attendance
records we received directly from grantees.[Footnote 31] Based on our
review of this information, we determined that for both grantees,
average attendance at Head Start centers was considerably lower than
the reported enrollment at the centers.[Footnote 32] In response to
this report, HHS reported that it had taken action to incorporate a
comparison of enrollment and attendance in its reviews, and stated
that they were substantially different in only a small number of
cases.[Footnote 33] However, neither the updated monitoring protocol
nor the Recovery Act monitoring protocol contains changes designed to
more carefully reconcile enrollment and attendance figures.
Following Low Expenditure Rates in the First Year, Mixed Messages from
OHS about Spending Policy Led to Varied Spending Practices:
Delays, Facilities Issues, and Other Challenges Slowed Expenditure
Rates:
By the end of the first year of Recovery Act funding, expansion
grantees had expended at least 60 percent of awards, and about 1 month
later, grantees had expended about 70 percent (see figure 6), using a
conservative estimate, which is explained below. In contrast to
expansion grantees, grantees nationwide drew down at least 86 percent
of Recovery Act cost-of-living adjustment (COLA) and quality
improvement (QI) funds by the beginning of November. For expansion
grantees, drawdown rates among individual grantees varied
considerably. About 14 percent of grantees had drawn down 50 percent
or less of their expansion awards, while 62 percent of grantees had
drawn down more than 75 percent of their awards by the beginning of
November. Grantees have until December 29, 2010, to expend all
obligated funds for the first budget year of the grant. However, of
the 14 Early Head Start expansion grantees we interviewed, 7 reported
that they could not expend all first-year funds and would request
approval to "carry over" funds into the next year. Of these seven, six
were able to calculate the amount they would request to carry over.
The total was about $2 million, or 21 percent of their total first-
year awards.
Figure 6: Minimum Percentage of Recovery Act Expansion and COLA/QI
Funds Drawn Down (Expended):
[Refer to PDF for image: multiple line graph]
Percentage of funds spent:
Date: September 2009;
First-year expansion funds: 0%;
COLA and QI funds: 5%.
Date: October 2009;
First-year expansion funds: 0%;
COLA and QI funds: 11%.
Date: November 2009;
First-year expansion funds: 0%;
COLA and QI funds: 15%.
Date: December 2009;
First-year expansion funds: 1%;
COLA and QI funds: 21%.
Date: January 2010;
First-year expansion funds: 3%;
COLA and QI funds: 27%.
Date: February 2010;
First-year expansion funds: 6%;
COLA and QI funds: 32%.
Date: March 2010;
First-year expansion funds: 10%;
COLA and QI funds: 39%.
Date: April 2010;
First-year expansion funds: 16%;
COLA and QI funds: 47%.
Date: May 2010;
First-year expansion funds: 22%;
COLA and QI funds: 53%.
Date: June 2010;
First-year expansion funds: 29%;
COLA and QI funds: 59%.
Date: July 2010;
First-year expansion funds: 37%;
COLA and QI funds: 65%.
Date: August 2010;
First-year expansion funds: 47%;
COLA and QI funds: 72%.
Date: September 2010;
First-year expansion funds: 60%;
COLA and QI funds: 79%.
Date: October 2010;
First-year expansion funds: 70%;
COLA and QI funds: 86%.
Source: HHS.
Note: October data is current as of November 3, 2010.
[End of figure]
"Drawdown" estimates can significantly underestimate individual
grantees' actual expenditures, therefore the data offer a conservative
estimate of grantees' total expenditures nationwide. Drawdown data
come from HHS's Payment Management System (PMS), from which grantees
withdraw funds to operate Head Start programs. Grantees generally must
expend withdrawn funds within a few days. Alternatively, grantees
occasionally use their own funds for some Head Start expenses and
later withdraw funds from PMS. For example, a representative of one
American Indian tribe we interviewed explained that the Head Start
program used the tribe's general funds to pay for its staff's COLAs
under the Recovery Act, and would withdraw the funds from PMS at a
later time to reimburse the tribe for its expenses. Because of
practices such as these, the drawdown rate is generally considered a
conservative estimate of grantees' actual expenditures.
OHS officials we interviewed lacked ready access to current,
aggregated drawdown data or to normative data on drawdown rates at
specific times (or among types of grantees) that might be used to
assess grantees' current expenditures. Instead, central office
officials referred to reports that would be submitted by grantees or
knowledge of specific grantees among regional office staff. Current
and historical drawdown information are kept by a different office
within HHS and are not routinely aggregated or reported to OHS, even
though current data are accessible.
Grantee expenditure patterns generally reflected when they had
received awards. Head Start grantees drew down more total first-year
award funds by the beginning of November 2010 (at least 82 percent)
than Early Head Start grantees (at least 70 percent), who received
awards later.[Footnote 34] Further, Early Head Start grantees that
received expansion awards earlier drew down more first-year award
funds than those that received later Early Head Start awards. Early
Head Start grantees that received awards in November 2009 averaged a
drawdown rate of at least 83 percent, while those who received awards
in February 2010 averaged a drawdown rate of at least 70 percent.
Different types of grantees drew down funds at different rates, as
shown in table 4. Some of the Early Head Start expansion funds went to
programs that serve two specific populations: American Indian and
Alaska Native programs enrolling children and families from federally
recognized tribes or native Alaskan children and families, and Migrant
and Seasonal Head Start programs enrolling children of migrant farm
workers. Drawdown for grantees serving American Indian and Alaska
Native communities was at least 48 percent by the beginning of
November 2010, as shown in table 4. OHS officials attribute this slow
rate to the fact that some tribes advance tribal funds to pay for
services and are reimbursed retroactively.
[Side bar: States Have Begun Drawing Down Advisory Council Funds:
As of the beginning of November 2010, State Advisory Council (SAC)
grantees had drawn down less than 1 percent of funds because awards
were issued mostly in September 2010. The Head Start Act of 2007
required the governor of each state to establish a council on early
childhood education and care for children from birth to school
entry.[A] Grants are being made available under the Recovery Act to be
administered by OHS. The grant opportunity was announced to governors
in May 2009 by the Acting Director of OHS, and applications were due
August 1, 2010.
As of September 30, 2010, OHS had awarded grants to 45 states, the
District of Columbia, and four territories totaling about $100 million
for the 3-year grants. Representatives from states we interviewed said
SACs will use various sources to meet the grant requirement that
states match 70 percent of the Recovery Act grant with nonfederal
funds such as state-funded pre-school initiatives, lottery funds, and
in-kind grants from state agencies. Seven states and territories did
not apply for funding. Officials from three states that did not apply
for SAC funding to whom we spoke cited challenges such as the
nonfederal match requirement.
[A] Pub. L. No.110-134, § 11(b), 121 Stat. 1363, 1411 (codified at 42
U.S.C. 9837b). End of side bar]
Table 4: First-Year Drawdown Rates for Grantees by Program Type, as of
the beginning of November 2010:
Type of grantee: Head Start;
Drawdown rate (percentage): 82%.
Type of grantee: Early Head Start;
Drawdown rate (percentage): 70%.
Type of grantee: American Indian and Alaska Native;
Drawdown rate (percentage): 48%.
Type of grantee: Migrant and Seasonal;
Drawdown rate (percentage): 84%.
Source: GAO analysis of HHS data.
[End of table]
Grantees themselves attribute low drawdown rates to delays in
receiving grants, difficulties in preparing facilities, and other
challenges, as discussed above. Five of the seven grantees we
interviewed that did not expect to obligate all first-year funds cited
the delay in receiving first-year grant awards from OHS as a challenge
in expending first-year Recovery Act expansion funds. As shown in
figure 7, OHS began making Head Start awards more than 6 months after
the Recovery Act was enacted, and Early Head Start awards were granted
even later.
Figure 7: Cumulative Fiscal Year 2010 Recovery Act Expansion Awards
Timeline and Drawdown:
[Refer to PDF for image: multiple line graph and timeline]
Date: February 17, 2009:
Recovery Act enacted.
Date: May 8, 2009:
OHS publishes Head Start and Early Head Start expansion grant
announcements.
Date: June 23,2009:
Head Start grant application deadline.
Date: July 9, 2009:
Early Head Start grant application deadline.
Date: September 2009; First batch of Head Start grants awarded;
Awarded: $95.7 million;
Drawdown: $0.
Date: October 2009;
Awarded: $95.7 million;
Drawdown: $0.5 million.
Date: November 2009; First batch of Early Head Start grants awarded;
Awarded: $462.2 million;
Drawdown: $2.0 million.
Date: December 2009;
Awarded: $670.3 million;
Drawdown: $9.0 million.
Date: January 2010;
Awarded: $686.2 million;
Drawdown: $21.3 million.
Date: February 2010; One year since Recovery Act enacted;
Awarded: $697.5 million;
Drawdown: $39.1 million.
Date: March 2010;
Awarded: $719.9 million;
Drawdown: $73.1 million.
Date: April 2010;
Awarded: $729.3 million;
Drawdown: $117.8 million.
Date: May 2010;
Awarded: $736.3 million;
Drawdown: $163.9 million.
Date: June 2010;
Awarded: $741.2 million;
Drawdown: $216.6 million.
Date: July 2010;
Awarded: $744 million;
Drawdown: $274.8 million.
Date: August 2010;
Awarded: $744 million;
Drawdown: $350.3 million.
Date: September 2010; End of first year grants;
Awarded: $744.1 million;
Drawdown: $443.7 million.
Source: GAO analysis of OHS data.
[End of figure]
Among grantees attributing delays to the preparation of facilities,
one grantee cited the unanticipated need for time to commission and
complete architectural drawings of the planned facility. This grantee
and another that was constructing new facilities experienced
difficulty completing the paperwork to obtain approval from OHS to
proceed with construction.[Footnote 35] Grantees are not permitted to
award a contract for construction or major renovation without approval
from an OHS official.[Footnote 36]
Due to Mixed Messages from OHS, Grantees Adopted Varied Spending
Practices:
The OHS central office told us that standard policy for permitting
grantees to request approval to carry over funds into the second year
of the grant will apply to Recovery Act expansion grantees--although a
regional OHS official reported that the OHS central office indicated
that requests may receive "additional flexibility"--and grantees we
interviewed often expressed confusion about whether or not OHS would
permit them to carry over funds. Of the officials at 13 grantees that
commented on the guidance they received, 9 stated that guidance on the
carryover policy was unclear. In particular, officials at seven
grantees did not expect to obligate all first-year funds by the end of
the fiscal year, and five of these were unclear about the carryover
policy.
Given the unique nature of the Recovery Act's one-time, 2-year
funding, grantees were unclear as to whether or not HHS's typical
carryover policy would apply. For typical, ongoing grants, the
carryover policy is explained in HHS's Grants Policy Statement, which
states that grantees may request to carry over unobligated funds in
the next year of their grant. HHS sets the policy for all grantees,
while regional offices typically evaluate and approve grantees'
requests for carryover. However, regional offices did not consistently
communicate a clear policy for Recovery Act funds. For example, in
June 2010, the head of one region publicly urged grantees to expend
all first-year funds within the fiscal year because the official was
uncertain about whether or not carryover would be permitted. According
to a grantee in another region, OHS staff told officials that it was
likely that the grantee would be able to carry over unobligated funds
for use in the following year. Officials at one grantee told us that
the regional office changed its guidance on carryover. Specifically,
the grantee reported that in June 2010, they received verbal
assurances that they would be able to carry over funds into the next
fiscal year. According to these officials, nearly 3 months later, the
grantee was told that carryover would not be permitted. Grantee
officials representing two different regions told us that OHS regional
office contacts refused to state the carryover policy "in writing."
One senior official from an OHS regional office confirmed that this
was the office's practice. An OHS official representing a different
regional office stated that the office had not sent any e-mails or
provided any written guidance on carryover to grantees as of September
2010.
Regional offices conveyed inconsistent messages to grantees because
the OHS central office did not communicate its carryover policy
clearly or early to regional offices. Officials at the OHS central
office explained to us that the policy for carryover had not changed
for Recovery Act grants. Further, the officials told us that if
grantees had unexpended funds at the end of fiscal year 2011, OHS
could approve grantees' request to extend the time period, or the
funds would be returned to the U.S. Treasury. Nevertheless, a senior
official at one regional office indicated that they were waiting for
information about carryover from the central office. A representative
told us in July 2010 that the region was expecting guidance from the
central office, which was not received until mid-September--about 2
weeks before the close of the fiscal year--and came verbally, not in
written form. At that time, the regional official reported that
Recovery Act carryover requests would be permitted in a manner
consistent with normal policy, with the possibility of some additional
flexibility to approve grantee requests.
Head Start grantees need clear information about how and when they are
expected to obligate and expend federal funds so that they can plan to
use funds responsibly to achieve program goals. Under normal Head
Start policies, grantees are expected to have obligated all funds for
that year within the annual budget period or to apply in writing to
carry over unobligated funds to the next year. Grantees have access to
information on carryover and the consequences of failing to adhere to
the deadlines, as both are explained on an OHS Web site.[Footnote 37]
As a result, grantees can plan accordingly.
Grantees' uncertainty about whether to "use or lose" Recovery Act
grant funds contributed to varied spending practices that may not
always have targeted expansion funds toward meeting programs' highest
current priorities. Two grantees we interviewed made advanced
purchases of diapers, supplies, or other items that representatives
either said were not needed until the next fiscal year or for which
the grantee did not originally plan. Others among the 14 expansion
grantees we contacted expended funds on large items that they did not
originally plan to purchase. For example, one grantee told us they
changed plans in order to purchase four buses, a van, and staff
training in the closing months of the fiscal year. On the advice of
the regional office, one grantee purchased a minivan to transport home-
based participants to health appointments and regularly scheduled
socialization activities. One grantee planned to construct a
playground to be used as an "outdoor learning environment" at a cost
of about $295,000. Another planned to use funds to construct a
socialization room for home-based Early Head Start participants on the
same site as the grantee's other Head Start program, at a cost of
about $43,000. Finally, 7 of the 14 expansion grantees we spoke to
planned to apply to OHS for permission to carry over remaining
unobligated funds into the second year.
