Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Lonoke Economic Development Agency
DATE: April 8, 1996
Docket No. A-95-118
Decision No. 1568
DECISION
The Administration for Children and Families (ACF) of the
Department of Health and Human Services notified the
Lonoke Economic Development Agency (EDA) on April 28,
1995 that ACF proposed to deny refunding of EDA's Head
Start grant. The basis for ACF's proposed action was the
lack of Policy Council approval of EDA's application for
refunding. The 1993-94 Policy Council voted on August
30, 1994 and again on October 13, 1994 not to approve the
application for refunding for the 1994-95 program year.
EDA's grant expired on November 30, 1994, although it
continued to receive funding pending a decision by ACF
and subsequently pending the issuance of this decision,
as provided in 42 U.S.C. 9841(a)(3).
EDA requested a hearing under 45 C.F.R. 1303.15. The
Departmental Appeals Board held a hearing in Little Rock,
Arkansas, on September 9-12 and October 10-13, 1995.
Portions of the hearing were also held by telephone on
November 22 and December 11, 1995. The Board also
received pre-hearing and post-hearing briefs from the
parties.
At the hearing on October 10, 1995, the Presiding Board
Member granted the request of the 1995-96 EDA Head Start
Policy Council to intervene in these proceedings pursuant
to 45 C.F.R. 16.16(b). Transcript of hearing (Tr.) at
1740. By agreement of the parties, two representatives
of that Policy Council testified at the hearing.
I. Summary of decision
As discussed in detail below, we uphold ACF's decision to
deny EDA's application for refunding. We preface our
decision by noting that there is no dispute that EDA's
Head Start program is in general a well-run program that
meets most of ACF's performance standards. EDA received
an overall rating of 85 based on the on-site review of
its program conducted by ACF in May 1994. Appellant's
Ex. 44, 5th page. 1/ However, as discussed below, the
Head Start program is unique in that it requires that the
management responsibility for the program be shared with
the parents of children enrolled in the program, acting
through their elected representatives on the Policy
Council. EDA, which for several years had administered
numerous other federal programs, misapprehended the
unique nature of its newest program, applying to it the
same strong management techniques that were successful in
its other programs. ACF made efforts to educate EDA as
to the role which the Head Start Act and the implementing
regulations intended for the Policy Council. EDA finally
acknowledged in briefing before this Board that
"[p]arental involvement are the key words when it comes
to the operation of the Head Start program" and that
Congress intended Head Start as "a program where the
parents control the direction of the program with the aid
and assistance of `professional administrators.'"
Supplemental Br. of the Appellant, at 5. However,
throughout the relevant time period, EDA clearly failed
to internalize this value.
Thus, notwithstanding the positive accomplishments of
EDA, the record compels us to find that ACF may properly
deny refunding on the ground that EDA's failure to obtain
Policy Council approval constitutes a material failure to
meet the performance standards for operation of Head
Start, which is a basis for the denial of refunding under
the applicable regulations. See 45 C.F.R. 1303.15(c)
and 1303.14(b)(4). Moreover, EDA did not show that there
is any valid reason why ACF should be required to
continue funding EDA regardless of EDA's material
violation of the regulations.
We note also that the specific problems of which the
Policy Council complained have been microscopically
parsed by the parties, leading to a voluminous record in
which the weight of attention might appear
disproportionate to the weight of some of those problems.
As we explain later, however, it is the totality of those
problems, in the context of the moment when they arose,
which persuades us that the Policy Council was not merely
being hypersensitive to slights. Rather, the problems,
taken together, display a fundamental error in how EDA
engaged the unique responsibility under Head Start to
treat the Policy Council as a partner, not merely as a
constituent.
We conclude specifically that:
o The Policy Council's decision not to approve
EDA's application for refunding was based on its
determination that, over the course of the 1993-94
program year, EDA disregarded the Policy Council's
partnership role in the management of the Head Start
program, and the Policy Council's decision was
therefore not arbitrary or capricious.
o Neither the Policy Council's decision not to
approve EDA's application for refunding nor ACF's
proposed denial of refunding constituted an illegal
act of discrimination based on race.
o The Policy Council members were duly elected
representatives of the parents of children enrolled
in the Head Start program, and the Policy Council's
decision not to approve EDA's application for
refunding was not invalid simply because many of the
parents may have disagreed with this decision.
o ACF provided adequate assistance to EDA and the
Policy Council in attempting to resolve the
conflicts which led to the Policy Council's decision
not to approve EDA's application for refunding, and
is not responsible for the parties' failure to
resolve this case through mediation.
o ACF reasonably determined that the 1995-96 Policy
Council's retroactive approval of the 1994-95
application for refunding nearly two years after
EDA's Head Start grant expired does not moot this
case.
o ACF gave EDA an opportunity to come into
compliance with the requirement for Policy Council
approval of an application for refunding, in
accordance with the procedures for the denial of
refunding based on the violation of a performance
standard.
It is important to recognize that, although EDA will not
continue to administer the Head Start program, that does
not mean that the community involved will not have a Head
Start program. Under the regulations, ACF must select a
replacement grantee that "reasonably promises the most
effective and responsible head Start program" from among
applicants, and also consider the extent to which those
applicants will provide for "continuation of services" to
the children who have been participating and to the
target areas that have been served and for "continued
employment . . . of the qualified personnel of the
existing program." 45 C.F.R. 1302.10 and 1302.11.
II. EDA's history and structure
EDA is a multi-purpose agency located in Lonoke,
Arkansas. EDA was organized and incorporated in 1981 for
the purpose of assisting low-income families and children
in Lonoke County. Tr. at 2523, 2525. One of the
founders of EDA was Alice Rufus, who has been its
Executive Director since its inception. Tr. at 2523.
Rufus, who is black, envisioned EDA as a black-run
organization, and virtually all the members of EDA's
Board of Directors over the years have been black. Tr.
at 2520, 2933-2934, 2937. 2/ EDA is apparently the only
major black-run organization in Lonoke County. See
Supplemental Br. of Appellant at 2. EDA serves a
population which is approximately half black and half
white. Tr. at 2932-2933.
EDA administers twelve programs, including Head Start.
Tr. at 1315, 2531-2534; Respondent's Supplemental Br. at
3. Its total operating budget is approximately
$1,500,000, about $400,000 of which is attributable to
the Head Start program. Tr. at 2938. EDA is
administered by the Executive Director, who reports to
the Board of Directors. Tr. at 2534. EDA has a paid
staff of about 35 individuals, including a Head Start
Director. Id. EDA received its first Head Start grant
in October 1991. Tr. at 2539. During the 1994-95
program year (for which ACF proposed to deny refunding),
EDA's Head Start program served approximately 121
children. Respondent's Ex. 5. In 1993, the program had
centers in the towns of Lonoke and Humnoke. A third
center in the town of Carlisle was later added.
Respondent's Supplemental Br. at 4; Tr. at 28, 37. The
Lonoke Center is the largest of the three centers. See
Appellant's Ex. 46.
III. How law and regulation emphasize parental
involvement in Head Start through the Policy Council
The Head Start program is designed to deliver early
developmental intervention, along with comprehensive
educational and supportive services, to low income
preschool children and their families. See 42 U.S.C.
9831 and 45 C.F.R. 1304.1-3. ACF provides funds to
grantees to serve as Head Start agencies within
designated communities and periodically conducts an on-
site review of their performance in meeting program and
fiscal requirements. See generally 42 U.S.C. 9846.
The Head Start program is unique in that parents are
expected to participate in the management of the program.
The Head Start Act provides in pertinent part that, in
order to be designated a Head Start agency, an agency
must--
(1) establish effective procedures by which parents
and area residents concerned will be enabled to
directly participate in decisions that influence the
character of programs affecting their interest; (2)
provide for their regular participation in the
implementation of such programs . . . .
42 U.S.C. 9837. As amended effective October 1, 1994,
that section also requires that, to be designated a Head
Start agency, an agency--
(4) seek the involvement of parents of participating
children in activities designed to . . . afford such
parents the opportunity to participate in the
development, conduct, and overall performance of the
program at the local level . . . .
The 1994 amendments reauthorized the Head Start program
and sought to implement the recommendations of the
Advisory Commission on Head Start Quality and Expansion,
including a recommendation to strengthen parent
involvement. The legislative history thus addresses the
role of parents in the Head Start program at some length.
The Senate report states that Head Start--
recognizes that parents are a child's most
influential teachers, and makes parent education and
involvement an integral part of the program's
operations, both in the classroom and at the highest
levels of each center's decision making processes.
S. Rep. No. 251, 103rd Cong., 2nd Sess. 4 (1994). The
report further states:
The Committee believes that parent involvement in
Head Start is the key to its success. Parents who
participate in Head Start programs become better
educated in life skills. They become better
parents. Their actions convey to their children
that they, as adults believe education is important
and that they support their children's activities.
Head Start programs that train their parents to be
full participants in the Policy Council, guiding
program operations through hiring, firing and budget
decisions, are more responsive to the needs of
parents and the local community. Parent involvement
in the Head Start program cannot be a rubber stamp;
for Head Start to accomplish its purpose, parent
involvement must be encouraged, desired, and
respected by the program.
Id. at 26. See also H.R. Rep. No. 483, 103rd Cong., 2nd
Sess. (1994), at 40-41.
The regulations implementing the Head Start Act (which
were promulgated before the 1994 amendments) contain
performance standards on parent involvement. 45 C.F.R.
Part 1304, Subpart E. The objectives of these
performance standards include:
(c) Provide the following kinds of opportunities
for parent participation:
(1) Direct involvement in decision making in
program planning and operation.
45 C.F.R. 1304.5-1(c)(1). In order to promote these
parent involvement objectives, Head Start grantees are
required to have a parent involvement plan that
provides --
a system for the regular provision of information to
members of Policy Groups. The purpose of such
communication is to enable the Policy Group to make
informed decisions in a timely and effective manner
. . . .
45 C.F.R. 1304.5-4(b). In addition, section
1304.5-2(a) of the performance standards states that:
The basic parent participation policy of the Head
Start program, with which all Head Start programs
must comply as a condition of being granted
financial assistance, is contained in Head Start
Policy Manual, Instruction I-31-Section B2, The
Parents (OCD Transmittal Notice 70.2, dated August
10, 1970). . . .
The Policy Manual referred to in this section appears as
Appendix B to 45 C.F.R. Part 1304. It explains the
rationale for parent involvement in the Head Start
program as follows:
Head Start believes that the gains made by the child
in Head Start must be understood and built upon by
the family and the community. To achieve this goal,
Head Start provides for the involvement of the
child's parents and other members of the family in
the experiences he receives in the child development
center. . . . .