OHS Hired a Contractor to Both Prepare for and Conduct On-Site
Reviews, but Has Not Incorporated Some Risk Indicators in Planning for
Reviews:
OHS Has Contracted to Help Prepare for and Conduct On-Site Reviews:
As required by the Head Start Act,[Footnote 38] OHS plans to conduct
"1-year" monitoring visits to 626 Early Head Start expansion grantees
by expanding its use of an existing contractor. HHS contracted with
Danya International (Danya) both for planning and carrying out
reviews--for a total of $21 million. Since 1999, Danya has supported
OHS reviews of Head Start grantees by providing logistic and
information technology support, and recruiting and training reviewers.
However, because the addition of new grantees has been relatively
rare, in any given year, OHS, together with Danya, typically complete
only a handful of first-year visits for new programs.
In 2010, OHS openly competed a monitoring contract but received only
one bid, from its existing monitoring contractor, which had completed
initial planning for reviews of Recovery Act grantees under a
noncompetitive modification of its existing contract. OHS had awarded
Danya a noncompetitive contract modification in September 2009 for
close to $7 million to provide support for first-year monitoring
visits to Recovery Act Early Head Start expansion grantees. Under this
contract as modified, Danya was to develop a plan to integrate the
Recovery Act expansion grantee visits into the national monitoring
schedule, plan to expand recruitment of Early Head Start reviewers,
and begin to develop information technology support for handling the
increased volume of grantee reviews. HHS contracting officers
justified the decision not to compete the contract modification,
stating that there was insufficient time for another company to plan
for monitoring Recovery Act expansion grantees. OHS also estimated
that awarding the contract to a contractor other than Danya would cost
$11 million in duplication of effort. Subsequently, however, in
accordance with the Recovery Act, HHS officials competed their entire
monitoring contract in January 2010 to implement the monitoring visits
that Danya had planned, as well as non-Recovery Act visits, worth $38
million each year. As the only company to bid for the contract, Danya
was awarded the contract for both Recovery Act and non-Recovery Act
monitoring on April 28, 2010. The Recovery Act portion of this
contract totaled $14 million dollars, of which Danya had billed for
close to $2.1 million as of September 2010.
Under Danya's initial Recovery Act planning contract, OHS postponed
indefinitely a centralized data management system for all grantees
after paying more than $250,000 in Recovery Act funding for the
project. The data system, called the Knowledge Management Repository,
was meant to consolidate different OHS data systems into one system.
For example, the Knowledge Management Repository would have compiled
grantee review data and evidence, and information about reviewers'
expertise. In February 2010, however, this project was postponed
indefinitely. According to OHS officials, they decided to postpone the
project, determining that this function should be implemented
internally. They stated the work completed by Danya will be used in a
future data management system. Although OHS officials told us that a
working group on monitoring information technology systems began
meeting in October 2010, officials indicated that the envisioned data
system will not be completed within the Recovery Act grant period or
available for monitoring the Recovery Act expansion grantees.
OHS Has Prepared for On-Site Reviews but Has Not Incorporated Some
Risk Indicators:
In coordination with the contractor, OHS plans to complete on-site
visits by April 30, 2011, or by the end of grantees' first year of
operation, whichever comes first. The Head Start Act requires that HHS
conduct "a review of each newly designated Head Start agency
immediately after the completion of the first year such an agency
carries out a Head Start program."[Footnote 39] OHS considers the end
of the grantees' first year of operation to be the end of 1 year of
serving children and families. Recovery Act monitoring visits will be
in addition to regularly scheduled monitoring visits, as shown in
figure 8. OHS starts each monitoring season at the beginning of the
fiscal year, which is in October of each year. OHS visited 63 Recovery
Act Early Head Start expansion grantees by October 31, 2010, although
it had planned to visit 67 by that date.
Figure 8: Regularly Scheduled Monitoring Visits and Planned Recovery
Act 1-Year Reviews, May 2010-April 2011:
[Refer to PDF for image: stacked vertical bar graph]
Number of reviews:
Date: May 2010;
Regular reviews (planned and implemented): 57.
Date: June 2010;
Regular reviews (planned and implemented): 26.
Date: July 2010;
Regular reviews (planned and implemented): 17.
Date: August 2010;
Regular reviews (planned and implemented): 23.
Date: September 2010;
Regular reviews (planned and implemented): 17.
Date: October 2010;
Recovery Act reviews (planned and implemented): 67;
Regular reviews (planned and implemented): 93;
Total reviews: 160.
Date: November 2010;
Recovery Act reviews (planned and implemented): 50;
Regular reviews (planned and implemented): 92;
Total reviews: 142.
Date: December 2010;
Recovery Act reviews (planned and implemented): 32;
Regular reviews (planned and implemented): 76;
Total reviews: 108.
Date: January 2011;
Recovery Act reviews (planned and implemented): 60;
Regular reviews (planned and implemented): 70;
Total reviews: 130.
Date: February 2011;
Recovery Act reviews (planned and implemented): 67;
Regular reviews (planned and implemented): 89;
Total reviews: 156.
Date: March 2011;
Recovery Act reviews (planned and implemented): 71;
Regular reviews (planned and implemented): 94;
Total reviews: 165.
Date: April 2011;
Recovery Act reviews (planned and implemented): 52;
Regular reviews (planned and implemented): 106;
Total reviews: 158.
Source: GAO analysis of Danya documentation.
[End of figure]
HHS's Office of Inspector General (OIG) identified some financial
management risks among grantees, including a few that received
Recovery Act expansion grants. Among 24 grantees that OHS identified
as high risk that were reviewed by the OIG, five received Recovery Act
expansion funds in fall 2010 (three for Early Head Start, one for both
Early Head Start and Head Start and one for Head Start). According to
OHS officials, the OHS central and regional offices identified high
risk grantees in their regions and referred them to the OIG for
review. The OIG began to audit the grantees in July and August 2009.
OHS later awarded five of the 24 grantees Recovery Act funding to
expand their Early Head Start or Head Start programs. OHS stated that
no expansion funds were awarded to grantees that were identified for
health and safety performance violations, although at least one of the
grantees that received an unfavorable health and safety review from
the OIG received an expansion grant.[Footnote 40] OHS officials
explained that in making funding decisions, OHS looked at the
grantees' reviews and spoke with staff in the regional offices to
determine if the grantees should receive expansion grants. In
conducting these reviews, the OIG identified several financial
management deficiencies among four expansion grantees for which
reports had been issued, including: uncertainties about continued
financial viability; non-competitive agreements that advantaged the
grantee; overcharging the Head Start program for administrative costs
or charging it for unallowable or unsupported costs; and a weak system
and internal controls related to accounting, personnel, procurement
and property management. Two of the five expansion grantees that
received financial management reviews from the OIG were on Danya's
Recovery Act schedule to receive a monitoring visit this year.
OHS plans to scope and staff its 1-year reviews of Recovery Act
grantees primarily according to their prior experience with Head Start
and Early Head Start and whether the grantees have recently received a
triennial review. New Early Head Start grantees will receive a full
monitoring visit using the triennial monitoring review protocol.
Recovery Act expansion grantees that have already received a triennial
monitoring visit in years just prior to receiving their expansion
funds will be given a more limited 1-year review of Recovery Act
operations. The remainder of the expansion grantees will receive the
triennial review for which they are scheduled in 2011, as shown in
table 5. The 213 grantees that received Head Start expansion funds but
no funding for Early Head Start expansion will receive their usual
triennial review if they are scheduled to be reviewed this year; if
they are not on this year's triennial schedule, they will not be
reviewed this year.
Table 5: Monitoring Reviews Planned by April 30, 2011, for Different
Types of Recovery Act Early Head Start Expansion Grantees:
Type of expansion grantee: New stand-alone Early Head Start[A];
Description of review: Grantees will receive a full monitoring review
with a full team;
Number of Early Head Start grantees: 72 grantees.
Type of expansion grantee: Existing Head Start grantees that received
Early Head Start expansion funds;
Description of review: Grantees already scheduled for a triennial
review will receive two additional Early Head Start reviewers;
Number of Early Head Start grantees: 69 grantees.
Type of expansion grantee: Existing Head Start grantees that received
Early Head Start expansion funds;
Description of review: Grantees not on the FY 2011 triennial review
schedule will receive a targeted review with three reviewers;
Number of Early Head Start grantees: 127 grantees.
Type of expansion grantee: Existing stand-alone Early Head Start
grantees that received Early Head Start expansion funds;
Description of review: Grantees already scheduled for a triennial
review will receive the traditional triennial review;
Number of Early Head Start grantees: 27 grantees.
Type of expansion grantee: Existing stand-alone Early Head Start
grantees that received Early Head Start expansion funds;
Description of review: Grantees not scheduled for an FY 2011 triennial
review will receive a Regional Office Program Specialist review;
Number of Early Head Start grantees: 43 grantees.
Type of expansion grantee: Existing grantees that operate both Head
Start and Early Head Start programs that received Early Head Start
expansion funds;
Description of review: Grantees already scheduled for a triennial
review will receive two additional Early Head Start reviewers;
Number of Early Head Start grantees: 118 grantees.
Type of expansion grantee: Existing grantees that operate both Head
Start and Early Head Start programs that received Early Head Start
expansion funds;
Description of review: Grantees not scheduled for an FY 2011 triennial
review will receive a Regional Office Program Specialist review;
Number of Early Head Start grantees: 170 grantees.
Total:
Number of Early Head Start grantees: 626 grantees.
Source: OHS.
[A] No Head Start grantees were new to the Head Start program. Thus,
all new grantees are Early Head Start grantees.
[End of table]
Both the full 1-year monitoring review and the triennial review cover
all aspects of the Head Start Monitoring Protocol, while targeted
reviews will focus on Early Head Start and Recovery Act issues. For
the 1-year reviews of Recovery Act grantees, OHS added questions to
the Monitoring Protocol to enhance coverage of topics such as grantee
governance and financial management, staffing, training and technical
assistance funding, and education services. Other questions are
directed at grantees implementing new programs. For example, one new
question asks reviewers, "Has the grantee drawn down an appropriate
amount of funds, given where it is in the start-up process?" Targeted
reviews for established grantees that have recently received a
triennial review will cover matters related to Recovery Act spending
and Early Head Start expansion. In these visits, reviewers do not ask
grantees about some requirements, like partnering with parents or
transportation services.
HHS and contractor officials have stated that all monitoring visits to
new grantees will be implemented as "surprise" visits in response to
GAO findings of fraudulent enrollment and attendance and enrollment
discrepancies among some Head Start grantees as reported in May 2010.
[Footnote 41] Typically, the OHS monitoring contractor notified
grantees of their scheduled review date 30 days prior to the visit.
According to the contractor, this date is chosen from among multiple
weeks selected by grantees.
To prepare for monitoring visits to first-year expansion grantees,
Danya gathered documentation and data on grantees and ensured support
systems were equipped to receive Recovery Act grantee data. Danya
gathered documentation and data on grantees to prepare for monitoring
visits, such as grantee start-up proposals and information entered
into the Head Start Enterprise System, a user-restricted Web-based
database that includes PIR data and results of monitoring meetings
with grantees. Danya has also adapted its data systems to track
Recovery Act-funded grantee review activities.
In addition, Danya recruited and trained reviewers to conduct visits
to expansion grantees. As of October 20, 2010, Danya had recruited
over 270 new reviewers for the first-year monitoring visits to
expansion grantees. The contractor stated that it recruited reviewers
with fiscal, health, and early childhood development expertise. For
the Early Head Start expansion visits, Danya reported recruiting
reviewers who have specific expertise in infant and toddler
development, expectant families, and infant mental health. Danya
trained reviewers by October 20, 2010, through both in-person and self-
certified Web-based training. In addition, Danya trained both OHS
officials and nonfederal reviewers who received extra training by
September 23, 2010, to serve as review team leaders. Team leaders will
organize and implement the review and oversee the preparation of
preliminary reports. Danya officials stated that they will also
conduct quarterly booster and follow-up training.
In addition to preparing for first-year visits to expansion grantees,
OHS has been conducting other one-time and ongoing monitoring
activities, as shown in table 6. These efforts include initial on-site
visits and reviewing grantee reports. Additionally, regional office
staffers have been holding risk management meetings with expansion
grantees to identify challenges and to monitor their progress. While
it was OHS's policy that all grantees receive regular risk management
meetings, we found that at one of the two regional offices we
contacted, risk management meetings were not consistently implemented
or documented. For example, a regional office did not document whether
or not any risk management meetings were conducted for one grantee
that did not plan to open a Recovery Act-funded facility to children
and families until September 2011. As a result, it is not clear that
grantees in that region have been receiving the same level of review
as other grantees or that regional offices are consistently
implementing OHS's policy or providing such information for
consideration in staffing review teams.
[Side bar: OHS Plans to Monitor State Advisory Councils through
Quarterly and 18-Month Reports:
OHS plans to monitor SAC funds through 18-month reports, as well as
quarterly program progress reports and minutes to be submitted to OHS.
The OHS central office has assisted grantees by providing resources on
accessing matching funds, responding to individual questions, hosting
a webinar, working with the National Governors Association, and
reminding grantees of recipient reporting deadlines. In addition, OHS
plans to host an annual meeting for states to share acquired knowledge
on SACs, starting in April 2011. OHS officials also stated that they
hope to create cohorts of states working on similar initiatives with
their SAC funding. Grantees noted, in particular, that the OHS SAC
representative was helpful and responsive. End of side bar]
Table 6: Status of OHS Monitoring Activities:
OHS monitoring of grantees: Initial on-site monitoring: In the months
after grantees are funded, OHS regional staff conduct initial on-site
visits to support grantees in meeting the Performance Standards, and
identify any early concerns;
Status: As of November 5, 2010, OHS regional office program staff
conducted 505 initial on-site visits to support Recovery Act expansion
grantees.
OHS monitoring of grantees: Risk management meetings: Regional staff
call grantees within the first 30 days of receiving an expansion
grant, within the next 45 days, and then quarterly until grantees are
operational. Calls may be more frequent, as needed. Through the risk
management meetings, OHS's objective is to understand what the grantee
is doing, how far along it is in the expansion process, and the amount
of the award spent. Participants include regional office staff and the
Regional Program Manager, if needed;
Status: GAO found that risk management meetings were implemented or
documented inconsistently. One regional office did not document that
some risk management meetings had occurred. The date and outcomes of
the risk management meetings were not always entered into the
centralized database.
OHS monitoring of grantees: Monthly enrollment and annual reporting:
Grantees are required to report their enrollment at the end of each
month, so OHS can compare it to the enrollment for which it was
funded. Low enrollment triggers monitoring actions by regional OHS
offices. Also, all grantees will complete an annual, more
comprehensive survey known as the PIR;
Status: Grantees have generally completed monthly enrollment reports.
According to an OHS official, almost all grantees have completed the
annual PIR.
Source: GAO analysis of OHS data.
[End of table]
Oversight of Recipient Reporting Data Quality Continues for the Fifth
Round of Reporting:
To meet our mandate to comment on recipient reports, we have continued
monitoring recipient reported data, including data on jobs funded.
This time we focused our review on the Head Start data in addition to
the national data. Analyzing these data can help in improving the
accuracy and completeness of the Recovery.gov data and in planning
analyses of recipient reports. Overall, this round's results were
similar to those we observed in previous rounds. While data quality is
improving, some issues remain. According to Recovery.gov as of October
30, 2010, recipients reported on over 200,000 awards indicating that
the Recovery Act funded approximately 671,607 jobs during the quarter
beginning July 1, 2010, and ending September 30, 2010.[Footnote 42]
This included over 2,400 prime reports associated with Head Start
grantees. As reported by the Recovery Accountability and Transparency
Board, job calculations are based on the number of hours worked in a
quarter and funded under the Recovery Act--expressed in FTEs.[Footnote
43]
Analysis of Fifth Round Recipient Reporting Data Shows Data Quality Is
Relatively Stable:
Using the fifth reporting period data, we continued our monitoring of
errors or potential problems by repeating many of the analyses and
edit checks reported in our earlier reports. We reviewed 77,711 prime
recipient report records from Recovery.gov for this fifth round, an
increase of 3,462 or about 4.6 percent from round four. For our
analyses, in addition to the fifth round of recipient report data, we
also used the previous four rounds of data as posted on Recovery.gov
as of October 30, 2010.
In examining recipient reports, we looked for progress in addressing
several key limitations found in our prior reports. In prior rounds we
have reviewed data logic and consistency and reviewed unusual or
atypical data. Data logic and consistency provide information on
whether the data are believable, given program guidelines and
objectives; unusual or atypical data values indicate potential
inaccuracies. As with previous quarterly report rounds, these reviews
included (1) the ability to link reports for the same project across
quarters and (2) concerns in the data logic and consistency, such as
reports marked final that show a significant portion of the award
amount not spent. We continued to see results similar to those of past
reviews. For example, we continued to find a small number of reports
for which there were potential linkage issues across quarters. This
may impact the ability to track project funding and FTEs over
quarters. We also continued to see a small number of reports marked
final for which there appeared to be some discrepancies, such as
reports marked final but for which project status was marked as less
than 50 percent completed.
As part of our review of data logic and consistency, we found some
inconsistencies in the Head Start data's agency review flag field that
were similar to inconsistencies we found in our previous reviews. Our
analysis suggests that this field may not correctly reflect the extent
of the agency's review process. Prime recipient report records include
a review flag on whether or not the federal agency reviewed the record
during the data quality review time frames. As we have noted in past
reports, our analyses of this agency review field, in conjunction with
other fields and our discussions with agency officials, have indicated
potential problems and inconsistencies. It appears that this continues
to be the case with Head Start reports, only 17 percent of which were
marked as having been reviewed by the agency. However, agency
officials stated that all reports were reviewed. Another data field on
the recipient report shows whether or not a correction was initiated;
analysis of that field indicates it is likely that additional agency
reviews took place. A correction could be initiated by either the
prime recipient or the reviewing agency. Thirty percent of the reports
had the correction flag set to 'yes' even though the review flags
suggested that neither the agency nor prime recipient had reviewed
those reports. Officials noted that they continued to experience
difficulties in marking reports as reviewed. Agency officials
indicated that they would continue to update these flags during the
continuous review process.
As part of our additional analysis, we found that a previously
identified concern with FTE calculations for Head Start reports is
being addressed. Agency officials stated that following the December
2009 Office of Management and Budget (OMB) memorandum clarifying the
FTE definition, all grants associated with COLA/QI were reviewed with
respect to the reporting of FTEs. Agency officials reviewed these
grants and communicated to recipients that the cost-of-living
increases were not to count toward the FTE totals. We reviewed the
FTEs reported to determine if Head Start recipients were no longer
reporting cost-of-living increases as FTEs. In examining the impact on
the FTE figures before and after this clarification guidance was
issued, we observed a significant drop in the number of COLA/QI FTEs
reported in all reporting periods following the updated guidance. We
further observed that for the fifth round of reporting, over 60
percent of these COLA/QI recipient reports showed no FTE value. For
the remaining reports showing FTEs, we looked to see if, in the 20
reports with the greatest number of FTEs, the fields describing the
award, project, and job creation explained their FTE counts. In almost
all cases, one of these narrative fields accounted for activities that
would be expected to produce FTEs--hiring staff, expanding existing
staff hours, or hiring other types of workers to improve facilities,
in accordance with Head Start quality improvement guidance. Agency
officials noted that they continue to monitor these grants to ensure
that cost-of-living increases are not being reported among the FTEs.
Head Start Agency Review of Recipient Data Included Updated OMB
Guidance Requirements:
OMB's guidance requires federal agencies to work with their recipients
to ensure that the data they report are comprehensive and accurate.
[Footnote 44] The agencies must make limited reviews of recipients'
data to identify material omissions and significant reporting errors
and to notify the recipients of any need to make appropriate and
timely changes. However, as OMB stated in its guidance, the federal
agencies' comments and suggestions for report changes do not preclude
the prime recipients' ultimate responsibility for the data they report.
On September 24, 2010, OMB issued updated guidance to federal agencies
and recipients that included guidance on, among other topics,
improving the transparency of narrative descriptions in recipient
reporting.[Footnote 45] In particular, this memorandum stated that
unclear or overly general award descriptions constitute material
omissions. Further, the memorandum described standards of completeness
for the "Award Description" and "Quarterly Activities/Project
Description for Prime and Sub-recipients" fields. OMB noted that these
two fields together must provide, at minimum, clear and complete
information on the award's purpose, scope and nature of activities,
outcomes, and status of activities. Per the memorandum, federal
agencies are to direct recipients to update or correct these fields in
instances in which incomplete award descriptions would mislead the
public or fail to provide sufficient information to discern the
award's purpose and activities.
In response to this memorandum, HHS issued guidance to ACF and its
operating divisions on reviewing these data fields as it reviews
recipient reports. HHS provides broad guidance on the types of data
quality reviews its operating divisions should perform, and ACF works
with OHS to review Head Start recipients' reports. This review used a
series of reports that contain data from FederalReporting.gov and the
ACF grants management systems to identify potential issues with data
submitted by recipients.[Footnote 46] This process entails automated
data reviews that cover all reports submitted, generating a list of
reports from which ACF programs can target their review of recipient
reported data. The automated reviews include, for example, award
number matching and reviews of expenditures, project status, and
reported FTEs.
In response to the new HHS guidance, ACF and OHS have incorporated
these additional reviews into their procedures. Agency officials
informed recipients of the enhanced requirements for updating award
and project descriptions. Further, when officials reviewed records in
early October in which recipients had brief descriptions in the data
fields, they found that about 600 Head Start recipients potentially
needed updating. In early November, agency officials stated that this
review had led to more than 450 of the 600 recipients updating their
records. Agency officials noted that many of the recipients had used
the "copy forward" feature for several rounds but had not updated
these two fields in recent rounds. The officials stated that they will
update or modify their review process as further guidance is released.
Conclusions:
The Recovery Act expansion grants made it possible for some 60,000
additional children and families, particularly those with low incomes,
to receive up to 2 years of Head Start and Early Head Start services
that will help ensure school readiness. The expansion grants also
created or retained a number of jobs during the country's economic
slowdown. Still, even as the Recovery Act directed an infusion of
funds into the economy, it also increased the importance of
accountability for their use. In light of the Recovery Act's pledge of
unprecedented transparency and accountability for federal grants, the
ability of OHS to measure the results of expanded Head Start funding
is critical. While grantee recipient reporting figures indicate that
staffing levels have increased with Recovery Act funds, data on the
number of children and families enrolled in Head Start and Early Head
Start are less clear. OHS's plan to require that reviewers compare
attendance with enrollment reports offers some clarification, but
until OHS clearly communicates a consistent definition for
"enrollment," the cumulative enrollment reports will continue to mean
different things for different grantees. Without better measures of
enrollment or service delivery, it will remain difficult for OHS to
assess whether its actions are extending Head Start and Early Head
Start to as many eligible children and families as possible.
The rapid addition of funds to Head Start and Early Head Start
increased the potential significance of efforts to reduce risks of
misuse or abuse of funds and enhance the effectiveness of sponsored
programs and projects. The fact that Early Head Start grants arrived
later than expected--further accelerating expenditures--increased the
risk of ineffective choices on the part of grantees. The absence of
clearly communicated guidance on whether they could carry funds from
one year to the next and the lack of consistent monitoring of their
spending plans likely left grantees feeling pressured to spend funds
on near-term priorities in the belief that application to longer-term
but potentially more important issues would not be possible. As a
result, some children may have received significantly different levels
or a lesser quality of service than their program managers might have
otherwise planned or provided. Unless this confusion is remedied, OHS
may miss opportunities to foster the best outcomes with Recovery Act
expansion funds.
Without consistently sharing the results of risk management meetings,
risks are more likely to be overlooked and a central OHS strategy for
managing risk--including risks in management of new funds--does not
achieve its full potential. In addition, failure to incorporate known
information regarding financial management and other risks in planning
Recovery Act reviews may make these reviews less effective in holding
grantees accountable for the funds received and ascertaining their
progress in addressing known problems.
Recommendations for Executive Action:
We recommend that the Director of the Office of Head Start take the
following three actions:
* To help ensure that grantees report consistent enrollment figures,
better communicate a consistent definition of "enrollment" to grantees
for monthly and yearly reporting and begin verifying grantees'
definition of "enrollment" during triennial reviews.
* To provide grantees consistent information on how and when they will
be expected to obligate and expend federal funds, clearly communicate
its policy to grantees for carrying over or extending the use of
Recovery Act funds from one fiscal year into the next.
* To better consider known risks in scoping and staffing required
reviews of Recovery Act grantees, direct OHS regional offices to
consistently perform and document Risk Management Meetings and
incorporate known risks, including financial management risks, into
the process for staffing and conducting reviews.
Agency Comments and Our Evaluation:
We provided a draft of the report to the Department of Health and
Human Services and the Office of Management and Budget for review and
comment. OMB did not provide comments. HHS's comments are reproduced
in appendix II. HHS agreed with GAO's recommendations and provided
additional detail on steps it had initiated or planned to implement.
With respect to our recommendation that OHS direct regional offices to
consistently perform and document Risk Management Meetings, HHS
reports it is reviewing the Risk Management Meeting process to ensure
it is consistently performed and documented in its centralized data
system and that it has taken related steps, such as requiring the
Grant Officer to identify known or suspected risks prior to an on-site
review. HHS also indicates that it will issue explicit guidance on
enrollment terminology for grantees and monitoring teams, as well as
provide guidance and make other efforts to effectively communicate the
mechanisms in place for grantees to meet the requirements for
obligation and expenditure of funds. In addition, in connection with
our observation regarding OHS managers' access to aggregated drawdown
data, HHS commented that it is pursuing plans to obtain monthly
reports of this nature for OHS and regional program managers. HHS also
provided technical comments, which we incorporated as appropriate.
We are sending copies of this report to the Secretary of Health and
Human Services, the Director of the Office of Management and Budget,
appropriate congressional committees, and other interested parties.
The report is also available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact Cornelia Ashby at (202) 512-7215 or ashbyc@gao.gov or Yvonne
Jones at (202) 512-6878 or jonesy@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions
to this report are listed in appendix IV.
Signed by:
Cornelia M. Ashby:
Director, Education, Workforce, and Income Security:
Signed by:
Yvonne D. Jones:
Director, Strategic Issues:
List of Addressees:
The Honorable Nancy Pelosi:
Speaker of the House of Representatives:
The Honorable Daniel K. Inouye:
President Pro Tempore of the Senate:
The Honorable Harry Reid:
Majority Leader:
United States Senate:
The Honorable Mitch McConnell:
Republican Leader:
United States Senate:
The Honorable Steny Hoyer:
Majority Leader:
House of Representatives:
The Honorable John Boehner:
Republican Leader:
House of Representatives:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable David Obey:
Chairman:
The Honorable Jerry Lewis:
Ranking Member:
Appropriations Committee:
House of Representatives:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Edolphus Towns:
Chairman:
The Honorable Darrell E. Issa:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Tom Harkin:
Chairman:
The Honorable Michael B. Enzi:
Ranking Member:
Committee on Health, Education, Labor & Pensions:
United States Senate:
The Honorable George Miller:
Chairman:
The Honorable John Kline:
Ranking Member:
Committee on Education and Labor:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We took a number of steps to address our objectives, which were to
determine (1) how Head Start and Early Head Start grantees have used
American Recovery and Reinvestment Act of 2009 (Recovery Act) funds,
including expanding enrollment; (2) what challenges grantees have
encountered in spending Recovery Act funds; (3) how the Office of Head
Start (OHS) has monitored the use of Recovery Act funds; and (4) how
the quality of jobs data reported by Recovery Act recipients,
particularly Head Start grantees, has changed over time.