* * * * *
It is clear that the success of Head Start . . .
demands the fullest involvement of the parents,
parental-substitutes, and families of children
enrolled in its program. . . .
* * * * *
Project Head Start must continue to discover new
ways for parents to become deeply involved in
decision-making about the program and in the
development of activities that they deem helpful and
important in meeting their particular needs and
conditions. . . .
This sharing in decisions for the future is one of
the primary aims of parent participation and
involvement in Project Head Start.
Appendix B also identifies "four major kinds of parent
participation in local Head Start programs," including
"participation in the process of making decisions about
the nature and operation of the program." The Appendix
requires that "[e]very corporate board operating a Head
Start program must have a Policy Committee or Council as
defined by HHS." The Policy Council must consist of
"[a]t least 50% parents of Head Start children presently
enrolled in that grantee's program plus representatives
of the community." 45 C.F.R. Part 1304, Appendix B,
Chart A. Appendix B assigns specific roles to the Board
of Directors, Executive Director, Head Start Policy
Council and Head Start Director in the management and
operation of the grantee agency's Head Start program.
Chart C of Appendix B describes the responsibility of the
Policy Council with respect to 17 "major management
functions." The Policy Council must approve or
disapprove actions taken to carry out 12 of the 17
functions listed. This entails approval "before the
decision is finalized or action taken." In addition, the
Policy Council must "have been consulted in the decision
making process prior to the point of seeking approval."
Its role with respect to the remaining functions ranges
from "general responsibility" to "may be consulted."
These represent "the minimum functions and degrees of
responsibility . . . ," although the Policy Council "may
negotiate for . . . a greater share of responsibility if
all parties agree."
IV. The analytical framework we use to review the record
Pursuant to 42 U.S.C. 9841 and the Head Start
regulations at 45 C.F.R. 1303.14 and 1303.15, a full
and fair hearing must be afforded to a grantee before its
application for refunding is denied. ACF proposed to
deny refunding of EDA's Head Start grant based on the
decision of EDA's Head Start Policy Council not to
approve EDA's application for refunding. The Head Start
performance standards require Policy Council approval of
a refunding application. 45 C.F.R. Part 1304, Appendix
B, Chart C, IV.(a). 3/ Violation of the performance
standards is a basis for a denial of refunding under the
regulations. 45 C.F.R. 1303.14(b) and 1303.15(c).
However, the lack of Policy Council approval does not
necessarily require ACF to propose the denial of
refunding. If ACF determines that the Policy Council's
decision was arbitrary, capricious, or illegal, ACF may
not deny refunding based on the lack of Policy Council
approval.
This standard is consistent with a U.S. District Court
decision which involved the question whether the
statutory right to a hearing on the denial of a refunding
application applied where the Policy Council did not
approve the grantee's application. North Shore Community
Action Programs, Inc. v. Shalala, Civil Action No. 93-
1834 (D.D.C. October 10, 1993). The court held that
there was a refunding application before HHS even though
the application was missing a required element, so that
the statutory right to a hearing applied. As one basis
for its decision, the court noted that to accept HHS's
position that the grantee was not entitled to a hearing
on the denial of refunding "would essentially provide a
Policy Council with absolute and unreviewable discretion
on refunding." North Shore, at 4. The court further
stated:
The HHS interpretation provides no review mechanism
for Policy Council actions -- even if those actions
were plainly illegal or suffered from constitutional
infirmities. For example, without the prescribed
hearing, a Policy Council could refuse to approve an
application because the grantee employed minorities
or because it refused to provide the Policy Council
with kickbacks. [Footnote omitted.] The Court
believes that the hearing requirement contained at
section 9841(a)(3) was provided in the statute
precisely to address these sorts of issues.
At 5. The court also noted that an administrative law
judge had held in another case that if the Policy
Council's actions "were unreasonable, arbitrary, or
improperly motivated, HHS could continue assistance to a
grantee despite the lack of approval by the Council." At
5, n. 7.
The court in North Shore was expressly concerned about
the possibility that a Policy Council might decide not to
approve a refunding application for reasons which are
unconstitutional or otherwise illegal. The decision also
suggests that only similarly invidious reasons would
warrant disregarding a Policy Council's decision not to
approve an application for refunding. This is apparent
from the court's reference to the "unreasonable,
arbitrary, or improperly motivated" standard employed by
an administrative law judge. In Citizens to Preserve
Overton Park v. Volpe, 401 U.S. 402, 415 (1971), the
Supreme Court stated that to determine whether a decision
was arbitrary, capricious, or illegal (a comparable
standard), one must examine whether the decision was
based on a consideration of the relevant factors and
whether there has been a clear error of judgment. Thus,
North Shore in effect requires only that a Policy Council
have a rational basis for its decision.
ACF's determination that the Policy Council's decision
was not arbitrary, capricious, or illegal was based on
its review of information provided by the Policy Council
and EDA. According to ACF, the Policy Council in effect
concluded that EDA was incapable of "establishing and
maintaining a working partnership with the Policy
Council." April 28, 1995 notice of intent to deny
refunding, at 2.
As indicated above, the Head Start Act and regulations
contemplate that the grantee and the Head Start parents,
acting through the Policy Council, will share the
responsibility for making decisions about the nature and
operation of the program. Shared decisionmaking is,
moreover, a cornerstone of the Head Start program. Thus,
we agree with ACF that if the Policy Council decided not
to approve the refunding application on the ground that
EDA was disregarding the Policy Council's partnership
role in the management of the Head Start program, its
decision would not be arbitrary or capricious.
EDA argued before the Board that it did not in fact take
some of the actions attributed to it by the Policy
Council, and that there was a reasonable explanation for
other actions attributed to it. We consider EDA's
arguments using the preponderance of the evidence
standard which is generally employed in administrative
proceedings, accepting that evidence "which is of greater
weight or more convincing," i.e., "which as a whole shows
that the fact sought to be proved is more probable than
not." Black's Law Dictionary 1182 (6th ed. 1990).
However, evidence concerning matters which were not known
to the Policy Council at the time it made its decision,
or of which the Policy Council should not reasonably have
known, is not entitled to any weight.
We need not find that all of the bases for the Policy
Council's decision were valid in order to conclude that
the Policy Council's decision was not arbitrary or
capricious. The Board may determine that some of those
bases, either individually or considered together, were
sufficient to justify the Policy Council's determination
not to approve the refunding application.
V. Analysis
A. The Policy Council's decision not to approve EDA's
refunding application was based on its determination
that EDA disregarded the Policy Council's
partnership role in the management of the Head Start
program, and was therefore not arbitrary or
capricious.
The bases for the Policy Council's decision were
initially set out in an August 30, 1994 memorandum from
Policy Council Chairperson Bonnie Yoakum 4/ to EDA Board
President Richard Young. Appellant's Ex. 2. Yoakum
thereafter elaborated on these bases in a statement she
read at a September 15, 1994 meeting with the Regional
Administrator of ACF. Respondent's Ex. 33. Finally, in
response to a request by the Regional Office for a
detailed explanation of the Policy Council's reasons for
voting not to approve the refunding application, the
Policy Council on February 2, 1995 submitted letters
written by individual Policy Council members.
Respondent's Ex. 3.
We find that many of the allegations made by the Policy
Council in support of its decision, taken together, show
that EDA failed to give the Policy Council due
recognition as a partner in the management of the Head
Start program. While some of the events identified by
the Policy Council could arguably be discounted as
showing only isolated problems in EDA's working
relationship with the Policy Council, cumulatively they
show a clear pattern of disregard for the Policy Council
and the role Congress intended it to play in the Head
Start program. The Policy Council's decision not to
approve EDA's refunding application was thus a rational
one. Accordingly, ACF did not err in finding that the
Policy Council's decision was not arbitrary or
capricious. 5/
Below, we discuss each of the allegations made by the
Policy Council which we find support its decision. We
discuss these bases in the order in which they appear in
Respondent's Hearing Exhibit 1, a list of the reasons for
the Policy Council's decision prepared by ACF, using the
descriptions in that exhibit. We also indicate where
each item was identified by the Policy Council as a basis
for its decision.
There were a number of additional bases (also listed in
Respondent's Hearing Exhibit 1) on which the Policy
Council relied. We do not develop them here since we
find after careful consideration that some bases are
unpersuasive while the remainder are insufficiently
substantial for us to rely on them. 6/ In addition, in
view of our conclusion that the Policy Council
articulated reasons which are sufficient to support its
decision, we do not consider those reasons ACF said
justified the Policy Council's decision (also listed in
Respondent's Hearing Exhibit 1) but on which the Policy
Council did not expressly rely.
Attempted firing of Head Start Director without
consulting with Policy Council and without obtaining
Policy Council approval
Policy Council's Allegation: The Policy Council alleged
that EDA attempted to fire the Head Start Director
without its approval. Appellant's Ex. 2, 1st page. See
also Respondent's Ex. 33, 1st page; Respondent's Ex. 3,
26th page.
What the Record Shows: On February 15, 1994, the Policy
Council held a regularly scheduled meeting. Respondent's
Ex. 22. At the meeting, Julius Dodson, the EDA Board
representative to the Policy Council, asked that the
Policy Council meet with the EDA Board on February 16,
1994. Id., 2nd page. EDA Executive Director Alice Rufus
testified that Dodson made this request on her behalf
since she was not permitted to participate in Policy
Council meetings. Tr. at 2570. A meeting was scheduled
for February 18 since one Policy Council member was
unavailable on February 16. Respondent's Ex. 22, 2nd
page.
Immediately after the Policy Council meeting, the EDA
Board held a regularly scheduled meeting. Tr. at 242-
243. After conducting some business, the Board went into
executive session to discuss personnel matters. Tr. at
244. Both Rufus and EDA Board member Rose Jones
testified that, during the executive session, Rufus
recommended to the Board that Lillie Turner, the Head
Start Director, be terminated for a number of reasons.
Tr. at 2588, 2960, 2235, 2237. In addition, both Rufus
and Jones testified that Rufus told the Board that Policy
Council approval of a termination was required and that a
meeting with the Policy Council had been scheduled for
February 18. Tr. at 2181, 2588. Jones further testified
that the EDA Board came to a decision that Turner should
no longer work for EDA but did not terminate Turner
because the Board had not yet met with the Policy
Council. Tr. at 2183, 2185. The Head Start regulations
provide that the Policy Council must approve or
disapprove the hiring or firing of Head Start staff. 45
C.F.R. Part 1304, Appendix B, Chart C.