To determine how Head Start and Early Head Start grantees have used
Recovery Act funds to expand enrollment, we reviewed relevant federal
laws and regulations, met with agency officials, visited and spoke
with Head Start and Early Head Start grantees, and analyzed OHS-
provided data on awards, expenditures, programs, and enrollment. We
conducted follow-up interviews with nine grantees that we visited
previously in nine localities in four states for a previous report on
the Recovery Act.[Footnote 47] For these interviews, we used an
interview protocol that focused on progress made in providing
services, spending Recovery Act funds, plans for carryover, and
reporting on Recovery.gov. Additionally, we spoke with seven grantees
in seven other states that we identified by analyzing Department of
Health and Human Services' (HHS) expenditure data to identify grantees
with drawdown rates below 5 percent as of July 16, 2010. For these
interviews, we used an interview protocol that addressed use of
Recovery Act funds, reasons for low spending rates, carryover
guidance, and regional office interaction. Table 7 lists the
characteristics of grantees that we spoke to, as well as the type of
interview they received. None of the grantees we interviewed were
among the small portion new to the Head Start program; however, eight
of them were implementing Early Head Start for the first time.
Table 7: Grantees Visited or Interviewed by GAO:
Grantee number: 1;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 2;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 3;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 4;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 5;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 6;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 7;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 8;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 9;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Site visit, follow-up phone interview;
Expansion grantee: Yes.
Grantee number: 10;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Phone interviews;
Expansion grantee: Yes.
Grantee number: 11;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Phone interview;
Expansion grantee: Yes.
Grantee number: 12;
Head Start or Early Head Start grantee: Head Start;
Type of interview: Phone interview;
Expansion grantee: No.
Grantee number: 13;
Head Start or Early Head Start grantee: Head Start;
Type of interview: Phone interview;
Expansion grantee: No.
Grantee number: 14;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: Phone interview;
Expansion grantee: Yes.
Grantee number: 15;
Head Start or Early Head Start grantee: Head Start and Early Head
Start;
Type of interview: E-mail;
Expansion grantee: Yes.
Grantee number: 16;
Head Start or Early Head Start grantee: Early Head Start;
Type of interview: E-mail;
Expansion grantee: Yes.
Source: GAO.
[End of table]
Interviews and site visits with grantees supplemented information
gathered from seven GAO focus groups with expansion grantees, on which
we reported in May 2010.[Footnote 48] Sixty-one individuals
participated in focus groups, representing a variety of programs,
including existing Head Start and Early Head Start grantees and
grantees entirely new to the Head Start and Early Head Start programs.
For most focus groups, we recruited participants from those attending
Head Start-related conferences. The focus groups discussed challenges
faced in implementing their expansion grants, among other topics.
Despite the representation across types of grantees and operating
regions, information from site visits and the results of interviews
and focus groups are not generalizable to all expansion grantees under
the Recovery Act.
To describe how State Advisory Council grantees were planning to
expend their funds, we interviewed state officials in six states:
three states that received grants and three states that chose not to
apply for these funds.
Additionally, we analyzed several databases used by OHS to understand
grantees' characteristics and the features of the grant awards. We
assessed data reliability for all computer-processed data we used,
including reviewing documentation of processes supporting the
databases, conducting logic tests for key variables, and assessing
data for out-of-range values.
* We analyzed OHS-provided Financial Assistance Award data from the
Grants Administration Tracking and Evaluation System database to
determine total funds awarded by year, distribution of grantees'
awards across budget categories, and how many children and families
each grantee was funded to serve.
* We used HHS-provided grantee expenditure data taken from the Payment
Management System (PMS) to determine progress in Head Start and Early
Head Start grantees' Recovery Act total drawdowns, as well as to
identify grantees with low drawdown rates for further GAO follow-up.
OHS officials cautioned us that PMS rates of expenditure are
conservative, as grantees occasionally spend their own funds on Head
Start programming and are reimbursed later through the PMS system.
* We analyzed 2 years of Program Information Report (PIR) data on
enrollment, staffing levels, and other variables. The PIR is
administered through the Head Start Enterprise System, a user-
restricted, Web-based database. PIR is an annual survey administered
to all Head Start and Early Head Start grantees. We performed logic
checks on all variables used in the report. We also analyzed previous
GAO reports and an external report that found that some PIR variables
were unreliable. None of these reports used 2009 or 2010 data. We
tested these variables for 2009 and 2010 and found them to be
sufficiently reliable for our purposes of reporting aggregated figures.
* We analyzed all end-of-month enrollment data for Recovery Act
grantees. Like the PIR, the end-of-month data collection instrument is
administered through the Head Start Enterprise System. OHS populates
the funded enrollment variable, and grantees are required to submit
reported enrollment each month, including an explanation for
enrollment that falls below a grantee's funded enrollment. We did not
validate individual grantees' enrollment reports by comparing them to
actual enrollment records. We found instances in which grantees'
funded enrollment was attributed incorrectly or in which grantees'
total funded enrollment was incorrect. These issues represented an
error rate of less than 1 percent of total funded enrollment. Although
we have continuing concerns about quality controls for the monthly
enrollment data, we determined that data used for our report are
sufficiently reliable for our purposes of reporting total reported and
funded enrollment for all grantees.
To describe challenges grantees have encountered in spending their
Recovery Act funds, we reviewed relevant federal laws and regulations
and met with agency officials from both the OHS central offices and
regional offices. In addition, we analyzed drawdown data from HHS's
PMS system. As described above, we also interviewed seven Early Head
Start grantees in seven states that we identified using PMS data.
Among all grantees with drawdown rates below 5 percent as of July 16,
2010, we randomly selected seven grantees to contact. We used a
standard protocol to ask these grantees' officials about how they have
been using funds, their challenges in spending funds, and why their
drawdown rates were so low at such a late time in the year.
To assess how OHS has monitored Recovery Act funds, we reviewed
relevant federal laws and regulations, interviewed agency officials,
analyzed contracts and contractor invoices, and reviewed other agency
documentation such as monitoring protocols. We met with the OHS
contracting officer and the OHS contractor to discuss the award
process and monitoring support. We also met with officials from the
HHS Office of the Inspector General to better understand their role in
the expansion grant-making process and in monitoring grantees.
The recipient reporting section of this report responds to the
Recovery Act's mandate that we comment on the estimates of jobs
created or retained by direct recipients of Recovery Act funds. For
our review of the fifth submission of recipient reports, covering the
period from July 1, 2010, through September 30, 2010, we built on
findings from our four prior reviews of the reports, covering the
period from February 2009 through June 30, 2010. We performed edit
checks and basic analyses on the fifth submission of recipient report
data that became publicly available at Recovery.gov on October 30,
2010. To understand how the quality of jobs data reported by Recovery
Act recipients, particularly Head Start grantees, has changed over
time, we compared the five quarters of recipient reporting data that
were publicly available at Recovery.gov on October 30, 2010. We
performed edit checks and other analyses on the Head Start subset of
recipient reports, which included matching OHS-provided data
(Financial Assistance Awards from the Grants Administration Tracking
and Evaluation System database) and HHS-provided data (grantee
expenditures from PMS) on grantees with recipient reports. We also
reviewed documentation and interviewed federal agency officials from
HHS, who have responsibility for ensuring a reasonable degree of
quality across their programs' recipient reports. Due to the limited
number of recipients reviewed and the judgmental nature of the
selection, GAO's full-time equivalent findings are limited to those
Head Start programs and time periods examined and are not
generalizable to any other program's FTE reporting.
To update the status of open recommendations from previous bimonthly
and recipient reporting reviews, we obtained information from agency
officials on actions taken in response to the recommendations.
We conducted this performance audit from August 2010 to December 2010
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Health and Human Services:
Office of the Assistant Secretary for Legislation:
Department Of Health & Human Services:
Washington, D.C. 20201:
December 10 2010:
Cornelia M. Ashby:
Director:
Education, Workforce, and Income Security:
U.S. Government Accountability Office:
44l G Street N.W.
Washington, DC 20548:
Dear Ms. Ashby:
Enclosed are comments on the U.S. Government Accountability Office's
(GAO) draft report entitled, "RECOVERY ACT: Head Start Grantees Expand
Services but More Consistent Communication Could Improve
Accountability and Decisions About Spending" (GAO-11-166).
The Department appreciates the opportunity to review this report
before publication.
Sincerely,
Signed by:
Jim R. Esquea:
Assistant Secretary for Legislation:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office's (GAO) Draft Report Entitled.
"Recovery Act: Head Start Grantees Expand Services But More Consistent
Communication Could Improve Accountability And Decisions About
Spending" (GAO-11-166):
The Department appreciates the opportunity to comment on this draft
report.
GAO Recommendations:
We recommend that the Director of the Office of Head Start take the
following three actions:
* To help ensure that grantees report consistent enrollment figures,
better communicate a consistent definition of "enrollment" to grantees
for monthly and yearly reporting and begin verifying grantees'
definition of "enrollment" during triennial reviews.
* To provide grantees consistent information on how and when they will
be expected to obligate and expend federal funds, clearly communicate
its policy to grantees for carrying over or extending the use of
Recovery Act funds from one fiscal year into the next.
* To better consider known risks in scoping and staffing required
reviews of Recovery Act grantees, direct OHS regional offices to
consistently perform and document Risk Management Meetings and
incorporate known risks, including financial management risks, into
the process for staffing and conducting reviews.
Administration for Children and Families (ACF) Comments:
As GAO noted, more than 55,000 infants, toddlers and pre-schoolers
have received comprehensive Head Start (HS) and Early Head Start (EHS)
services due to the funding under the American Recovery and
Reinvestment Act (ARRA).
In order to ensure that funds were well spent and that these children
receive high quality services, ACF has augmented the ongoing and on-
site monitoring of these programs. In 2008, the Office of Head Start
implemented a Risk Management Process for all grantees to serve as an
overarching framework tying together the funding, monitoring, and
technical assistance processes to prevent or reduce risks; focus on
early intervention and build on strengths; and to improve
communication, information sharing and grantee operations.
Participants include the staffs of the grantee, the OHS program, the
ACF Grants Office, and the Training and Technical Assistance network.
While all grantees will have at least one regular Risk Management
Meetings (RMM) each year, for ARRA grantees, specific meetings were
held to establish a formal system of communication to identify
barriers to implementation and service delivery. To facilitate the
meeting and provide consistency, a standard form was used by the
regional offices.
On-site monitoring was also strengthened for oversight of ARRA
grantees. For all grantees, OHS conducts regular on-site monitoring
visits every three years. For ARRA expansion, the frequency of on-site
reviews has been increased and tailored for the ARRA programs, as
noted by GAO. Specifically, 0HS partnered with the Office of Inspector
General to conduct pre-award audits on all new grantees, contracted
with an outside agency to conduct intensive on-site monitoring after
the first year of operations. Federal staff already have conducted
more than 500 on-site visits to ARRA programs.
ACF appreciates the recommendations from GAO on how to improve on this
performance and offers the following response on GAO's three
recommendations as welt as technical comments and corrections.
Definition of Enrollment:
GAO is correct that there is a difference between the regulatory
definition of "enrollment" and what the Program improvement Report
(PER) attempts to capture in its reporting on enrollment. The purpose
of the PER is to report on services received by children and families
and so we have instructed grantees to only include children having
received services.[Footnote 1] ACF agrees that we need to develop
appropriate terminology to avoid confusion. OHS will quickly issue
explicit guidance on this terminology for grantees and monitoring
teams.
Communication on Obligating and Expanding Federal Funds:
The terms and conditions of all awards are outlined in the HHS Grants
Policy (GPS) statement which is incorporated by reference in the
standard remarks of all grant awards. The GPS outlines the
requirements for requesting carryover of unobligated balances. The
requirements for the ARRA funds did not differ from the HHS grant
requirements. These procedures include submitting a request with
appropriate justification which describes the previously approved
goals and objectives/activities that were not met and will be
completed in the subsequent budget period. The request must also
include a current financial status report that reflects the
unobligated balance.
Since GAO's work highlights the need for more explicit guidance for
ARRA grantees, ACF will issue guidance to reiterate the required
obligation and expenditure requirements of the grant, and will
continue to improve upon its efforts to effectively communicate the
mechanisms in place as they relate to fiscal requirements of
obligating and expending funds.
Consistently Perform and Document Risk Management Meetings:
ACF agrees that Risk Management Meetings need to be performed and
documented consistently. ACF Central Office oversees the work of
regional offices with granters, including reviews of documentation in
the centralized data system and works directly with regions when
inconsistencies are discovered. At present, OHS is reviewing the Risk
Management process to ensure it is consistently performed and
documented in the centralized data system. ACF also agrees that
including financial management risks into the process for staffing and
conducting reviews is critical and has already made significant
progress in this area. Specifically, OHS has implemented a process for
the current program year that informs fiscal reviewers about known or
suspected financial risks of grantees, 30 days prior to the on-site
review The Grant Officer is now required to complete a Fiscal
Information form (see attached) that identifies known or suspected
risks in seven key areas prior to an on-site review. The fiscal
reviewer is required to respond in writing to each area of risk. The
information gathered by the fiscal reviewer is then fed back to the
Grants Officer, who is then required to take prompt and appropriate
action.
ACF agrees with GAO's statement on page 7 that "managers need current
information on expenditures to detect problems and proactively manage
risks associated with unusual expenditure patterns, such as overly
rapid or slow expenditures." To that end, OHS has been sharing
periodic reports on current and aggregated drawdown data with Regional
Program Managers and Grants Officers. As of December 1, OHS has
received agreement from the Division of Payment Management to send
these management reports on a monthly basis for all ARRA grants for
central office and regional office oversight purposes. ACF will pursue
a Memorandum of Agreement with DPM to institutionalize this process
for all HS and EHS grants.
Appendix II Footnote:
[1] PIR instructs grantees to include all children who have been
enrolled in their program and have attended at least one class or, for
programs with home-based options, received at least one home visit and
all pregnant women who have been enrolled in their program and
received Early Head Start services.
[End of section]
Appendix III: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
In this appendix, we update the status of agencies' efforts to
implement the 28 open recommendations, 1 newly implemented
recommendation, and 1 newly closed recommendation from our previous
bimonthly and recipient reporting reviews.[Footnote 49] Agency
responses to our new recommendations are included in the program
section of this report. Recommendations that were listed as
implemented or closed in a prior report are not repeated here. Lastly,
we address the status of our Matters for Congressional Consideration.
Department of Energy:
Open Recommendations:[Footnote 50]
Given the concerns we have raised about whether program requirements
were being met, we recommend that the Department of Energy (DOE), in
conjunction with both state and local weatherization agencies, develop
and clarify weatherization program guidance that:
* establishes best practices for how income eligibility should be
determined and documented and issues specific guidance that does not
allow the self-certification of income by applicants to be the sole
method of documenting income eligibility.
* clarifies the specific methodology for calculating the average cost
per home weatherized to ensure that the maximum average cost limit is
applied as intended.
* accelerates current DOE efforts to develop national standards for
weatherization training, certification, and accreditation, which is
currently expected to take 2 years to complete.
* develops a best practice guide for key internal controls that should
be present at the local weatherization agency level to ensure
compliance with key program requirements.
* sets time frames for development and implementation of state
monitoring programs.
* revisits the various methodologies used in determining the
weatherization work that should be performed based on the
consideration of cost-effectiveness and develops standard
methodologies that ensure that priority is given to the most cost-
effective weatherization work. To validate any methodologies created,
this effort should include the development of standards for accurately
measuring the long-term energy savings resulting from weatherization
work conducted.
* considers and addresses how the weatherization program guidance is
impacted by the introduction of increased amounts of multifamily units.
In addition, given that state and local agencies have felt pressure to
meet a large increase in production targets while effectively meeting
program requirements and have experienced some confusion over
production targets, funding obligations, and associated consequences
for not meeting production and funding goals, we recommended that DOE
clarify its production targets, funding deadlines, and associated
consequences while providing a balanced emphasis on the importance of
meeting program requirements.
Agency Actions:
DOE generally concurred with all of the recommendations. DOE provided
updates for each individual recommendation explaining what it has done
thus far and what it will do to satisfy the recommendations. For
example, for the first recommendation listed above--that DOE should
establish best practices for how income eligibility should be
determined and not allow the self-certification of income by
applicants to be the sole method of documenting income eligibility--
DOE explained that it is revising a Program Notice to strengthen these
provisions. DOE reminded grantees and subgrantees that proof of
eligibility should be clearly documented, and that self-certification
should only be relied upon when all other methods for documenting
income eligibility have been exhausted. Evidence of all other attempts
to prove eligibility must be included in the client file.
Environmental Protection Agency:
Open Recommendation:[Footnote 51]
We recommend that the Environmental Protection Agency (EPA)
Administrator work with the states to implement specific oversight
procedures to monitor and ensure subrecipients' compliance with the
provisions of the Recovery Act-funded Clean Water and Drinking Water
State Revolving Fund (SRF) program.
Agency Actions:
In response to our recommendation, EPA provided additional guidance to
the states regarding their oversight responsibilities, with an
emphasis on enhancing site specific monitoring and inspections.
Specifically, in June 2010, the agency developed and issued an
oversight plan outline for Recovery Act projects that provides
guidance on the frequency, content, and documentation related to
regional reviews of state Recovery Act programs and regional and state
reviews of specific Recovery Act projects. For example, EPA's guidance
states that regions and states should be reviewing the items included
on the EPA "State ARRA Inspection Checklist" or use a state equivalent
that covers the same topics. The plan also describes EPA headquarters
role in ongoing Recovery Act oversight and plans for additional
webcasts. EPA also reiterated that contractors are available to
provide training and to assist with file reviews and site inspections.
We are undertaking further review of the states' use of Recovery Act
funds for the Clean and Drinking Water programs. As part of that work,
we will consider EPA's and the states' oversight of Recovery Act funds
and, more specifically, progress in implementing EPA's guidance.
Department of Health and Human Services: Office of Head Start:
Open Recommendation:[Footnote 52]
To facilitate understanding of whether regional decisions regarding
waivers of the program's matching requirement are consistent with
Recovery Act grantees' needs across regions, the Director of OHS
should regularly review waivers of the nonfederal matching requirement
and associated justifications.
Agency Actions:
OHS has not conducted a review of waivers of the nonfederal matching
requirement, but OHS officials stated that the variation is largely
due to differences in regions' policy in timing: some regional offices
grant waivers at the same time that the grant is made official,
whereas other regions grant waivers later. OHS officials stated that
although the OHS central office has not regularly reviewed grantees'
justifications for waiver applications for regional variability in the
past, they are looking into tracking this data in their web-based
system consistently across regions. The process of tracking waivers is
not yet complete.
Open Recommendation:[Footnote 53]
To oversee the extent to which grantees are meeting the program goal
of providing services to children and families and to better track the
initiation of services under the Recovery Act, the Director of OHS
should collect data on the extent to which children and pregnant women
actually receive services from Head Start and Early Head Start
grantees.
Agency Actions:
HHS disagreed with our recommendation. OHS officials stated that
attendance data are adequately examined in triennial or yearly on-site
reviews and in periodic risk management meetings. Because these
reviews and meetings do not collect or report data on service
provision, we continue to believe that tracking services to children
and families is an important measure of the work undertaken by Head
Start and Early Head Start service providers.
Newly Implemented Recommendation:[Footnote 54]
To provide grantees with appropriate guidelines on their use of Head
Start and Early Head Start grant funds, and enable OHS to monitor the
use of these funds, the Director of OHS should direct regional office
staff to stop allocating all grant funds to the "other" budget
category, and immediately revise all financial assistance awards (FAA)
in which all funds were allocated to the "other" category.
Agency Actions:
Since our May report, OHS revised all FAAs that had designated all of
a grantee's awarded funds to the "other" budget category rather than
more specific budget categories, such as "supplies" or "equipment."
Further, OHS did not issue any FAAs that designated all funds to
"other."
Department of Housing and Urban Development:
Open Recommendation:[Footnote 55]
Because the absence of third-party investors reduces the amount of
overall scrutiny Tax Credit Assistance Program (TCAP) projects would
receive and the Department of Housing and Urban Development (HUD) is
currently not aware of how many projects lacked third-party investors,
HUD should develop a risk-based plan for its role in overseeing TCAP
projects that recognizes the level of oversight provided by others.
Agency Actions:
HUD responded to our recommendation by saying it will identify
projects that are not funded by the HOME Investment Partnerships
Program (HOME) funds and projects that have a nominal tax credit
award. HUD said it will make these identifications after projects are
complete and develop a monitoring plan tailored to these projects. HUD
currently has not taken any action on this recommendation because it
is too early in the process to be able to identify projects that lack
third-party investors. The agency will take action once they able to
collect the necessary information from the project owners and the
state housing finance agencies.
Department of Labor:
Open Recommendations:[Footnote 56]
To enhance the Department of Labor's (Labor) ability to manage its
Recovery Act and regular Workforce Investment Act (WIA) formula grants
and to build on its efforts to improve the accuracy and consistency of
financial reporting, we recommend that the Secretary of Labor take the
following actions:
* To determine the extent and nature of reporting inconsistencies
across the states and better target technical assistance, conduct a
one-time assessment of financial reports that examines whether each
state's reported data on obligations meet Labor's requirements.
* To enhance state accountability and to facilitate their progress in
making reporting improvements, routinely review states' reporting on
obligations during regular state comprehensive reviews.
Agency Actions:
Labor agreed with both of our recommendations and has begun to take
some actions to implement them. To determine the extent of reporting
inconsistencies, Labor awarded a contract in September 2010 to perform
an assessment of state financial reports to determine if the data
reported are accurate and reflect Labor's guidance on reporting of
obligations and expenditures. Labor plans to begin interviewing states
in mid-December and will issue a report after the interviews are
completed and analyzed. To enhance states' accountability and
facilitate their progress in making improvements in reporting, Labor
has drafted guidance on the definitions of key financial terms such as
obligations and expects to issue this guidance in December 2010. After
the guidance is issued, Labor plans to conduct a system wide webinar
on this topic.
Open Recommendations:[Footnote 57]
Our September 2009 bimonthly report identified a need for additional
federal guidance in two areas--measuring the work readiness of youth
and defining green jobs--and we made the following two recommendations
to the Secretary of Labor:
* To enhance the usefulness of data on work readiness outcomes,
provide additional guidance on how to measure work readiness of youth,
with a goal of improving the comparability and rigor of the measure.
* To better support state and local efforts to provide youth with
employment and training in green jobs, provide additional guidance
about the nature of these jobs and the strategies that could be used
to prepare youth for careers in green industries.
Agency Actions:
Labor agreed with both of our recommendations and has begun to take
some actions to implement them. With regard to the work readiness
measure for WIA Youth summer employment activities, Labor issued
guidance on May 13, 2010 for the WIA Youth Program that builds on the
experiences and lessons learned during implementation of Recovery Act-
funded youth activities in 2009. In this guidance, Labor broadly
identified some additional requirements for measuring work readiness
of youth. Further guidance was provided on August 19, 2010, that
described the methodology for implementing the work readiness
indicator and provided an optional work readiness tool for the WIA
Youth Program. The guidance clarifies the Employment and Training
Administration's (ETA) changes to the definition of work readiness,
now basing it on the employer's worksite evaluation and making this
evaluation the required means to measure work readiness.
Regarding our recommendation on the green jobs, Labor told us that the
Bureau of Labor Statistics (BLS) has developed a definition of green
jobs. The definition was developed through a review of a wide range of
studies, including several surveys conducted by state workforce
agencies and work conducted internationally. BLS also consulted with a
variety of stakeholders, including federal agencies, state labor
market information offices, and industry (business and labor) groups.
BLS published its proposed definition in the March 16, 2010, Federal
Register and solicited comments. The final definition was published in
the Federal Register on September 21, 2010. In addition, Labor is
hosting a Green Jobs Community of Practice, an online virtual
community available to all grantees of the Recovery Act-funded green
jobs training grants, as well as members of the workforce system and
the general public. This will serve as Labor's primary venue for
sharing information and updates on trends and practices in green jobs
training. The Department has also begun an implementation study of
these green jobs training grants to capture best practices and lessons
learned. Study results will be made available through a Training and
Employment Guidance Letter by summer 2011.
Executive Office of the President: Office of Management and Budget:
Open Recommendation:
To leverage Single Audits as an effective oversight tool for Recovery
Act programs, we recommended that the Director of the Office of
Management and Budget (OMB):
1. provide more direct focus on Recovery Act programs through the
Single Audit to help ensure that smaller programs with higher risk
have audit coverage in the area of internal controls and compliance;
[Footnote 58]
2. take additional efforts to provide more timely reporting on
internal controls for Recovery Act programs for 2010 and beyond;
[Footnote 59]
3. evaluate options for providing relief related to audit requirements
for low-risk programs to balance new audit responsibilities associated
with the Recovery Act;[Footnote 60]
4. issue Single Audit guidance in a timely manner so that auditors can
efficiently plan their audit work;[Footnote 61]
5. issue the OMB Circular No. A-133 Compliance Supplement no later
than March 31 of each year;[Footnote 62]
6. explore alternatives to help ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner;[Footnote 63] and:
7. shorten the time frames required for issuing management decisions
by federal agencies to grant recipients.[Footnote 64]
Agency Actions:
1. To provide more direct focus on Recovery Act programs to help
ensure that smaller programs with higher risk have audit coverage in
the area of internal controls and compliance through the Single Audit,
OMB updated its Single Audit guidance in the OMB Circular A-133,
Audits of States, Local Government, and Non-Profit Organizations
Compliance Supplement in July 2010.[Footnote 65] This compliance
supplement requires auditors to consider all federal programs with
expenditures of Recovery Act awards to be considered programs with
higher risks when performing standard risk-based tests to select
programs to be audited. The compliance supplement also clarified
information to assist auditors in determining the appropriate risk
levels for programs with Recovery Act expenditures. This is the second
year that OMB has included guidance in the compliance supplement to
address some of the higher risks inherent in Recovery Act programs.
The most significant of these risks are associated with new programs
that may not have the internal controls and accounting systems in
place to help ensure that funds are distributed and used in accordance
with program regulations and objectives. OMB and the federal cognizant
agency for audit have conducted several training and outreach
activities for the audit community regarding the importance of the new
audit requirements for Recovery Act programs.
Since most of the funding for Recovery Act programs will be expended
in 2010 and beyond, we continue to believe that it is essential that
OMB provide direction in Single Audit guidance so that some smaller
programs with higher risk would not be automatically excluded from
receiving audit coverage based upon the requirements in the Single
Audit Act. In recent discussions with OMB officials, we communicated
our concern that future Single Audit guidance provide instruction that
helps to ensure that smaller programs with higher risk have audit
coverage in the area of internal controls and compliance. OMB
officials agreed and stated that they plan to continue including
similar language in the Compliance Supplement and performing outreach
trainings throughout the duration of the Recovery Act.
2. To address the recommendation for taking additional efforts to
encourage more timely reporting on internal controls for Recovery Act
programs for 2010 and beyond, OMB commenced a second voluntary Single
Audit Internal Control Project (project) in August 2010 for states
that received Recovery Act funds in fiscal year 2010.[Footnote 66]
Similar to the prior project (which did not get started until October
2009), one of the project's goals is to achieve more timely
communication of internal control deficiencies for higher-risk
Recovery Act programs so that corrective action can be taken more
quickly. Specifically, the project encourages participating auditors
of states that received Recovery Act funds to identify and communicate
deficiencies in internal control to management 3 months sooner than
the 9-month time frame currently required under OMB Circular No. A-
133. The project also requires that management provide, 2 months
earlier than required under statute, plans for correcting internal
control deficiencies to the cognizant agency for audit for immediate
distribution to the appropriate federal agencies.[Footnote 67] The
federal agency is then to have provided its concerns relating to
management's plan of corrective actions in a written decision as
promptly as possible and no later than 90 days after the corrective
action plan is received by the cognizant agency for audit. According
to OMB officials, 13 states had volunteered to participate in the
project as of November 15, 2010. Each participating state is to select
a minimum of four Recovery Act programs for inclusion in the project
and at the completion of the 2010 project, OMB plans to assess the
project's results.
We assessed the results of the first OMB Single Audit Internal Control
Project for fiscal year 2009 and found that it was helpful in
communicating internal control deficiencies earlier than required
under statute. We reported that 16 states participated in the first
project and that the states selected at least two Recovery programs
for the project. We also reported that the project's dependence on
voluntary participation limited its scope and coverage and that
voluntary participation may also bias the project's results by
excluding from analysis states or auditors with practices that cannot
accommodate the project's requirement for early reporting of control
deficiencies. Overall, we concluded that although the project's
coverage could have been more comprehensive, the analysis of the
project's results provided meaningful information to OMB for better
oversight of the Recovery Act programs selected and information for
making future improvements to the Single Audit guidance. We believe
that OMB needs to continue taking steps to encourage timelier
reporting on internal controls through Single Audits for Recovery Act
programs.