At the end of the executive session, Richard Young, the
EDA Board Chairman, spoke to Turner outside of her
office. Tr. at 46, 248, 1873. When she returned to her
office, she told Policy Council Chairperson Bonnie Yoakum
and Policy Council member Rose Williams, who were waiting
for her there, that she had been fired. Tr. at 248.
Turner testified that Young told her that the Board had
terminated her for insubordination, effective
immediately. Tr. at 46, 232. However, Young testified
that he did not inform Turner that she was fired
immediately, but mentioned something to Turner about the
Policy Council. Tr. at 1874. Moreover, in a proceeding
in the Lonoke County Court, Young testified that the EDA
Board had initiated a decision to terminate Turner, but
that the Board could not terminate her because of "70.2"
(the Head Start parent involvement regulations).
Respondent's Hearing Ex. 8; Tr. at 2979. Rufus testified
that she heard Young tell Turner that the EDA Board had
decided to "suspend" her employment until the Board could
meet with the Policy Council to discuss possible
termination. Tr. at 2589, 2613-14. The Head Start
regulations provide that "if the situation warrants
immediate action, the grantee may suspend an employee
until proper termination proceedings can occur."
Respondent's Ex. 10, ACYF-IM-87-33, dated 11/5/87,
attached Parent Involvement Policy Interpretations, at 2.
The Policy Council held a "Special Called Meeting" on
February 18, 1995. Respondent's Ex. 14. After reporting
that Young had informed Turner that she was fired, Yoakum
called for a motion to "reject the decision of the EDA
Board of Directors." Id. at 2. This motion was
approved. However, the Policy Council was concerned that
the EDA Board might have Turner arrested if she returned
to work, and therefore voted to approve a second motion
that Turner "be placed on Administrative Leave with pay
until this matter is resolved." Id. The meeting was
then adjourned so that the Policy Council could meet with
the EDA Board as scheduled. Id. However, the Board did
not hold the meeting because of the presence of a large
crowd of individuals which the Board felt was disruptive.
Tr. at 2272-2273; Appellant's Ex. 54, last page.
By letter dated February 25, 1994, Yoakum advised Young
that the Policy Council had voted against the action
taken by the EDA Board to terminate the Head Start
Director. Noting that the Policy Council must approve
such an action, Yoakum stated that the Policy Council
would be willing to discuss Turner's performance with the
EDA Board once Turner had been returned to work.
Respondent's Ex. 18, 1st page. Turner subsequently
showed the Policy Council a copy of a February 17, 1994
memorandum from Rufus to Turner setting forth the EDA
Board's rationale for the action taken against Turner.
Respondent's Ex. 9; Tr. at 262. By letter dated March 8,
1994, Yoakum responded to Rufus' February 17 memorandum,
stated that the Board had no authority to terminate
Turner, and requested that Turner be returned to work no
later than March 14. Respondent's Ex. 22, 3rd page.
By letter dated March 15, 1994, Young advised Turner that
the EDA Board was requesting that she return to work on
March 16, 1994. Appellant's Ex. 6. Turner advised the
Board that she would not be able to return to work until
March 21. She also requested a conference to discuss her
working conditions since much had happened since she was
"allegedly terminated." Appellant's Ex. 6A. In a letter
dated March 16, Young reiterated the Board's request that
Turner return to work on March 16, stating that Turner
was never terminated. Appellant's Ex. 7. Turner
returned to work on March 21. Tr. at 67. She received
pay for the period February 16 through March 16. Tr. at
170, 218.
Our Findings: Pursuant to a decision made at the EDA
Board's executive session on February 15, 1994, Board
Chairman Richard Young told Head Start Director Lillie
Turner not to report to work the next day. Three Board
members who attended the executive session presented
uncontroverted testimony that the EDA Board did not make
a final decision to terminate Turner but merely decided
to initiate termination proceedings pending approval of a
termination by the Policy Council. The latter action
would have been authorized under ACF's policy permitting
an immediate suspension without Policy Council approval.
The Board members' testimony is corroborated by the fact
that EDA sought to schedule a meeting with the Policy
Council as soon as possible after its executive session.
However, Turner clearly believed that Young told her that
she was fired, and communicated this to the Policy
Council. Lacking any contrary information, the Policy
Council reasonably believed that EDA had terminated
Turner without seeking its approval, in contravention of
the Head Start regulations. Following its unsuccessful
attempt to meet with the Policy Council on February 18,
1994, EDA made no further attempts to correct this
misunderstanding during the several weeks that Turner was
out of work. Although the Policy Council made two
written requests to the EDA Board that Turner be
reinstated, the Board did not respond to either request.
The Policy Council reasonably relied on its belief that
EDA had terminated Turner unlawfully as a factor in
deciding not to approve EDA's refunding application. The
Policy Council's authority to approve or disapprove the
hiring or firing of Head Start staff is one of the major
responsibilities conferred by the Head Start regulations.
Moreover, the position of Head Start Director is a key
one. Even if EDA did not intend to terminate Turner
without seeking Policy Council approval, its failure to
correct the Policy Council's legitimate perception that
EDA had ignored the Policy Council's role in firing
decisions was part of a pattern which showed that EDA
disregarded the Policy Council's partnership role in the
management of the Head Start program.
Attempted confiscation of Policy Council Chairperson's
note to parents on February 16, 1994
Policy Council's Allegation: The Policy Council alleged
that EDA's Executive Director warned the staff about
sending memos home to Head Start parents. Respondent's
Ex. 33, at 1. As indicated below, the Policy Council
believed that this was a response to an attempt by the
Policy Council Chairperson to send the parents a note,
which the Policy Council alleged was confiscated by EDA.
What the Record Shows: On February 16, 1994, EDA
Executive Director Alice Rufus sent a memorandum to Head
Start staff stating "NO memos are to be passed out to any
staff members nor parents concerning the Economic
Development Agency Head Start unless prior approval has
been given by the Executive Director." Respondent's Ex.
12. Rufus testified that it was EDA policy to require
that all correspondence be approved in advance by her.
Tr. at 2950.
According to the minutes of a February 18, 1994 Policy
Council meeting, Bonnie Yoakum, the Policy Council
Chairperson, told the Policy Council that Rufus wrote
this memorandum after being informed of a note Yoakum had
written to the Head Start parents earlier on February 16.
Respondent's Ex. 14. The note stated that the Head Start
Director had been fired without Policy Council approval
and reassured the parents that the program would continue
to operate as usual. Respondent's Ex. 11. Yoakum
testified that she went to the Lonoke Center during her
lunch hour on February 16, 1994, wrote the note, and gave
copies of the note to the teachers to distribute to the
parents when they came to pick up their children. Tr. at
259-250. Sharon Rudder, Acting Director of the Lonoke
Center at the time in question, testified that Shirley
Bailey, Rufus' administrative assistant, came to the
Lonoke Center on February 16, 1994 and picked up copies
of the note which had not already been sent home with the
children. Tr. at 3303. Rudder further testified that
Bailey told parents that she had been instructed to come
over and gather the copies of Yoakum's note. Id.
Although Rufus testified that she did not know about
Yoakum's note at the time (Tr. at 3034), Rudder's
testimony was not rebutted by Bailey (who did not
testify) or by anyone else who was at the Lonoke Center
that day.
Our Findings: EDA had a policy, confirmed by the
Executive Director in a February 16, 1994 memorandum to
Head Start staff, which required prior approval of the
Policy Council's communications with the Head Start
parents. The preponderance of the evidence shows that,
consistent with this policy, a note written by the Policy
Council Chairperson to the Head Start parents was
confiscated at the direction of EDA's Executive Director.
The Policy Council reasonably relied on EDA's policy as a
factor in its decision not to approve EDA's refunding
application. The Policy Council needed to be able to
communicate freely with the parents whom it represented.
EDA's policy, which it attempted to enforce in this
instance, did not recognize this need and was part of a
pattern which showed that EDA disregarded the Policy
Council's partnership role in the management of the Head
Start program. If the Executive Director objected to the
content of the note in question here or any other
communication from the Policy Council to the parents, she
could have sent a separate communication to the parents
which explained EDA's position instead of suppressing the
Policy Council's communication.
Refusal to provide keys to the Head Start Director upon
her return to work, despite repeated requests by the
Policy Council
Policy Council's Allegation: The Policy Council alleged
that EDA failed to provide the Head Start Director and
key staff with keys to the Lonoke Center. Appellant's
Ex. 2, lst page. See also Respondent's Ex. 33, 2nd page;
Respondent's Ex. 3, 27th page.
What the Record Shows: Prior to her suspension from her
job on February 15, 1994, Head Start Director Lillie
Turner had keys to the Lonoke Center. EDA Executive
Director Alice Rufus testified that Turner made copies of
the keys for a number of people. Tr. at 3002. At Rufus'
request, Turner gave Rufus her keys when she was
suspended. Tr. at 248. The locks to the Lonoke Center
were also changed at that time. Id.; Respondent's Ex.
25. Upon her return to work on March 21, 1994, Turner
asked for keys to the Lonoke Center, but Rufus refused
her request. Respondent's Ex. 23; Tr. at 71-72. Rufus
testified that she explained to Turner at the time that
she was withholding the keys because supplies were
missing from the Center. Tr. at 2592, 2997, 3001.
However, Turner testified as well as stated in a March
24, 1994 letter to Rufus that she did not receive any
explanation. Tr. at 72; Respondent's Ex. 23.
About the time that Turner returned to work, Policy
Council Chairperson Bonnie Yoakum spoke to Rufus in
person about giving keys to Turner. Tr. at 2593. Rufus
testified that Yoakum demanded the keys, and that she
told Yoakum that she resented her talking to her in this
manner. Id. By letter dated March 25, 1994, Yoakum
advised EDA Board Chairman Richard Young that the Policy
Council had voted that Turner and five other people (in
addition to the janitor) be given keys to the Lonoke
Center, and requested that this be done by March 28.
Respondent's Ex. 24. By letter dated April 4, 1994,
Yoakum advised the Regional Office that EDA had not
issued the keys and had not given any explanation.
Yoakum stated that the Council felt that it "is
demoralizing to staff for them not to be allowed to have
keys, because this demonstrates a lack of trust."
Respondent's Ex. 25. By letter dated May 6, 1994, Yoakum
advised the Regional Office that, at an EDA Board meeting
the previous day, the majority of the EDA Board had voted
against her motion that Turner be given a key to the
Lonoke Center. Respondent's Ex. 26. The issue of the
keys was raised again at a September 15, 1994 meeting
with the Regional Administrator at which Rufus indicated
that the keys were taken away because things were being
lost at the center. Tr. at 99. Rufus nevertheless
agreed to give Turner the keys in an effort to get the
refunding application approved. Tr. at 2718.