3. OMB officials have stated that they are aware of the increase in
workload for state auditors who perform Single Audits due to the
additional funding to Recovery Act program and corresponding increase
in programs being subject to audit requirements. OMB officials stated
that they solicited suggestions from state auditors to gain further
insights to develop measures for providing audit relief. However, OMB
has not yet identified viable alternatives that would provide relief
to all state auditors. For state auditors that are participating in
the second OMB Single Audit Internal Control project, OMB has provided
some audit relief. Specifically, OMB modified the requirements under
Circular No. A-133 to reduce the number of low-risk programs that must
be included in some project participants' assessment requirements for
smaller programs for Single Audits for fiscal years 2010 and 2011. As
expenditures of Recovery Act funds are expected to continue through
2016, it is important that OMB look for opportunities and implement
various options for providing audit relief in future years.
4, 5. With regard to issuing Single Audit Guidance in a timely manner,
and specifically the OMB Circular A-133 Compliance Supplement, OMB
officials have stated that they intend to issue the fiscal year 2011
compliance supplement by March 31, 2011. The team of federal officials
who assisted in the development of the OMB Circular A-133 Compliance
Supplement met in August 2010--a few weeks earlier than in prior years-
-for its annual kick off meeting. At that meeting, the team set a goal
of issuing the 2011 compliance supplement by March 31, 2011, and
discussed revised production schedules and deadlines needed to
accommodate the earlier issuance date. We will continue to monitor
OMB's progress to achieve this objective.
6, 7. In October 2010, OMB officials stated that they have discussed
alternatives for helping to ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner, including possibly shortening the time frames required
for issuing management decisions by federal agencies to grant
recipients.[Footnote 68] However, OMB officials have yet to decide on
the course of action that they will pursue to implement our related
recommendations. OMB officials acknowledged that the results of the
2009 OMB Single Audit Internal Control Project confirmed that this
issue continues to be a challenge. They stated that they have met
individually with several federal awarding agencies that were late in
providing their management decisions in the 2009 project to discuss
the measures that the agencies will take to improve the timeliness of
their management decisions.
In March 2010, OMB issued guidance under memo M-10-14, item 7,
(http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010
/m10-14.pdf) that called for federal awarding agencies to review
reports prepared by the Federal Audit Clearinghouse regarding Single
Audit findings and submit summaries of the highest-risk audit findings
by major Recovery Act programs by September 30, 2010, as well as other
relevant information on the federal awarding agency's actions
regarding these areas.[Footnote 69] OMB officials have stated that
they plan to use this information to identify trends that may require
clarification or additional guidance in the compliance supplement. OMB
officials also stated that they are working with the Recovery Act
Accountability and Transparency Board to develop metrics for
determining how federal awarding agencies are to use information
available in the Single Audit. As of November 2010, according to OMB
officials, the project is in the planning phase and the specific
metrics are still being considered. OMB anticipates that the metrics
may be available in January 2011 and that the metrics could be applied
at the agency level, by program, to allow for analysis of Single Audit
findings and other measures to be determined. One goal of the metrics
project is to increase the effectiveness and timeliness of federal
awarding agencies' actions to resolve Single Audit findings. We will
monitor the progress of these efforts to determine the extent that it
improves the timeliness of federal agencies' actions to resolve audit
findings so that risks to Recovery Act funds are reduced and internal
controls in Recovery Act programs are strengthened.
Newly Closed Recommendation:[Footnote 70]
Because performance reporting is broader than the jobs reporting
required by section 1512, the Director of OMB should also work with
federal agencies--perhaps through the Senior Management Councils--to
clarify what new or existing program performance measures--in addition
to jobs created and retained--that recipients should collect and
report in order to demonstrate the impact of Recovery Act funding.
Agency Actions:
It was an objective of the Recovery Act to use existing measures to
allow the public to see the performance impact of the Act's
investments. Some federal agencies have issued or plan to issue
additional guidance on what other programs or impact measures are
required for evaluating the impact of Recovery Act funding. Some state
program officials said that they use existing program performance
measures developed by federal agencies to track the performance impact
of Recovery Act funding, while other states have developed their own
measures. With the passage of time, we have concluded that the intent
of this recommendation is being addressed by individual federal
agencies, as well as being addressed by local program officials.
Department of Transportation:
Open Recommendations:[Footnote 71]
To ensure that Congress and the public have accurate information on
the extent to which the goals of the Recovery Act are being met, we
recommend that the Secretary of Transportation direct the Federal
Highway Administration (FHWA) to take the following two actions:
* Develop additional rules and data checks in the Recovery Act Data
System, so that these data will accurately identify contract
milestones such as award dates and amounts, and provide guidance to
states to revise existing contract data.
* Make publicly available--within 60 days after the September 30,
2010, obligation deadline--an accurate accounting and analysis of the
extent to which states directed funds to economically distressed
areas, including corrections to the data initially provided to
Congress in December 2009.
Agency Actions:
As of the time of this report, the Department of Transportation (DOT)
was in the process of developing its plans in response to these
recommendations.
Open Recommendation:[Footnote 72]
To better understand the impact of Recovery Act investments in
transportation, we believe that the Secretary of Transportation should
ensure that the results of these projects are assessed and a
determination made about whether these investments produced long-term
benefits. Specifically, in the near term, we recommend the Secretary
direct FHWA and the Federal Highway Administration (FTA) to determine
the types of data and performance measures they would need to assess
the impact of the Recovery Act and the specific authority they may
need to collect data and report on these measures.
Agency Actions:
In its response, DOT noted that it expected to be able to report on
Recovery Act outputs, such as the miles of road paved, bridges
repaired, and transit vehicles purchased, but not on outcomes, such as
reductions in travel time, nor did it commit to assessing whether
transportation investments produced long-term benefits. DOT further
explained that limitations in its data systems, coupled with the
magnitude of Recovery Act funds relative to overall annual federal
investment in transportation, would make assessing the benefits of
Recovery Act funds difficult. DOT indicated that, with these
limitations in mind, it is examining its existing data availability
and, as necessary, would seek additional data collection authority
from Congress if it became apparent that such authority were needed.
DOT plans to take some steps to assess its data needs, but it has not
committed to assessing the long-term benefits of Recovery Act
investments in transportation infrastructure. We are therefore keeping
our recommendation on this matter open.
Open Recommendation:[Footnote 73]
The Secretary of Transportation should gather timely information on
the progress they are making in meeting the maintenance-of-effort
requirement and to report preliminary information to Congress within
60 days of the certified period (September 30, 2010), (1) on whether
states met required program expenditures as outlined in their
maintenance-of-effort certifications, (2) the reasons that states did
not meet these certified levels, if applicable, and (3) lessons
learned from the process.
Agency Actions:
DOT concurred in part with our March 2010 recommendation that it
gather and report more timely information on the progress states are
making in meeting the maintenance-of-effort requirements. DOT
officials stated that DOT will encourage states to report preliminary
data for the certified period ending September 30, 2010, and deliver a
preliminary report to Congress within 60 days of the certified period.
On October 1, 2010, DOT officials requested that each state update its
actual aggregate expenditure data for the types of projects funded
under each transportation covered program in FHWA's Recovery Act Data
System by November 1, 2010. DOT also requested that each state provide
an explanation of why the state did not meet its certified MOE amount
in any or all transportation programs, as appropriate.
Department of Treasury:
Open Recommendation:[Footnote 74]
Treasury should expeditiously provide Housing Finance Agencies (HFAs)
with guidance on monitoring project spending and develop plans for
dealing with the possibility that projects could miss the spending
deadline and face further project interruptions.
Agency Actions:
Treasury commented that it has taken a number of steps to ensure HFAs
and project owners have a complete understanding of the 30 percent
deadline and are prepared to comply with that requirement. Further,
Treasury said it plans to continue monitoring the impact of the 30
percent deadline on the program and to provide additional guidance
necessary to address unforeseen or unexpected circumstances. Although
Treasury officials said that they recently asked HFAs whether any
projects could potentially miss the end of the year deadline, no HFAs
have indicated that projects may miss the deadline. Also, although
Treasury currently has not provided additional guidance to HFAs, it
intends to continue working with HFAs and make a decision about
further guidance at the end of the year, after it identifies any
projects that do not meet the 30 percent deadline.
Matters for Congressional Consideration:
Matter:[Footnote 75]
To the extent that appropriate adjustments to the Single Audit process
are not accomplished under the current Single Audit structure,
Congress should consider amending the Single Audit Act or enacting new
legislation that provides for more timely internal control reporting,
as well as audit coverage for smaller Recovery Act programs with high
risk.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:[Footnote 76]
To the extent that additional coverage is needed to achieve
accountability over Recovery Act programs, Congress should consider
mechanisms to provide additional resources to support those charged
with carrying out the Single Audit Act and related audits.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:[Footnote 77]
To provide housing finance agencies (HFA) with greater tools for
enforcing program compliance, in the event the Section 1602 Program is
extended for another year, Congress may want to consider directing
Treasury to permit HFAs the flexibility to disburse Section 1602
Program funds as interest-bearing loans that allow for repayment.
We continue to believe that Congress should consider directing
Treasury to permit HFAs the flexibility to disburse Section 1602
Program funds as interest-bearing loans that allow for repayment.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Cornelia M. Ashby, (202) 512-7215 or ashbyc@gao.gov:
Yvonne D. Jones, (202) 512-6878 or jonesy@gao.gov:
Staff Acknowledgments:
In addition to the contacts above, the following individuals made key
contributions to this report: Susan Baker, Thomas Beall, James
Bennett, Sue Bernstein, Anna Bonelli, Andrew Ching, Holly Dye,
Alexandra Edwards, Thomas James, Susan Lawless, Sheila R. McCoy,
Jeffrey G. Miller, Carol Patey, Beverly Ross, Christine San, Linda
Siegel, Jon Stehle, Andrew J. Stephens, Wayne Sylvia, Kate Van Gelder,
Betty Ward-Zukerman, Craig Winslow, Elizabeth Wood, William T. Woods,
Ethan Wozniak, and Amber Yancey-Carroll.
[End of section]
Related GAO Products:
Recovery Act: FEMA Could Take Steps to Protect Sensitive Port Security
Grant Details and Improve Recipient Reporting Instructions.
[hyperlink, http://www.gao.gov/products/GAO-11-88]. Washington, D.C.:
October 15, 2010.
Recovery Act: Department of Justice Could Better Assess Justice
Assistance Grant Program Impact. [hyperlink,
http://www.gao.gov/products/GAO-11-87]. Washington, D.C.: October 15,
2010.
Recovery Act: Increased Medicaid Funds Aided Enrollment Growth, and
Most States Reported Taking Steps to Sustain Their Programs.
[hyperlink, http://www.gao.gov/products/GAO-11-58]. Washington, D.C.:
October 8, 2010.
Recovery Act: Opportunities Exist to Increase the Public's
Understanding of Recipient Reporting on HUD Programs. [hyperlink,
http://www.gao.gov/products/GAO-10-966]. Washington, D.C.: September
30, 2010.
Participants in SBA's Microloan Program Could Provide Additional
Information to Enhance the Public's Understanding of Recovery Act Fund
Uses and Expected Outcomes. [hyperlink,
http://www.gao.gov/products/GAO-10-1032R]. Washington, D.C.: September
29, 2010.
Child Care and Development Fund: Undercover Tests Show Five State
Programs Are Vulnerable to Fraud and Abuse. [hyperlink,
http://www.gao.gov/products/GAO-10-1062]. Washington, D.C.: September
22, 2010.
Temporary Assistance for Needy Families: Implications of Caseload and
Program Changes for Families and Program Monitoring. [hyperlink,
http://www.gao.gov/products/GAO-10-815T]. Washington, D.C.: September
21, 2010.
Recovery Act: Survey of State Housing Finance Agencies' Use of the Low-
Income Housing Tax Credit Assistance Program (TCAP) and the Section
1602 Program. [hyperlink, http://www.gao.gov/products/GAO-10-1022R].
Washington, D.C.: September 20, 2010.
Recovery Act: Opportunities to Improve Management and Strengthen
Accountability over States' and Localities' Uses of Funds. [hyperlink,
http://www.gao.gov/products/GAO-10-999]. Washington, D.C.: September
20, 2010.
Recovery Act: Opportunities to Improve Management and Strengthen
Accountability over States' and Localities' Uses of Funds
(Appendixes). [hyperlink, http://www.gao.gov/products/GAO-10-1000SP].
Washington, D.C.: September 20, 2010.
Older Americans Act: Preliminary Observations on Services Requested by
Seniors and Challenges in Providing Assistance. [hyperlink,
http://www.gao.gov/products/GAO-10-1024T]. Washington, D.C.: September
7, 2010.
Tax Administration: Usage and Selected Analyses of the First-Time
Homebuyer Credit. [hyperlink,
http://www.gao.gov/products/GAO-10-1025R]. Washington, D.C.: September
2, 2010.
Challenges Facing Government and the Contracting Community.
[hyperlink, http://www.gao.gov/products/GAO-10-1021CG]. Washington,
D.C.: August 23, 2010.
National Institutes of Health: Awarding Process, Awarding Criteria,
and Characteristics of Extramural Grants Made with Recovery Act
Funding. [hyperlink, http://www.gao.gov/products/GAO-10-848].
Washington, D.C.: August 6, 2010.
Social Security Administration: Cases of Federal Employees and
Transportation Drivers and Owners Who Fraudulently and/or Improperly
Received SSA Benefits. [hyperlink,
http://www.gao.gov/products/GAO-10-949T]. Washington, D.C.: August 4,
2010.
Recovery Act: Further Opportunities Exist to Strengthen Oversight of
Broadband Stimulus Programs. [hyperlink,
http://www.gao.gov/products/GAO-10-823]. Washington, D.C.: August 4,
2010.