Our Findings: EDA withheld the keys to the Lonoke Center
from the Head Start Director from March 1994 until
September 1994, despite repeated requests by the Policy
Council that she be given the keys. EDA never gave any
explanation for withholding the keys to either the Head
Start Director or the Policy Council. Rufus' testimony
that she gave Turner an explanation is rebutted by
Turner's contemporaneous letter, which specifically
states that no explanation was given.
The Policy Council reasonably relied on EDA's withholding
of the keys from the Head Start Director as a factor in
deciding not to approve EDA's refunding application. EDA
did not argue that the Policy Council was not
legitimately concerned with the Head Start Director's
having access to the Lonoke Center, but rather that EDA
had a strong interest in withholding the keys because
supplies were missing from the Lonoke Center. Since EDA
was ultimately accountable for the use of Head Start
funds, it may have been justified in withholding the
keys. However, EDA's failure to explain why it was
withholding the keys was part of a pattern which showed
that EDA disregarded the Policy Council's partnership
role in the management of the Head Start program. The
fact that EDA's Executive Director was offended by what
she considered the Policy Council Chairperson's
peremptory demand for the keys when the Head Start
Director first returned to work does not justify EDA's
failure to provide any explanation for its action over a
period of several months.
Handling of the filling of the Lonoke Center Director's
position - attempt to circumvent input of Policy Council
Policy Council's Allegation: The Policy Council alleged
that Policy Council members were intimidated by the
attendance of EDA Board members and the EDA Executive
Director at personnel committee meetings. Appellant's
Ex. 2, 2nd page. The Policy Council referred
specifically to the personnel committee meetings
concerning the selection of a director for the Lonoke
Center. Respondent's Ex. 3, 11th page, 27th page.
What the Record Shows: Applicants for the position of
director of the Lonoke Center were interviewed by a
committee composed of EDA's Executive Director, the Head
Start Director, two EDA Board members, and four Policy
Council members. Appellant's Ex. 17. Pursuant to the
Head Start Personnel Procedures and Policies Manual
(which was developed by EDA and approved by the Policy
Council), the interviews should have been conducted by
the Head Start Director and the "personnel committee."
Respondent's Hearing Ex. 10. The Policy Council bylaws
as revised 8/94 specified that the personnel committee
consists of the officers of the Policy Council.
Respondent's Ex. 87, at 6. 7/ Alice Rufus, EDA's
Executive Director, testified that, on the advice of
consultants hired by ACF to provide technical assistance
to EDA, she and the Head Start Director agreed to include
additional people on the personnel committee. Tr. at
3088, 3090. However, Bonnie Yoakum, the Policy Council
Chairperson, testified that no one told the Policy
Council to let EDA sit in on the interviews. Tr. at
3371, 3375-3376. 8/
Under the Head Start Personnel Procedures and Policies
Manual, the Head Start Director and personnel committee
recommend an applicant to the Policy Council. If the
Policy Council approves that applicant, the applicant's
name is sent to EDA's Executive Director for final
approval. Respondent's Hearing Ex. 10.
Six applicants were interviewed during the first round of
interviews on August 22, 1994. Appellant's Ex. 17.
Three of the four Policy Council members, including
Yoakum, expressed support for Sharon Rudder for the
position; however, the other Policy Council member, Rufus
and one EDA Board member each supported other applicants.
(The Head Start Director and the second EDA Board member
did not state whom they supported.) Id. The committee
did not recommend a candidate to the Policy Council. Id.
Nevertheless, the Policy Council voted the next day in
favor of hiring Rudder. Respondent's Ex. 90. Rufus did
not hire Rudder at that time, but instead arranged for a
second round of interviews on September 29, 1994. The
numerical rating system which the personnel committee had
agreed to use broke down when there was a disagreement
between Rufus and Yoakum about which applicants should be
re-interviewed. Tr. at 333; Respondent's Ex. 35. On
October 18, 1994, the Policy Council again voted in favor
of Rudder, although the personnel committee had not
recommended a candidate. Appellant's Ex. 19.
Approximately one month later, Rufus hired Rudder. Tr.
at 2769.
Our Findings: EDA's Executive Director included herself
and two EDA Board members on the personnel committee
considering applicants for an important position in EDA's
Head Start program. The inclusion of these individuals
was contrary to the Policy Council bylaws, which gave the
Policy Council and the Head Start Director the
responsibility for selecting Head Start staff, subject to
the approval of EDA's Executive Director. These
procedures were consistent with the Head Start
regulations, which provide with respect to the hiring and
firing of Head Start personnel that the grantee Board may
be consulted, the Executive Director has general
responsibility, and the Policy Council must approve or
disapprove. 45 C.F.R. Part 1304, Appendix B, Chart C.
The preponderance of the evidence shows that there was
never any agreement to alter the composition of the
personnel committee prior to the completion of the
interview process.
The Policy Council reasonably relied on EDA's inclusion
of EDA Board members and the EDA Executive Director on
the personnel committee as a factor in deciding not to
approve EDA's refunding application. EDA ignored the
process established by the Policy Council bylaws, which
gave the Policy Council the primary responsibility for
the initial selection of an applicant. This was part of
a pattern which showed that EDA disregarded the Policy
Council's partnership role in the management of the Head
Start program. The mere fact that the applicant whom the
Policy Council favored was ultimately hired does not
compensate for EDA's unwillingness to let the Policy
Council make the initial selection.
Failure to provide detailed line item budget reports as
requested by the Policy Council
Policy Council's Allegation: The Policy Council alleged
that EDA failed to provide it with line item financial
reports. See, e.g., Appellant's Ex. 2, 1st page;
Respondent's Ex. 3, 27th page.
What the Record Shows: EDA did not provide any financial
reports to the Policy Council until the 1993-94 school
year, the third year of the operation of its Head Start
program. Tr. at 685. The report on the May 1994 on-site
review of EDA's Head Start program stated that "[t]he
Policy Council must be provided direct financial reports
monthly." Respondent's Ex. 95, page 19 of Executive
Summary. EDA thereafter began providing reports which
showed monthly expenditures in seven broad budget
categories: personnel, fringe benefits, travel,
supplies, contractual, rent, and other. Respondent's Ex.
66, lst through 3rd pages. At a June 14, 1994 Policy
Council meeting, the Policy Council asked the EDA
accountant to provide reports with a detailed line item
breakdown. Tr. at 84, 295, 372. EDA then began
providing reports which showed, for each of the budget
categories listed above, the amount budgeted for the
year, the current month expenditures, the cumulative
expenditures (i.e., annual expenditures to date), and the
difference between the cumulative expenditures and the
amount budgeted for the year. Tr. at 457-458;
Respondent's Ex. 66, 5th page ff. The Policy Council was
not satisfied with this information and again requested
reports with detailed line item breakdowns. Tr. at 1114,
1116 (August 12-13, 1994 request); Respondent's Ex. 81,
2nd page (October 11, 1994 request). Although EDA
Executive Director Alice Rufus stated at the October 11,
1994 budget training that she could provide the
information requested by the Policy Council (Tr. at
1117), this information was never provided.
Manuel Duque, who provided budget training to EDA and the
Policy Council and was himself the Executive Director of
a Head Start grantee, testified that EDA's monthly
financial reports from July 1994 on provided the basic
information required by the Head Start regulations. Tr.
at 1111, 1118. (The regulations require that, at a
minimum, the grantee should provide to members of "Policy
Groups" "[f]inancial reports and statements of funds
expended in the Head Start account." 45 C.F.R.
1304.5-4(b)(3).) However, Duque further testified that
it would be reasonable for the Policy Council to request
detailed line item breakdowns. Tr. at 1116, 1118.
Bonnie Yoakum, the Policy Council Chairperson, as well as
Policy Council members Steven Lilly and Rose Williams,
testified that the Policy Council felt it needed the
additional information in order to adequately discharge
its budget planning duties. Tr. at 294, 685, 824. Duque
also testified that EDA should have been able to provide
the type of information requested by the Policy Council
using standard accounting techniques. Tr. at 1119.
The report of ACF's on-site review gave EDA a score of
100% on the "Admin/Fin/Prop. Mgmt." component.
Appellant's Ex. 44, 5th page. Rufus testified that she
was told by the on-site review team that detailed budget
information was not required. Tr. at 2775. In addition,
Rufus testified that she responded to the Policy
Council's request for detailed line item budgets by
instructing Head Start Director Lillie Turner to provide
the Policy Council with information which Turner
maintained on purchase orders submitted by Head Start
staff, but that Turner had failed to do so. Tr. at 2777,
2905. Rufus further testified that Turner was given
financial reports every month from very early on in the
life of EDA's Head Start program, but did not give them
to the Policy Council. Tr. at 2555.
Our Findings: EDA failed to provide financial
information for which the Policy Council made repeated
requests over a period of several months and which EDA
should have been capable of providing. There is no basis
for EDA's position that the Head Start Director was to
blame for the failure to provide the information
requested. Even if she had given the Policy Council the
purchase order information which she had, detailed
information on budget categories other than supplies
would have been lacking. Furthermore, there is no
evidence that the financial reports which EDA allegedly
gave the Head Start Director contained the information
which the Policy Council had requested.
The Policy Council reasonably relied on EDA's failure to
provide the requested budget information as a factor in
deciding not to approve EDA's refunding application.
Although the information requested went beyond the
minimum information required by the Head Start
regulations, there was undisputed testimony that it was
reasonable for the Policy Council to request this
additional information. Moreover, the Policy Council's
request was clearly related to its responsibility under
the Head Start regulations for approving requests for
federal funds. The additional information would enable
the Policy Council to determine such things as whether
funds were being spent in accordance with the budget or
were available for additional program activities. EDA's
failure to provide the requested information was part of
a pattern which showed that EDA disregarded the Policy
Council's partnership role in the management of the Head
Start program.
EDA attendance and uninvited participation at Policy
Council meetings
Policy Council's Allegation: The Policy Council alleged
that Policy Council members felt intimidated or
threatened by the attendance of EDA Board members, EDA's
Executive Director and her administrative assistant, and
the EDA bookkeeper at Policy Council meetings.
Appellant's Ex. 2, 1st page; Respondent's Ex. 3, 27th
page.
What the Record Shows: EDA Executive Director Alice
Rufus attended most Policy Council meetings beginning in
the 1993-94 program year. Tr. at 300, 2611. Rufus
testified that she began attending the meetings after
ascertaining that Head Start Director Lillie Turner had
not been passing on to the Policy Council copies of the
financial reports which Rufus had given her. Tr. at
2611-2612. After EDA suspended Turner on February 15,
1994, the meetings were also attended on occasion by
Rufus' administrative assistant, EDA's bookkeeper, and
several EDA Board members (primarily Rose Jones and
Aretha Dodson, but also Board Chairman Richard Young,
Julius Dodson, Willie Mae Hood and Donnell Scott). Tr.
at 300-301, 807, 1170-1171, and 2786. (The Head Start
Director also generally attended Policy Council meetings.
Tr. at 300. In addition, the Head Start Parent
Involvement and Social Services Coordinator was generally
in and out of the Policy Council meetings, running
errands for the parents. Id. Members of the Head Start
teaching staff also attended some Policy Council
meetings. Tr. at 1170-1171. However, the Policy Council
did not allege that it objected to the attendance of
these individuals.)
The Policy Council bylaws as revised 8/94 state that
"[i]n accordance with Appendix B of the Performance
Standards, grantee staff members may attend Policy
Council meetings only upon request of the Council."
Respondent's Ex. 87, at Article V, Section 4 (emphasis in
original). Appendix B states that "[s]taff members [of
the grantee] may attend the meetings of councils . . . in
a consultative non-voting capacity upon request of the
council . . . ." 45 C.F.R. Part 1304, Appendix B, Part
B, Special Notes, Paragraph 4. ACF clarified that staff
may request time on the agenda of a policy council
meeting if necessary. Respondent's Ex. 10, ACYF-IM-87-
33, Parent Involvement Policy Interpretations, at 6.
There is no evidence that any of the individuals in
question, with the exception of EDA Board member Rose
Jones, were ever invited to the Policy Council meetings
or that any of these individuals ever requested
permission to attend the meetings. (Jones, who was the
alternate to the EDA Board representative to the Policy
Council during the 1993-94 program year, testified that
she received notice of the Policy Council meetings held
that year, as well as notice of the first meeting during
the 1994-95 program year. Tr. at 2155. The record does
not show whether Julius Dodson, the regular EDA Board
representative to the Policy Council during the 1993-94
program year, received notice of the Policy Council
meetings.)
There is no evidence that the Policy Council ever advised
EDA before the vote not to approve the refunding
application that it objected to the presence of EDA Board
members and staff at the Policy Council meetings. Policy
Council Chairperson Bonnie Yoakum testified that since
the public had a right to attend the Policy Council
meetings, the Policy Council "never said the public was
unwelcome in our meetings." Tr. at 300, 304. Rufus
testified that there was a point at which she was told by
Policy Council members that they did not want her at
Policy Council meetings. Tr. at 2703. However, it is
not clear when this occurred.
Yoakum testified that the presence of the individuals in
question made other Policy Council members uncomfortable
(although she testified that she herself did not have a
problem with EDA Board members being present since she
knew them from EDA Board meetings). Tr. at 300, 302-303.
Mary Abshure, the Head Start Parent Involvement and
Social Services Coordinator, testified that the presence
of these individuals had a "chilling effect on how the
parents conducted themselves" in the Policy Council
meetings. Tr. at 1171, 1212, 1221-1223.
Abshure testified that she did not see anyone "physically
or verbally taking over or dominating" the meetings. Tr.
at 1221. Yoakum testified that the EDA Board members and
employees who attended the meetings did not normally make
comments during the course of the meetings. Tr. at 303.
However, Yoakum stated that on one or two occasions, EDA
Board members made comments that were disturbing to the
Policy Council. Tr. at 303-304. Moreover, according to
Policy Council member Rose Williams, EDA Board members
Rose Jones and Aretha Dodson interrupted and tried to
take over Policy Council meetings, belittling parents in
the process. Tr. at 821, 824; Respondent's Ex. 3, 18th
page. Policy Council member Steven Lilly testified that
EDA Board members sometimes said demeaning things about
Policy Council members at the Policy Council meetings and
laughed down their suggestions or shot down their ideas.
Tr. at 691.
Our Findings: The EDA Executive Director and some EDA
Board members and staff attended Policy Council meetings
without being invited by the Policy Council. The
presence of these individuals inhibited the conduct of
Policy Council business, even when these individuals did
not actively participate in Policy Council meetings. In
addition, the EDA Board members sometimes interfered in
the conduct of the meetings, making comments which were
critical of the Policy Council.
The Policy Council reasonably relied on the attendance of
these individuals at Policy Council meetings as a factor
in deciding not to approve EDA's refunding application.
In order to be able to share the responsibility for
decision-making in the Head Start program with the
grantee, a policy council needs to be able to discuss
freely matters before it. The Head Start regulations
recognize that this discussion may be inhibited by the
presence of the Head Start director and professional
staff, stating that they--
must take care to avoid dominating meetings by force
of their greater training and experience in the
process of decisionmaking. At these meetings,
professionals may be tempted to do most of the
talking. They must learn to ask parents for their
ideas, and listen with attention, patience and
understanding. Self-confidence and self-respect are
powerful motivating forces. Activities which bring
out these qualities in parents can prove invaluable
in improving family life of young children from low
income homes.
45 C.F.R. Part 1304, Appendix B, Part B, Section 1.c.(3).
Accordingly, the Head Start regulations specifically
prohibit grantee staff members from attending policy
council meetings without being invited. The rationale
for the prohibition clearly applies to the grantee's
board members and executive director as well. (The
prohibition may not specifically refer to them because
ACF may not have contemplated that they would ever have a
legitimate reason to attend a policy council meeting.)
To the extent that they had legitimate reasons for
attending Policy Council meetings, they could have
requested time on the agenda to ensure that their
concerns were addressed, instead of simply showing up at
the meetings. In addition, the EDA Board could have
invited the Policy Council to attend a Board meeting if
it had matters to discuss with the Policy Council (as the
Board in fact did on more than one occasion).
The fact that the Policy Council never notified any of
the individuals in question, with the exception of the
Executive Director, that it objected to their attending
the Policy Council meetings cannot reasonably be taken to
mean that the Policy Council did not in fact object. The
Policy Council may have been too intimidated by the
presence of these individuals to even raise an objection.
Moreover, it appears from Yoakum's testimony that the
Policy Council may not have clearly understood that these
individuals were entitled to attend the Policy Council
meetings only upon invitation.
Finally, even assuming that the Policy Council meetings
were open to the public under the Arkansas Freedom of
Information Act (as EDA alleged), all of the individuals
in question were properly excluded since EDA agreed to be
bound by the rules of the Head Start program in accepting
federal funds.
Belittling remarks made to Policy Council members 9/
Policy Council's Allegation:
The Policy Council alleged that "disrespectful treatment"
of the parents and Policy Council members by EDA occurred
on an on-going basis. Appellant's Ex. 2, 1st page;
Respondent's Ex. 3, 26th page.
What the Record Shows: In written explanations of the
reasons for their decision not to approve the refunding
application, the majority of Policy Council members said
that the EDA Board treated them disrespectfully. See
Respondent's Ex. 3. In addition, two EDA witnesses,
Policy Council members Pamela LaHew and Marie Jackson,
testified that some Policy Council members felt that they
had been talked down to by EDA Board members and EDA
staff. Tr. at 2309, 2492. Policy Council member Steven
Lilly testified that he was present at some Policy
Council meetings where EDA Board member Rose Jones
disparaged "other people" by putting them down and
talking back to them. Tr. at 752. Policy Council member
Rose Williams testified that EDA Board Chairman Richard
Young had said in front of a teacher that Williams "was
confused and did not know what the `hell' [she] was
talking about." Tr. at 870; Respondent's Ex. 3, 17th
page. Williams also said that EDA Board member Willie
Mae Hood said that parents are ignorant, and put them
down in front of teachers, parents, and citizens. Id.
In addition, Williams said that EDA Board member Aretha
Dodson belittled the parents. Tr. at 870. Williams
further testified that she had been treated
discourteously by the EDA Executive Director's staff.
Tr. at 852-853.
EDA Executive Director Alice Rufus denied that she
treated any Policy Council members disrespectfully. Tr.
at 2795. Several witnesses also testified that Rufus
never treated them disrespectfully. Tr. 654, 853, 2101,
2493, 2499. The evidence concerning disrespectful
treatment by EDA was not otherwise directly rebutted.
Our Findings: On numerous occasions, several EDA Board
members treated Policy Council members in a manner that
the Policy Council members considered disrespectful. The
remark attributed by Williams to Young is clearly
disrespectful and shows that the Policy Council members'
perception of how they were treated was justified. (On
the other hand, there is insufficient evidence to find
that EDA Executive Director or EDA staff treated any
Policy Council members disrespectfully.)
The Policy Council reasonably relied on its belief that
its members were treated disrespectfully by the EDA Board
as a factor in deciding not to approve EDA's refunding
application. In enacting the 1994 amendments to the Head
Start Act, Congress specifically stated that "parent
involvement must be encouraged, desired, and respected by
the program." S. Rep. No. 251, 103rd Cong., 2nd Sess. 26
(1994) (quoted more extensively earlier). In order to
respect "parent involvement," the grantee must clearly
treat the parents themselves with respect. Moreover, the
Head Start regulations stress the need to enhance
parents' "self-confidence" and "self-respect," stating
that grantee staff must therefore "learn to ask parents
for their ideas, and listen with attention, patience and
understanding." 45 C.F.R. Part 1304, Appendix B, section
B. The EDA Board cannot be faulted for occasional
failures to live up to this standard. However, it is
clear in this case that these failures occurred
repeatedly and that they were not attributable to
personality conflicts between particular individuals.
The making of disparaging remarks directly to the Policy
Council members was obviously an impediment to a good
working relationship between the EDA Board and the Policy
Council. Moreover, far from enhancing the parents' self-
confidence in acting as advocates for their children, as
Congress and ACF both intended, this treatment led the
parents to be intimidated by the mere presence of EDA
Board members at the Policy Council meetings. Thus, the
behavior of EDA Board members described above was part of
a pattern which reflected EDA's disregard for the Policy
Council's partnership role in the management of the Head
Start program.
Lack of EDA Board interest in and attendance at training
Policy Council's Allegation: The Policy Council alleged
that the EDA Board members failed to attend training
sessions. Appellant's Ex. 2, 2nd page. See also,
Respondent's Ex. 3, 27th page.