Recovery Act: States Could Provide More Information on Education
Programs to Enhance the Public's Understanding of Fund Use.
[hyperlink, http://www.gao.gov/products/GAO-10-807]. Washington, D.C.:
July 30, 2010:
Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and
Schedule Targets, but Assessing Impact of Spending Remains a
Challenge. [hyperlink, http://www.gao.gov/products/GAO-10-784].
Washington, D.C.: July 29, 2010.
Recovery Act: Contracting Approaches and Oversight Used by Selected
Federal Agencies and States. [hyperlink,
http://www.gao.gov/products/GAO-10-809]. Washington, D.C.: July 15,
2010.
Department of Energy: Further Actions Are Needed to Improve DOE's
Ability to Evaluate and Implement the Loan Guarantee Program.
[hyperlink, http://www.gao.gov/products/GAO-10-627]. Washington, D.C.:
July 12, 2010.
GAO Review of LEA Controls over and Uses of Recovery Act Education
Funds (Avery County Schools). [hyperlink,
http://www.gao.gov/products/GAO-10-746R]. Washington, D.C.: July 9,
2010.
GAO Review of LEA Controls over and Uses of Recovery Act Education
Funds (Winston-Salem/Forsyth County Schools). [hyperlink,
http://www.gao.gov/products/GAO-10-747R]. Washington, D.C.: July 9,
2010.
Independent Oversight of Recovery Act Funding for Mississippi's
Weatherization Assistance Program. [hyperlink,
http://www.gao.gov/products/GAO-10-796R]. Washington, D.C.: June 30,
2010.
High Speed Rail: Learning From Service Start-ups, Prospects for
Increased Industry Investment, and Federal Oversight Plans.
[hyperlink, http://www.gao.gov/products/GAO-10-625]. Washington, D.C.:
June 17, 2010.
Federal Energy Management: GSA's Recovery Act Program Is on Track, but
Opportunities Exist to Improve Transparency, Performance Criteria, and
Risk Management. [hyperlink, http://www.gao.gov/products/GAO-10-630].
Washington, D.C.: June 16, 2010.
GAO Proactive Testing of ARRA Tax Credits for COBRA Premium Payments.
[hyperlink, http://www.gao.gov/products/GAO-10-804R]. Washington,
D.C.: June 14, 2010.
Temporary Assistance for Needy Families: Implications of Recent
Legislative and Economic Changes for State Programs and Work
Participation Rates. [hyperlink,
http://www.gao.gov/products/GAO-10-525]. Washington, D.C.: May 28,
2010.
Recovery Act: Increasing the Public's Understanding of What Funds Are
Being Spent on and What Outcomes Are Expected. [hyperlink,
http://www.gao.gov/products/GAO-10-581]. Washington, D.C.: May 27,
2010.
Recovery Act: Clean Water Projects Are Underway, but Procedures May
Not Be in Place to Ensure Adequate Oversight. [hyperlink,
http://www.gao.gov/products/GAO-10-761T]. Washington, D.C.: May 26,
2010.
Recovery Act: States' and Localities' Uses of Funds and Actions Needed
to Address Implementation Challenges and Bolster Accountability.
[hyperlink, http://www.gao.gov/products/GAO-10-604]. Washington, D.C.:
May 26, 2010.
Recovery Act: States' and Localities' Uses of Funds and Actions Needed
to Address Implementation Challenges and Bolster Accountability
(Appendixes). [hyperlink, http://www.gao.gov/products/GAO-10-605SP].
Washington, D.C.: May, 26, 2010.
Head Start: Undercover Testing Finds Fraud and Abuse at Selected Head
Start Centers. [hyperlink, http://www.gao.gov/products/GAO-10-733T].
Washington, D.C.: May 18, 2010.
Child Care: Multiple Factors Could Have Contributed to the Recent
Decline in the Number of Children Whose Families Receive Subsidies.
[hyperlink, http://www.gao.gov/products/GAO-10-344]. Washington, D.C.:
May 5, 2010.
Health Coverage Tax Credit: Participation and Administrative Costs.
[hyperlink, http://www.gao.gov/products/GAO-10-521R]. Washington,
D.C.: April 30, 2010.
2010 Census: Plans for Census Coverage Measurement Are on Track, but
Additional Steps Will Improve Its Usefulness. [hyperlink,
http://www.gao.gov/products/GAO-10-324]. Washington, D.C.: April 23,
2010.
American Samoa and Commonwealth of the Northern Mariana Islands:
Wages, Employment, Employer Actions, Earnings, and Worker Views Since
Minimum Wage Increases Began. [hyperlink,
http://www.gao.gov/products/GAO-10-333]. Washington, D.C.: April 8,
2010.
Energy Star Program: Covert Testing Shows the Energy Star Program
Certification Process Is Vulnerable to Fraud and Abuse. [hyperlink,
http://www.gao.gov/products/GAO-10-470]. Washington, D.C.: March 5,
2010.
Recovery Act: California's Use of Funds and Efforts to Ensure
Accountability. [hyperlink, http://www.gao.gov/products/GAO-10-467T].
Washington, D.C.: March 5, 2010.
Recovery Act: Factors Affecting the Department of Energy's Program
Implementation. [hyperlink, http://www.gao.gov/products/GAO-10-497T].
Washington, D.C.: March 4, 2010.
Recovery Act: One Year Later, States' and Localities' Uses of Funds
and Opportunities to Strengthen Accountability. [hyperlink,
http://www.gao.gov/products/GAO-10-437]. Washington, D.C.: March 3,
2010.
State and Local Governments' Fiscal Outlook March 2010 Update.
[hyperlink, http://www.gao.gov/products/GAO-10-358]. Washington, D.C.:
March 2, 2010.
Recovery Act: Officials' Views Vary on Impacts of Davis-Bacon Act
Prevailing Wage Provision. [hyperlink,
http://www.gao.gov/products/GAO-10-421]. Washington, D.C.: February
24, 2010.
2010 Census: Key Enumeration Activities Are Moving Forward, but
Information Technology Systems Remain a Concern. [hyperlink,
http://www.gao.gov/products/GAO-10-430T]. Washington, D.C.: February
23, 2010.
Electronic Personal Health Information Exchange: Health Care Entities'
Reported Disclosure Practices and Effects on Quality of Care.
[hyperlink, http://www.gao.gov/products/GAO-10-361]. Washington, D.C.:
February 17, 2010.
Recovery Act: Project Selection and Starts Are Influenced by Certain
Federal Requirements and Other Factors. [hyperlink,
http://www.gao.gov/products/GAO-10-383]. Washington, D.C.: February
10, 2010.
Recovery Act: IRS Quickly Implemented Tax Provisions, but Reporting
and Enforcement Improvements Are Needed. [hyperlink,
http://www.gao.gov/products/GAO-10-349]. Washington, D.C.: February
10, 2010.
Status of the Small Business Administration's Implementation of
Administrative Provisions in the American Recovery and Reinvestment
Act of 2009. [hyperlink, http://www.gao.gov/products/GAO-10-298R].
Washington, D.C.: January 19, 2010.
Recovery Act: States' Use of Highway and Transit Funds and Efforts to
Meet the Act's Requirements. [hyperlink,
http://www.gao.gov/products/GAO-10-312T]. Washington, D.C.: December
10, 2009.
Recovery Act: Status of States' and Localities' Use of Funds and
Efforts to Ensure Accountability. [hyperlink,
http://www.gao.gov/products/GAO-10-231]. Washington, D.C.: December
10, 2009.
Recovery Act: Status of States' and Localities' Use of Funds and
Efforts to Ensure Accountability (Appendixes). [hyperlink,
http://www.gao.gov/products/GAO-10-232SP]. Washington, D.C.: December
10, 2009.
Recovery Act: Planned Efforts and Challenges in Evaluating Compliance
with Maintenance of Effort and Similar Provisions. [hyperlink,
http://www.gao.gov/products/GAO-10-247]. Washington, D.C.: November
30, 2009.
Recovery Act: Contract Oversight Activities of the Recovery
Accountability and Transparency Board and Observations on Contract
Spending in Selected States. [hyperlink,
http://www.gao.gov/products/GAO-10-216R]. Washington, D.C.: November
30, 2009.
Recovery Act: Recipient Reported Jobs Data Provide Some Insight into
Use of Recovery Act Funding, but Data Quality and Reporting Issues
Need Attention. [hyperlink, http://www.gao.gov/products/GAO-10-223].
Washington, D.C.: November 19, 2009.
Recovery Act: Recipient Reported Jobs Data Provide Some Insight into
Use of Recovery Act Funding, but Data Quality and Reporting Issues
Need Attention. [hyperlink, http://www.gao.gov/products/GAO-10-224T].
Washington, D.C.: November 19, 2009.
Recovery Act: Agencies Are Addressing Broadband Program Challenges,
but Actions Are Needed to Improve Implementation. [hyperlink,
http://www.gao.gov/products/GAO-10-80]. Washington, D.C.: November 16,
2009.
Recovery Act: Preliminary Observations on the Implementation of
Broadband Programs. [hyperlink,
http://www.gao.gov/products/GAO-10-192T]. Washington, D.C.: October
27, 2009.
First-Time Homebuyer Tax Credit: Taxpayers' Use of the Credit and
Implementation and Compliance Challenges. [hyperlink,
http://www.gao.gov/products/GAO-10-166T]. Washington, D.C.: October
22, 2009.
Federal Energy Management: Agencies Are Taking Steps to Meet High-
Performance Federal Building Requirements, but Face Challenges.
[hyperlink, http://www.gao.gov/products/GAO-10-22]. Washington, D.C.:
October 30, 2009.
High Speed Passenger Rail: Developing Viable High Speed Rail Projects
under the Recovery Act and Beyond. [hyperlink,
http://www.gao.gov/products/GAO-10-162T]. Washington, D.C.: October
14, 2009.
Tax Administration: Opportunities Exist for IRS to Enhance Taxpayer
Service and Enforcement for the 2010 Filing Season. [hyperlink,
http://www.gao.gov/products/GAO-09-1026]. Washington, D.C.: September
23, 2009.
Recovery Act: Funds Continue to Provide Fiscal Relief to States and
Localities, While Accountability and Reporting Challenges Need to Be
Fully Addressed. [hyperlink, http://www.gao.gov/products/GAO-09-1016].
Washington, D.C.: September 23, 2009.
Recovery Act: Funds Continue to Provide Fiscal Relief to States and
Localities, While Accountability and Reporting Challenges Need to Be
Fully Addressed (Appendixes). [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP]. Washington, D.C.:
September 23, 2009.
Recovery Act: States' and Localities' Current and Planned Uses of
Funds While Facing Fiscal Stresses. [hyperlink,
http://www.gao.gov/products/GAO-09-908T]. Washington, D.C.: September
10, 2009.
Recovery Act: States' Use of Highway Infrastructure Funds and
Compliance with the Act's Requirements. [hyperlink,
http://www.gao.gov/products/GAO-09-926T]. Washington, D.C.: July 31,
2009.
Unemployment Insurance Measures Included in the American Recovery and
Reinvestment Act of 2009, as of July 2009. [hyperlink,
http://www.gao.gov/products/GAO-09-942R]. Washington, D.C.: July 27,
2009.
Grants Management: Grants.gov Has Systematic Weaknesses That Require
Attention. [hyperlink, http://www.gao.gov/products/GAO-09-589].
Washington, D.C.: July 15, 2009.
Recovery Act: States' and Localities' Current and Planned Uses of
Funds While Facing Fiscal Stresses. [hyperlink,
http://www.gao.gov/products/GAO-09-829]. Washington, D.C.: July 8,
2009.
Recovery Act: States' and Localities' Current and Planned Uses of
Funds While Facing Fiscal Stresses. [hyperlink,
http://www.gao.gov/products/GAO-09-831T]. Washington, D.C.: July 8,
2009.
Recovery Act: States' and Localities' Current and Planned Uses of
Funds While Facing Fiscal Stresses (Appendixes). [hyperlink,
http://www.gao.gov/products/GAO-09-830SP]. Washington, D.C.: July 8,
2009.
Recovery Act: The Department of Transportation Followed Key Federal
Requirements in Developing Selection Criteria for Its Supplemental
Discretionary Grants Program. [hyperlink,
http://www.gao.gov/products/GAO-09-785R]. Washington, D.C.: June 30,
2009.
High Speed Passenger Rail: Effectively Using Recovery Act Funds for
High Speed Rail Projects. [hyperlink,
http://www.gao.gov/products/GAO-09-786T]. Washington, D.C.: June 23,
2009.
Recovery Act: GAO's Efforts to Work with the Accountability Community
to Help Ensure Effective and Efficient Oversight. [hyperlink,
http://www.gao.gov/products/GAO-09-672T]. Washington, D.C.: May 5,
2009.
Recovery Act: Consistent Policies Needed to Ensure Equal Consideration
of Grant Applications. [hyperlink,
http://www.gao.gov/products/GAO-09-590R]. Washington, D.C.: April 29,
2009.
Recovery Act: Initial Results on States' Use of and Accountability for
Transportation Funds. [hyperlink,
http://www.gao.gov/products/GAO-09-597T]. Washington, D.C.: April 29,
2009.
Social Security Administration: Effective Information Technology
Management Essential for Data Center Initiative. [hyperlink,
http://www.gao.gov/products/GAO-09-662T]. Washington, D.C.: April 28,
2009.
Recovery Act: As Initial Implementation Unfolds in States and
Localities, Continued Attention to Accountability Issues Is Essential.
[hyperlink, http://www.gao.gov/products/GAO-09-580]. Washington, D.C.:
April 23, 2009.
Recovery Act: As Initial Implementation Unfolds in States and
Localities, Continued Attention to Accountability Issues Is Essential.
[hyperlink, http://www.gao.gov/products/GAO-09-631T]. Washington,
D.C.: April 23, 2009.
Small Business Administration's Implementation of Administrative
Provisions in the American Recovery and Reinvestment Act. [hyperlink,
http://www.gao.gov/products/GAO-09-507R]. Washington, D.C.: April 16,
2009.
American Recovery and Reinvestment Act: GAO's Role in Helping to
Ensure Accountability and Transparency for Science Funding.