What the Record Shows: During the 1993-94 program year,
there were seven training sessions at EDA which addressed
topics such as roles and responsibilities of the EDA
Board and Policy Council, teamwork, communication, and
conflict resolution. (Additional training was provided
through April 1995; however, we need not discuss this
training, which was provided after the Policy Council
voted not to approve the refunding application, since
there is ample other evidence of the EDA Board's lack of
interest in training.) With the exception of the first
training session, which was provided by a private
consultant at the request of EDA's Head Start Director,
the training sessions were conducted by Basic Health
Management (BHM), an organization under contract to ACF
to provide technical assistance to Head Start grantees in
several states including Arkansas. Respondent's Ex. 69;
Tr. at 890, 1024. ACF requested BHM to provide technical
assistance to address the findings of the report on ACF's
on-site review in May 1994. Respondent's Ex. 68, 1st
page. The report found, in pertinent part, that "[t]he
Grantee Board and the Policy Council needs [sic] training
together. The training should be provided early in the
school year. The trainings should include:
communication skills, group dynamics, budgeting process,
developing Policy Council by-laws, conflict resolution,
partnership building, and other trainings." Respondent's
Ex. 95, Executive Summary, page 19.
Most of the training in question was intended to be
provided to both the Board and the Policy Council
(although in some cases, the trainers planned to meet
separately with the Board first). Tr. at 939, 1056.
Board attendance at all of the training sessions was
either limited or non-existent and was much lower than
the trainers had expected. Tr. at 1045, 1050. (The
trainers expected all or almost all of the Board members
to attend the training on October 7-8, 1994. Tr. at 923,
1045.) Phyllis Hammonds, who provided some of the
training, testified that the training was not successful
due to the lack of Board participation. Tr. at 1056.
There is no evidence that the trainers were dissatisfied
with the extent of participation by Policy Council
members.
There were 11 or 12 Board members during the period in
question, five of whom were appointed to the Board in
November 1993. Respondent's Ex. 17; Tr. at 1804, 1822,
1828, 1830. One Board member attended part of a November
20, 1993 training session on the Head Start parent
involvement regulations ("70.2"). Respondent's Hearing
Ex. 3, 2nd page. No Board members attended a June 3,
1994 training session on the development of EDA's
technical assistance action plan for addressing the
findings in the on-site review conducted in May 1994
(which included deficiencies in the parent involvement
component). Respondent's Ex. 69, p. 2; Tr. at 1030. One
Board member attended a July 17-18, 1994 training session
on the development of a program improvement plan for the
Administration and Parent Involvement components and the
open exchange of information among staff and between the
Board and Policy Council. Respondent's Ex. 72, 6th page.
One Board member attended an August 12-13, 1994 training
session on the budget development and approval process,
and Board and Policy Council roles and responsibilities.
Tr. at 1106-1107. (This training is incorrectly shown in
Respondent's Exhibits 68 and 69 as a July 12-13 session.
Tr. at 901.) Most of the Board members attended the
first day of a September 30-October 1, 1994 training
session on team-building and communication for Board
members and Policy Council members, but only three
attended the second day. Tr. at 1060. Four Board
members attended an October 7-8, 1994 training session.
Respondent's Ex. 77, 2nd page; Respondent's Ex. 78, 1st
page. The October 7 session, for Board members only,
focused on the Board and its relationship to Head Start.
Tr. at 920, 1045. The October 8 session was a joint
session focusing on 70.2 for the EDA Board, Policy
Council and staff members. Tr. at 921. No Board members
attended an October 11, 1994 training session on defining
Board and Policy Council duties and responsibilities, the
design of an organization chart, and development of a
detailed line item financial report. Respondent's Ex.
69, p. 5; Tr. at 935.
Prior to the September 30-October 1, 1994 training and
the October 7-8 training, EDA Board President Richard
Young sent a memorandum to all Board members stating that
it was "important" for them to attend. Respondent's
Hearing Ex. 5. In addition, Young testified that he
found the November 1993 training on 70.2 to be useful and
that he thought 70.2 training would be very important for
any new EDA Board member. Tr. at 1788, 1832.
EDA Executive Director Alice Rufus testified that the EDA
Board members attended the training sessions that were
provided specifically for the Board. Tr. at 2796. Rufus
also testified that the EDA Board members may not have
attended the 70.2 training because they disliked
Hammonds. Id. Rufus further testified that it is hard
to get board members of grassroots organizations to
attend meetings because most of them work. Tr. at 2797.
The record shows that the EDA Board sometimes had
difficulty getting a quorum for its regular monthly
meetings. Tr. at 95, 904; Appellant's Ex. 42. EDA Board
member Rose Jones testified that she attended as many of
the trainings as she possibly could, given her schedule.
Tr. at 2219. However, Hammonds testified that Jones told
her on September 30, 1994 that Jones did not feel it was
necessary for her to attend 70.2 training because all she
had to do was read 70.2 herself. Tr. at 1074. Moreover,
a similar statement was made by Jones and Board member
Aretha Dodson at an EDA Board meeting in March 1994. Tr.
at 75; Respondent's Ex. 3, 18th page, 25th page.
Our Findings: There were seven training sessions held
during the 1993-94 program year which related to the
roles and responsibilities of the EDA Board and Policy
Council (including how to improve the interactions
between the two groups). Most of the training was
designed as joint training for both Board and Policy
Council members. The EDA Board President believed that
this training would have been useful to the EDA Board in
understanding the Head Start regulations on parent
involvement. However, only two of these training
sessions were attended by more than one EDA Board member,
and two were not attended by any Board members.
The Policy Council reasonably relied on the EDA Board's
poor attendance at these training sessions as a factor in
deciding not to approve EDA's refunding application.
Since the purpose of the training sessions was to try to
give the EDA Board and the Policy Council the skills
needed to work together effectively, the Policy Council
reasonably attributed the Board's poor attendance to its
disregard for the Policy Council's partnership role in
the management of the Head Start program. The poor
attendance is not adequately explained by the fact that
Board members had other commitments. In view of the
findings in the on-site review report that joint training
was needed to address the deficiencies in the parent
involvement component, the Board members could reasonably
have been expected to make an extra effort to attend the
training sessions. Even if other programs also required
the EDA Board's attention, the Board should arguably have
given priority to the Head Start program in view of the
program's unique requirement for shared decisionmaking.
Nor is it likely that the poor attendance was due to the
Board members' alleged dislike for one of the trainers
since a number of the training sessions were conducted by
other individuals. Instead, as the statements by Board
members Jones and Dodson to the effect that they could
read 70.2 on their own seem to indicate, the Board
members simply did not place a high premium on developing
a partnership relationship with the Policy Council.
Pressure placed on Policy Council members to support
refunding in late November 1994 10/
Policy Council's Allegation: The Policy Council alleged
that Policy Council member Farris McClain was harassed
and pressured by an EDA Board member as well as by an EDA
staff member to sign a petition in support of the
refunding application in the last few days of November
1994. Respondent's Ex. 3, 21st - 23rd pages. 11/
What the Record Shows: Farris McClain was a member of
the 1993-1994 Policy Council and represented the parents
at the Carlisle Center. He voted on August 30, 1994 and
October 13, 1994 not to approve the application for
refunding, an action to which many of the Carlisle
parents objected. Respondent's Ex. 1 and 2; Tr. at 1675.
According to McClain, EDA bookkeeper Talecia Hodge (who
was also the daughter of EDA's Executive Director) went
to his home late one evening at the end of November and
three times the next day to get him to sign a petition
approving the refunding application. Respondent's Ex. 3,
21st - 22nd pages; Tr. at 763, 791. (Although McClain
did not identify the precise dates in question, it
appears from the testimony discussed below that Hodge's
first visit was on November 28.) Hodge was accompanied
on one visit by Lucretia Hale, the alternate Carlisle
representative to the Policy Council, and on the
subsequent visit by several Carlisle parents. Id. On
November 29, Hodge first visited McClain's home early in
the morning and woke him and his family up. Respondent's
Ex. 3, 21st page; Tr. at 763. McClain did not answer the
door. Respondent's Ex. 3, 21st page. On each of Hodge's
other visits, McClain indicated that he would not sign
the petition, sometimes stating that he needed more time
to think about it or engaging in a discussion about it.
Respondent's Ex. 3, 21st page; Tr. at 763-764. Hodge
also came to see McClain about the petition twice later
that day when he was at work at the police station (where
he was a dispatcher/jailer). Respondent's Ex. 3, 22nd
page.
Hale testified that, when she accompanied Hodge to
McClain's home, McClain invited Hodge to come back with
the rest of the Carlisle parents. Tr. at 2402. However,
according to McClain's written statement, he simply said
that he had not had an opportunity to talk to the
Carlisle parents, after which Hodge said she was coming
back with the parents. Respondent's Ex. 3, 21st page.
Marie Jackson, a Carlisle parent (as well as an EDA
employee) who returned with Hodge, testified that McClain
told her in response to her inquiry that he did not feel
that he was being harassed. Tr. at 2314. It is not
clear from the record precisely what Jackson asked him,
however. McClain's written statement indicates that he
was harassed and pressured by "EDA and Talecia [Hodge]."
Respondent's Ex. 3, 21st page. McClain also testified
that he was harassed by Hodge to sign the petition. Tr.
at 763. He further testified that she did not really
frighten him and would not make him change his mind about
anything. Tr. at 791.
Also on November 29, EDA Board member Rose Jones went to
the police station and spoke privately with the police
chief, Floyd Van Horn. Respondent's Ex. 3, 22nd page;
Tr. at 3271. Van Horn testified that Jones asked him
what his relationship with McClain was, whether he was
aware of McClain's role on the Policy Council, and
whether he knew that McClain would not sign the
application for refunding. Tr. at 3271-3273. According
to Van Horn, he tried at that point to warn Jones that it
was inappropriate for her to try to use her position as a
member of the Lonoke City Council (which Van Horn
considered his employer) to get him to influence
McClain's decision. Tr. at 3273. Van Horn further
testified that Jones asked him if he was considering
McClain for a position as a police officer, and said that
she thought McClain was incapable of making good
decisions and that if she had anything to do with it,
McClain would not be hired as a police officer. Tr. at
3273-3274. Van Horn also testified that Jones did not
ask him directly to ask McClain to change his vote,
although she did threaten McClain's future in the police
department. Tr. at 3281-3282, 3286, 3290. In addition,
Van Horn testified that he did not remember Jones
discussing anything in addition to McClain with him on
the night in question. Tr. at 3290-3293.
According to McClain, Van Horn emerged from his office
after the meeting with Jones looking "dismayed" and
"upset." Respondent's Ex. 3, 22nd page; Tr. at 765.
McClain also stated that he then told Van Horn something
to the effect that people had been "on him" about the
petition, after which Van Horn related the substance of
his conversation with Jones. Id. at 22nd and 23rd pages;
Tr. at 765. However, Van Horn testified that he merely
assured McClain that his position as a dispatcher/jailer
was secure, despite any rumors to the contrary. Tr. at
3275, 3277.
Jones denied that she had talked to Van Horn, either
directly or indirectly, about McClain and/or his vote on
the refunding application. Tr. at 2214. She testified
that she went to see Van Horn because her home had been
broken into twice. Tr. at 2211. Van Horn testified that
during that time period Jones' house had been broken
into. Tr. at 3291.
Our Findings: EDA bookkeeper Talecia Hodge and EDA Board
member Rose Jones put undue pressure on Policy Council
member Farris McClain to sign a petition approving the
refunding application before the grant expired on
November 30, 1994. Hodge harassed McClain by making
repeated visits to his home and workplace. Although
McClain did not tell Hodge that he objected to her
visits, his statement to the police chief that people had
been "on him" about the petition indicated that he was
not comfortable with the visits. In telling Jackson that
he did not feel that he was being harassed, McClain may
have meant that he did not feel that Jackson was
harassing him, not that Hodge was not harassing him.
Moreover, even though McClain stated that he did not feel
intimidated by Hodge, the circumstances clearly show that
her repeated visits made him very uncomfortable.
Jones sought to have McClain's employer, Police Chief
Floyd Van Horn, influence McClain to sign the petition
approving the application for refunding. She also
threatened to stand in the way of any promotion for
McClain. Her statement to Van Horn made clear that this
was her intent, even if she did not say so explicitly.
Although Jones denied that she had talked to Van Horn
about McClain, Van Horn was the more credible witness
since he had no stake in the outcome of this proceeding.
While Jones did not pressure McClain directly, she
pressured him indirectly, since McClain realized the
nature of Jones' visit to Van Horn (even if Van Horn did
not relate the substance of their conversation to McClain
at the time).
The Policy Council reasonably relied on the pressure
placed on McClain to sign the petition approving the
refunding application as a factor in deciding not to
change its earlier decision not to approve EDA's
refunding application. The fact that Hodge and Jones
resorted to harassment and coercion to try to get the
Policy Council to change its decision was part of a
pattern which indicated that EDA disregarded the Policy
Council's partnership role in the management of the Head
Start program.
In summary, we find that, based on all of the items
discussed in this section, the Policy Council could
reasonably have discerned a pattern of behavior on the
part of EDA which showed that it disregarded the Policy
Council's partnership role in the management of the Head
Start program. We therefore conclude that the Policy
Council's decision not to approve the refunding
application was not arbitrary or capricious.
B. Neither the Policy Council's decision not to approve
EDA's application for refunding nor ACF's proposed
denial of refunding constituted an illegal act of
discrimination based on race.
EDA argued that the Policy Council's decision not to
approve EDA's application for refunding constituted an
act of discrimination based on race and was therefore
illegal. As noted previously, the members of EDA's Board
of Directors as well as its Executive Director are black,
and EDA views itself as a black-run organization,
although it provides services to all eligible
individuals. The overall population of Lonoke County, in
which EDA is located, is between 12 and 27% black. Tr.
at 2931-2932. EDA's argument derives in large part from
these facts and the fact that the 1993-94 Policy Council
Chairperson, Bonnie Yoakum, was white. EDA argued
essentially that Yoakum and other white Policy Council
members conspired with the "white establishment" of
Lonoke County, and with blacks who were subservient to
the wishes of those whites, to wrest the Head Start
program from EDA, with the ultimate goal of destroying
EDA as an organization. 12/
It is certainly possible that racial tensions existed in
the Lonoke community during the time in question here.
As the only major black-run organization in Lonoke, which
was highly successful, EDA might have been anxious about
perceived threats to its existence due to its singular
status. However, the record does not support the
argument that the Policy Council's decision not to
approve EDA's refunding application arose from any
invidious discriminatory conspiracy or actions.
EDA Executive Director Alice Rufus asserted that race was
a factor in the Policy Council's decision simply because
she and the EDA Board members are black and because the
allegations against EDA were made by a white individual
(presumably Yoakum). Tr. at 2916. However, this
speculative inference is rebutted by the fact that three
of the Policy Council members who voted against refunding
on August 30, 1994, and three of the Policy Council
members who voted against refunding on October 13, 1994,
were black. Supplemental Br. of the Appellant at 7;
Respondent's Post-Hearing Br. at 74; Tr. at 342. See
also Respondent's Ex. 1 and 2. 13/ In addition, the Head
Start Director, whose alleged termination was identified
by the Policy Council as a major basis for its decision
not to approve the refunding application, is black. 14/
There is also no persuasive evidence that any of the
black Policy Council members who voted not to approve the
refunding application were swayed by the influence of
white Policy Council members or white members of the
community. The only evidence adduced by EDA was that
Policy Council member Farris McClain had worked for the
white husband of Sharon Rudder, a teacher at the Lonoke
Center who was ultimately hired as Center Director. Tr.
at 788-789. However, there is no basis for concluding
that McClain's vote was somehow influenced by this remote
connection. Contrary to EDA's characterization of
McClain, the record shows (as discussed previously) that
McClain, in the face of considerable pressure to change
his opposition to refunding, had the fortitude to resist.
15/
Moreover, McClain specifically testified that he did not
believe that he or any of the Policy Council members were
motivated by racial bias or influenced by someone who may
have had some racial bias against the EDA Board. Tr. at
776. In addition, Policy Council Chairperson Bonnie
Yoakum and Steven Lilly, another white Policy Council
member, both testified that neither they nor (in their
view) other members of the Policy Council were motivated
by racial bias. Tr. at 362, 364-365, 697. Angela
Berryman, who was a black Policy Council alternate in the
1993-94 program year and Policy Council representative
the subsequent year, testified that she did not believe
that race was a factor in the Policy Council's decision
not to approve the refunding application. Tr. at 2675.
Furthermore, three of the consultants who provided
training to EDA, including a black consultant, testified
that they had not observed any racial bias on the part of
the Policy Council toward the EDA Board. Tr. at 941,
1061, 1080, 1130. 16/
Nevertheless, both Rufus and EDA Board member Rose Jones
identified several actions which they asserted showed
that a white conspiracy against EDA existed. The actions
included: the arrest of all of the EDA Board members
except Yoakum based on an allegation that the Board had
met without notifying the local newspaper reporter (in
violation of the Arkansas Freedom of Information Act
(FOIA)); that a number of whites from the community sent
EDA similar requests for information under FOIA; and the
appearance of a group of whites from the community at two
specially called EDA meetings at the end of August 1994.
Tr. at 2277-2278, 2282-2283, 2749. See also Appellant's
Ex. 48, 51, and 58. EDA also alleged in its briefing
that the local news media and courts had a racial bias
against EDA, claiming that there was unfavorable coverage
of EDA by the Lonoke Democrat and that there was
gratuitous criticism of EDA in a county court decision
finding that the EDA Board violated FOIA in terminating
the Head Start Director. See Supplemental Br. of the
Appellant at 10-12; Appellant's Post-Hearing Br. at 44.
However, even assuming that these actions were motivated
by racial bias (a question which we do not need to
reach), EDA failed to show any connection between these
actions and the Policy Council's decision not to approve
EDA's refunding application.
EDA also argued that ACF's proposed decision to deny
refunding was racially motivated. In support of this
argument, Rufus pointed to the fact that, in the past 15
years, two minority-run programs have been defunded by
the Region VI office of ACF. Tr. at 3213; Appellant's
Hearing Ex. 7. (A third minority program was voluntarily
relinquished after an impasse between the grantee and the
Policy Council developed. Appellant's Hearing Ex. 7.)
However, Region VI currently administers 177 Head Start
programs, a large number of which are predominantly black
organizations. Respondent's Post-Hearing Br. at 43, n.
50; Tr. at 890, 954. Viewed in that context, the
defunding of these two organizations does not demonstrate
racial bias. Rufus took the position that racial bias
could also be inferred because ACF Assistant Regional
Commissioner Beverly Turnbo, who is white, was
responsible for making the recommendation that ACF
propose the denial of refunding to EDA. Tr. at 2916.
However, we find nothing in Turnbo's extensive testimony
which is indicative of any racial bias on her part. 17/
Finally, we note that EDA Board President Richard Young
did not know that it was EDA's position that ACF's
proposed denial of refunding was based on racial bias.
Tr. at 1775.
We therefore find that the Policy Council's decision not
to approve EDA's refunding application was motivated by
the factors it stated, not by racial bias. We also find
that there is no evidence whatsoever that ACF's proposed
decision to deny refunding were motivated by racial bias.
Accordingly, we conclude that ACF did not err in
determining that the Policy Council's decision was not
arbitrary, capricious, or illegal.
C. The Policy Council's decision not to approve EDA's
application for refunding was not invalid simply
because many of the parents may have disagreed with
this decision.
EDA asserted that the Policy Council's decision not to
approve EDA's application for refunding was contrary to
the wishes of the parents of children enrolled in the
Head Start program. EDA argued that the Policy Council's
decision was therefore arbitrary and capricious.
This issue is among the most troubling of those raised by
EDA. If, after being informed of the Policy Council's
and EDA's positions in this dispute, the Head Start
parents collectively disagreed with the Policy Council
and communicated their wishes to the Policy Council, this
arguably would be compelling evidence that the Policy
Council's decision was arbitrary and capricious. As we
explain in detail below, however, we find this argument
of EDA unpersuasive for the following reasons: (1) the
parents who supported EDA were not clearly informed about
the bases for the Policy Council's decision; (2) it is
unclear whether the parents' support for EDA was
influenced by other considerations, such as a
misunderstanding of the consequences of a denial of
refunding; (3) Head Start commands a role for the Policy
Council that has considerable presumptive validity, such
that a decision of the Policy Council should not be
overridden merely because some parents disagree with the
decision; and (4) notwithstanding the Policy Council's
vote, the parents re-elected many of the same Policy
Council members, who did not thereafter change their
vote.
As evidence that the parents favored approval of the
refunding application, EDA submitted petitions "in favor
of EDA keeping the program," signed by 91 parents on
November 15, 1994. Appellant's Ex. 45. 18/ EDA also
submitted a petition signed on November 29, 1994 by what
appear to be the parents of all the children in the
Carlisle Center (except Farris McClain) which stated in
part, "We the parents of the Carlisle Head Start Center
want EDA to keep the head start program and our
representatives will not vote the way we want. . . ."