[hyperlink, http://www.gao.gov/products/GAO-09-515T]. Washington,
D.C.: March 19, 2009.
American Recovery and Reinvestment Act: GAO's Role in Helping to
Ensure Accountability and Transparency. [hyperlink,
http://www.gao.gov/products/GAO-09-453T]. Washington, D.C.: March 5,
2009.
Estimated Adjusted Medicaid Funding Allocations Related to the
Proposed American Recovery and Reinvestment Act. [hyperlink,
http://www.gao.gov/products/GAO-09-371R]. Washington, D.C.: February
5, 2009.
Estimated Temporary Medicaid Funding Allocations Related to Section
5001 of the American Recovery and Reinvestment Act. [hyperlink,
http://www.gao.gov/products/GAO-09-364R]. Washington, D.C.: February
4, 2009.
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115.
[2] This amount is current as of November 26, 2010.
[3] 123 Stat. 178.
[4] Grantees report data on programs for the Program Information
Report (PIR) each August, and the data are compiled for use at the
federal, regional, and local levels.
[5] § 901(a)(1), 123 Stat. 191.
[6] § 1512(e), 123 Stat. 288. The reports submitted quarterly by
recipients are referred to as "recipient reports."
[7] The federal fiscal year runs from October 1 through September 30
of the next calendar year.
[8] § 1512(c), 123 Stat.287-88.
[9] Although Head Start is intended to serve primarily children whose
family income is at or below the federal poverty line, its regulations
permit up to 10 percent of children to be from families that are not
low-income, and up to 49 percent in American Indian-Alaska Native
programs that meet certain conditions. 45 C.F.R. § 1305.4(b)(2) and
(3).
[10] § 1603, 123 Stat. 302.
[11] 123 Stat. 178-88.
[12] This figure reflects the documentation OHS provided to GAO as of
the close of our review. In comments on the report, HHS indicated that
OHS obligated additional expansion funds for technical assistance that
are not reflected in this total.
[13] We previously reported that OHS awarded grants without an
accompanying budget to guide oversight of grantees' spending in 77
instances as of March 16, 2010. We recommended that OHS stop
allocating all grant funds to the "other" budget category and
immediately revise all Financial Assistance Awards in which all funds
were allocated to the "other" category. In appendix III, we discuss
OHS's response to this recommendation. GAO, Recovery Act: States' and
Localities' Uses of Funds and Actions Needed to Address Implementation
Challenges and Bolster Accountability, GAO-10-604 (Washington, D.C.:
May 26, 2010), 184.
[14] [hyperlink, http://www.gao.gov/products/GAO-10-604], 163, 171.
[15] [hyperlink, http://www.gao.gov/products/GAO-10-604], 171-175.
[16] Unlike expansion grants, typical Head Start and Early Head Start
grants have generally been awarded for indefinite periods that are
refunded annually.
[17] OHS awarded 19 grants to grantees for project periods that cover
the remainder of the first year, plus the entirety of the second year.
[18] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: Nov. 1999), 10, 18.
[19] 42 U.S.C. § 9836a (c)(1)(B).
[20] 8§ 19, 121 Stat. 1430-35 (to be codified at 42 U.S.C.§ 9843a).
[21] GAO, Head Start: A More Comprehensive Risk Management Strategy
and Data Improvements Could Further Strengthen Program Oversight,
[hyperlink, http://www.gao.gov/products/GAO-08-221] (Washington D.C.:
Feb. 12, 2008), 25.
[22] GAO, Head Start: Undercover Testing Finds Fraud and Abuse at
Selected Head Start Centers, [hyperlink,
http://www.gao.gov/products/GAO-10-1049] (Washington, D.C.: Sept. 28,
2010).
[23] GAO's FraudNet provides a mechanism for reporting potential
instances of fraud, waste, abuse, or mismanagement of federal funds
[hyperlink, http://www.gao.gov/fraudnet]
[24] OHS awarded 867 grants to expand Head Start and Early Head Start
services.
[25] While we spoke with 16 grantees, only 14 received Early Head
Start expansion grants. We discussed program options with 13 of these
14 grantees.
[26] Grantees report data for the PIR each August, and the data are
compiled for use at the federal, regional, and local levels.
[27] These data come from our analysis of OHS's PIR data. We tested
the consistency of these variables and found that some grantees'
responses about credentials were inconsistent. In this analysis, we
excluded the grantees that failed the tests. Additionally, grantees
may have used Recovery Act funding to hire classroom teachers without
a Child Development Associate with the intention of providing them
with the necessary training to earn the credential.
[28] [hyperlink, http://www.gao.gov/products/GAO-10-604], 170-171.
[29] [hyperlink, http://www.gao.gov/products/GAO-10-604], 171-173.
[30] 45 C.F.R. § 1305.2(b) (2009). Prior GAO work has highlighted this
inconsistency. We previously reported that OHS's definition of
enrollment for monthly reporting does not necessarily signify that
services are being provided. We recommended that OHS collect data on
the extent to which children and pregnant women actually receive
services from Head Start and Early Head Start grantees. GAO-10-604,
180-183. See appendix III for a discussion of open recommendations and
OHS's response.
[31] GAO, Head Start: Undercover Testing Finds Fraud and Abuse at
Selected Head Start Centers, [hyperlink,
http://www.gao.gov/products/GAO-10-1049] (Washington, D.C.: Sept. 28,
2010), 10-13.
[32] Attendance on a particular date is only a proxy for the number of
children receiving services, since on a given day some children are
expected to be absent.
[33] An advisory committee for the Secretary of HHS specifically
recommended that enrollment and attendance be considered along with
other factors in determining whether or not OHS should renew an
individual grant or make the grant available for competition among
organizations (Secretary's Advisory Committee on Re-designation of
Head Start Grantees, A System of Designation Renewal of Head Start
Grantees (December 2008)). Subsequently, OHS proposed regulations on
September 22, 2010, that would consider attendance and enrollment,
insofar as these factors are part of triennial reviews, but these
factors are not identified as "Key Quality Indicators" (Head Start
Program, 75 Fed. Reg. 57704).
[34] While almost all Head Start expansion grants were made by the end
of September 2009, the first Early Head Start grantees did not receive
awards until November 2009.
[35] In a focus group conducted in the winter of 2010 with expansion
grantees, some participants noted the difficulty in completing this
paperwork, called "1309" approval, in reference to the section of the
Code of Federal Regulations that covers requirements for constructing
facilities. 45 C.F.R. 3009.4 (2009).
[36] 45 U.S.C. § 1309.45 (2009).
[37] OHS, Obligation and Expenditure of Funds, [hyperlink,
http://eclkc.ohs.acf.hhs.gov/hslc/Program%20Design%20and%20Management/Fi
scal/Financial%20Management/Budgets/ObligationandEx.htm].
[38] 42 U.S.C. § 9836A(C)(1)(b).
[39] 42 U.S.C. § 9836a(c)(1)(B).
[40] HHS OIG, Review of Head Start Health and Safety Standards at
Community Action for Improvement, Inc., Report Number A-04-09-03531
(March 18, 2010). In fieldwork completed in August 2009, the HHS OIG
noted health and safety deficiencies at grantee sites, including
poison ivy and fire ant mounds in playground areas, missing railings
on playground equipment, and an unlocked closet accessible to children
containing liquid bleach, a hazardous chemical.
[41] GAO, Head Start: Undercover Testing Finds Fraud and Abuse at
Selected Head Start Centers, [hyperlink,
http://www.gao.gov/products/GAO-10-733T] (Washington, D.C.: May 18,
2010).
[42] Under the continuous corrections period, recipients were allowed
to modify submissions from November 2, 2010, to December 6, 2010. The
final update of this round of recipient reported data should occur on
December 8, 2010.
[43] Under the Recovery Act, recipients are to file reports for any
quarter in which they receive Recovery Act funds directly from the
federal government. Reporting requirements apply to nonfederal
recipients of funding, including entities such as state and local
governments, educational institutions, nonprofits, and other private
organizations. These requirements apply to recipients who receive
funding through the Recovery Act's discretionary appropriations, not
recipients receiving funds through entitlement programs, such as
Medicaid, or tax provisions. Certain other exceptions apply, such as
for individuals. Recovery Act, div. A, § 1512, 123 Stat. at 287-288.
[44] See OMB Memoranda M-09-21 and M-10-08.
[45] See OMB Memorandum M-10-34. This memorandum included updated
guidance on when a recipient should mark a record as final, as well as
a statement that changes to prior reports may not be initiated for the
number of jobs field. Further, the memorandum noted that previous OMB
memoranda (M-09-21 and M-10-08) require recipients to provide
narrative descriptions that are sufficiently clear to facilitate
understanding by the general public. We have previously reported on
the issue that this guidance addresses. For more information see, for
example, the following recent reports: GAO, Recovery Act: States Could
Provide More Information on Education Programs to Enhance the Public's
Understanding of Fund Use, [hyperlink,
http://www.gao.gov/products/GAO-10-807] (Washington, D.C.: July 30,
2010) and Recovery Act: Increasing the Public's Understanding of What
Funds Are Being Spent on and What Outcomes Are Expected, [hyperlink,
http://www.gao.gov/products/GAO-10-581] (Washington, D.C.: May 27,
2010).
[46] Federalreporting.gov is the nationwide data collection system for
recipient reporting data requirements, while the data reported by
recipients are available to the public for viewing and downloading on
Recovery.gov.
[47] GAO, Recovery Act: Opportunities to Improve Management and
Strengthen Accountability over States' and Localities' Uses of Funds
(Appendixes), [hyperlink, http://www.gao.gov/products/GAO-10-1000SP]
(Washington, D.C.: Sept. 20, 2010).
[48] [hyperlink, http://www.gao.gov/products/GAO-10-604], 163.
[49] GAO, Recovery Act: As Initial Implementation Unfolds in States
and Localities, Continued Attention to Accountability Issues Is
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580]
(Washington, D.C.: Apr. 23, 2009); Recovery Act: States' and
Localities' Current and Planned Uses of Funds While Facing Fiscal
Stresses, [hyperlink, http://www.gao.gov/products/GAO-09-829]
(Washington, D.C.: July 8, 2009); Recovery Act: Funds Continue to
Provide Fiscal Relief to States and Localities, While Accountability
and Reporting Challenges Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23,
2009); Recovery Act: Recipient Reported Jobs Data Provide Some Insight
into Use of Recovery Act Funding, but Data Quality and Reporting
Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009); Recovery Act: Status of States' and Localities' Use of Funds
and Efforts to Ensure Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-231] (Washington, D.C.: Dec. 10,
2009); Recovery Act: One Year Later, States' and Localities' Uses of
Funds and Opportunities to Strengthen Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-437] (Washington, D.C. Mar. 3,
2010); and Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C. May 26, 2010); Recovery Act: Opportunities to
Improve Management and Strengthen Accountability over States' and
Localities' Uses of Funds. [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: September
20, 2010).
[50] [hyperlink, http://www.gao.gov/products/GAO-10-604], 245-246.
[51] [hyperlink, http://www.gao.gov/products/GAO-10-604], 246-247.
[52] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[53] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[54] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[55] [hyperlink, http://www.gao.gov/products/GAO-10-999], 189.
[56] [hyperlink, http://www.gao.gov/products/GAO-10-604], 244.
[57] [hyperlink, http://www.gao.gov/products/GAO-09-1016], 78.
[58] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[59] [hyperlink, http://www.gao.gov/products/GAO-10-604], 248.
[60] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[61] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[62] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[63] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247-248.
[64] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[65] Congress passed the Single Audit Act, as amended, 31 U.S.C. ch.
75, to promote, among other things, sound financial management,
including effective internal controls, with respect to federal awards
administered by nonfederal entities. The Single Audit Act requires
states, local governments, and nonprofit organizations expending
$500,000 or more in federal awards in a year to obtain an audit in
accordance with the requirements set forth in the act. A Single Audit
consists of (1) an audit and opinions on the fair presentation of the
financial statements and the Schedule of Expenditures of Federal
Awards; (2) gaining an understanding of and testing internal control
over financial reporting and the entity's compliance with laws,
regulations, and contract or grant provisions that have a direct and
material effect on certain federal programs (i.e., the program
requirements); and (3) an audit and an opinion on compliance with
applicable program requirements for certain federal programs.
[66] OMB's second project is similar to its first Single Audit
Internal Control project which started in October 2009. Sixteen states
participated in the first project. We assessed the results of the
project and reported them in GAO, Recovery Act: Opportunities to
Improve Management and Strengthen Accountability over States' and
Localities' Uses of Funds [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: September
20, 2010).
[67] Each award recipient expending more than $50 million is assigned
a cognizant agency for audit. Generally, the cognizant agency for
audit is the federal awarding agency that provides the predominant
amount of direct funding to a recipient unless OMB assigns this
responsibility to another agency. Some of the responsibilities of the
cognizant agency include performing quality control reviews,
considering auditee requests for extensions, and coordinating a
management decision for audit findings that affect federal programs of
more than one agency. For the states participating in the project, HHS
is the cognizant agency for audit.
[68] The project's guidelines called for the federal awarding agencies
to complete (1) performing a risk assessment of the internal control
deficiency and identify those with the greatest risk to Recovery Act
funding and (2) identifying corrective actions taken or planned by the
auditee. OMB guidance requires this information to be included in a
management decision that the federal agency was to have issued to the
auditee's management, the auditor, and the cognizant agency for audit.
[69] The Single Audit Act requires that recipients submit their
financial reporting packages, including the Single Audit report, to
the federal government's audit clearinghouse no later than 9 months
after the end of the period being audited. As a result, an audited
entity may not receive feedback needed to correct an identified
internal control deficiency over compliance until the latter part of
the subsequent fiscal year.
[70] [hyperlink, http://www.gao.gov/products/GAO-09-829], 131.
[71] [hyperlink, http://www.gao.gov/products/GAO-10-999], 187-188.
[72] [hyperlink, http://www.gao.gov/products/GAO-10-604], 241-242.
[73] [hyperlink, http://www.gao.gov/products/GAO-10-437], 29.
[74] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[75] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[76] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[77] [hyperlink, http://www.gao.gov/products/GAO-10-604], 251.
[End of section]
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