Appellant's Ex. 48. In addition, EDA submitted the
results of a telephone poll of the Head Start parents
conducted by EDA staff in the summer of 1995 in which the
parents were asked whether they supported the approval of
the refunding application. Appellant's Ex. 46; Tr. at
3224-3225, 3233. Of the 98 parents who were contacted,
78 (or 80%) were for approval of the refunding
application. The votes of the parents were reported by
name. Id. 19/ 20/
While this evidence on its face indicates that the
overwhelming majority of parents supported refunding EDA,
ACF raised questions about "the objectiveness of the
processes used to collect the opinions and the degree of
factual knowledge of the parents." Respondent's Post-
Hearing Br. at 78. ACF suggested that many parents may
have signed the November 15, 1996 petitions because they
believed that there would be no Head Start program in
Lonoke County if EDA were not refunded. Id. 21/ Indeed,
the record shows that a spokesperson for a U.S.
congresswoman suggested at a November 14, 1994 "town
meeting" that this might be the case, and that the
spokesperson's statement was reported on television.
Respondent's Ex. 91. 22/ Moreover, ACF noted that the
poll taken in the summer of 1995 was conducted by two EDA
employees rather than an objective third party. Id. at
79. Since the vast majority of parents responding to the
poll were not presented by EDA for cross-examination, the
results of the poll are not reliable. Of the seven
parents who testified for EDA, one was employed by EDA,
one had a spouse who was employed by EDA, and one
regularly received other assistance from EDA. Tr. at
2108, 2298, 2859. These individuals may therefore have
had an economic incentive to testify in EDA's favor.
Even if the parents' support for refunding EDA was not
influenced by other considerations, this does not mean
that the Policy Council's decision not to approve EDA's
application for refunding should be disregarded. The
Head Start regulations specify a "formal structure by
which parents can participate in policy making and
operation of the program . . . ." 45 C.F.R. Part 1304,
Appendix B, section B. A grantee (such as EDA) without a
delegate agency must have center committees composed of
the parents whose children are enrolled in each center
(which EDA had and which is not at issue here) and a
Policy Council composed of "at least 50% parents of Head
Start children presently enrolled in that grantee's
program . . . ." Id. at Chart A. All of the management
functions in the Head Start program are divided among the
grantee Board, the grantee's executive director, the
Policy Council, and the Head Start director. Id. at
Chart C. There is no provision for direct participation
in management by the parents. The Policy Council was
thus clearly intended to represent parents' interests.
Moreover, as ACF also pointed out, there is an "inherent
rationality" to the system outlined in the regulations.
Respondent's Post-Hearing Br. at 77. Policy Council
members devote more time and energy to the Head Start
program than the average parent. They receive special
training on the Head Start program in general and on 70.2
(the parent involvement regulations) in particular.
Furthermore, in carrying out their management
responsibilities, they are normally able to observe the
workings of the program more closely than the average
parent. Thus, the Policy Council members were in a
better position than other parents to assess whether EDA
was administering the Head Start program in accordance
with the requirements of the Head Start Act and
regulations.
ACF nevertheless acknowledged that the Policy Council's
decision not to approve the refunding application might
be invalid if there were evidence showing that the Policy
Council members who voted that way are no longer the
elected representatives of the parents, such as an
attempt to recall the Policy Council members or vote them
out. Tr. at 1411-1412. There was no such evidence here,
however. The Policy Council first voted not to approve
the refunding application on August 30, 1994, with all of
the eight Policy Council members who were present voting
that way. Respondent's Ex. 1. Between the August 30 and
the October 13, 1994 Policy Council meetings, the members
of the 1994-95 Policy Council were elected. Tr. at 324-
325; Appellant's Ex. 49, at 7-8, 10-12. Five individuals
who voted on August 30 not to approve the refunding
application were re-elected to the 1994-95 Policy
Council. Tr. at 325. (The remaining three individuals
were not eligible to serve on the Policy Council again.
Tr. at 325-326.) 23/ If the parents had wished the 1994-
95 Policy Council to reverse the decision of the 1993-94
Policy Council, they could have elected other
representatives who might have done so. Instead, the
1994-95 Policy Council did not even bring the matter to
another vote. Appellant's Ex. 47, lst page; Appellant's
Ex. 49, 2nd page.
Covella Jackson, a Carlisle parent (and Chairperson of
the 1995-96 Policy Council), testified that the Carlisle
parents had voted to unseat their Policy Council
representative, Farris McClain. Tr. at 1971.
Respondent's Ex. 1 and 2. The alleged vote to unseat
McClain occurred in late November 1994, after McClain had
voted twice not to approve the refunding application.
See Tr. at 1972, 2402; Respondent's Ex. 1 and 2.
However, Jackson also testified that McClain was not in
fact unseated because he was not present at the meeting
at which this action was taken. Tr. at 1971. Another
Carlisle parent, Lucretia Hale, testified that the
parents wanted to vote McClain out but thought they could
not do so because there were not enough parents present.
Tr. at 2402. In any event, there is no evidence in the
record that any actions were taken to unseat or recall
any of the other Policy Council representatives who voted
not to approve the refunding application.
We therefore conclude that the fact that the Policy
Council's decision not to approve EDA's application for
refunding may have been contrary to the wishes of many of
the parents did not render the Policy Council's decision
arbitrary or capricious and thus invalid.
D. ACF provided adequate assistance to EDA in
attempting to resolve the conflicts which led to the
Policy Council's decision not to approve EDA's
application for refunding, and is not responsible
for the parties' failure to resolve this case
through mediation.
EDA took the position that ACF did not give EDA adequate
assistance in resolving the conflicts which led to the
Policy Council's decision not to approve EDA's
application for refunding, and that ACF should therefore
be precluded from denying refunding. According to EDA,
the extensive training which ACF funded was intended
primarily to address the deficiencies identified in the
report of ACF's on-site review and not to assist EDA in
resolving conflicts with the Policy Council. EDA also
argued specifically that ACF did not assist it in
adopting an impasse procedure, despite the recommendation
of ACF and its technical assistance contractor that EDA
adopt such a procedure. In addition, EDA asserted that
ACF failed to comply with the requirement of the Head
Start Act Amendments of 1994 that ACF adopt procedures
for resolving conflicts between grantees and policy
councils. EDA suggested that if ACF had adopted such
procedures, the EDA Board and the Policy Council would
have been required to engage in a process which might
have led to approval of the refunding application. See,
generally, Supplemental Br. of the Appellant at 15-18;
Appellant's Post-Hearing Br. at 52-55; Tr. at 3187-3194.
It is unclear whether, even if EDA's allegations were
true, we should conclude that EDA's failure to obtain
Policy Council approval of its refunding application
should be excused somehow. We need not reach that issue,
however, since we conclude that ACF provided adequate
assistance to EDA. As indicated earlier in this
decision, during the 1993-94 program year, there were
seven training sessions at EDA which addressed topics
such as roles and responsibilities of the EDA Board and
Policy Council, teamwork, communication, and conflict
resolution. The fact that the on-site review was the
impetus for most of these training sessions does not mean
that the training did not provide information and skills
which EDA and the Policy Council could have used to
resolve their conflicts.
Moreover, both ACF and its trainers provided sample
conflict resolution procedures to EDA on numerous
occasions. ACF forwarded introductory material on
conflict resolution to EDA on February 25, 1994.
Appellant's Ex. 56. This material outlined a three step-
process for resolving conflicts: "the shared decision-
making process," "voluntary negotiation or mediation,"
and "mandatory (binding) negotiation arbitration." Id.
During its on-site review in May 1994, ACF provided more
detailed information on conflict resolution to EDA and
the Policy Council. Tr. at 275-276, 1233-1235. This
information included a rule for resolving potential
impasse situations proposed by ACF in 1980 (but never
finalized) which would have required binding arbitration
if an impasse were reached. See Respondent's Ex. 79 and
94. In addition, at an October 7-8, 1994 training
session, the trainers provided materials which were
virtually identical to those provided in May. Tr. at
924. Furthermore, in an October 21, 1994 letter to EDA's
Executive Director, ACF noted that it had previously
provided EDA with documents outlining a suggested
mediation process to be used in impasse situations.
Appellant's Ex. 24. The letter further stated, "[i]t is
suggested that you review that information and consider
using whatever portions you deem appropriate or develop a
similar policy for use in your program." Id. at 1.
In addition, in September 1994, the ACF Regional
Administrator met with members of the EDA Board, EDA's
Executive Director, the Head Start Director, the Policy
Council Chairperson and others to encourage the Board and
the Policy Council to resolve the situation which led to
the Policy Council's decision not to approve the
refunding application. Respondent's Ex. 32.
ACF thus clearly made a concerted effort over an extended
period of time to assist EDA in resolving its conflicts
with the Policy Council. Notwithstanding this effort,
the EDA Board never adopted a conflict resolution
procedure, although the minutes of a July 7, 1994 EDA
Board meeting indicate that the Board was aware that it
needed to adopt such a procedure. Respondent's Ex. 30.
EDA argued that ACF was also to blame for EDA's failure
to adopt such procedures because ACF failed to promulgate
regulations implementing the Head Start Act Amendments of
1994. We do not agree that the lack of regulations was a
factor here. The Head Start Act Amendments require in
pertinent part that --
the Secretary shall develop and publish procedures
(including mediation procedures) to be used in order
to--
(A) resolve in a timely manner conflicts
potentially leading to adverse action between--
(i) recipients of financial assistance under
this subchapter; and
(ii) delegate agencies or Head Start Parent
Policy Councils; and
(B) avoid the need for an administrative
hearing on an adverse action.
42 U.S.C. 9841(a)(4). This provision requires that ACF
develop and publish procedures which could be used by
grantees and policy councils to resolve conflicts.
Although ACF did not publish procedures in a formal
regulation, it did provide sample procedures to EDA, and
thus satisfied the intent of this provision.
Moreover, it is not necessarily the case that, had ACF
published conflict resolution procedures, the EDA Board
and the Policy Council would have been required to engage
in a process which might have led to a resolution of the
conflict. Although ACF's 1980 proposed rule would have
required a grantee and a policy council to submit to
binding arbitration where there is an impasse, the
provision quoted above does not require that ACF
promulgate a similar rule. 24/ If ACF had adopted solely
procedures for mediation, a voluntary process requiring
the consent of both parties, it is not clear that EDA
would have utilized them. Although ACF had suggested
mediation as a technique for conflict resolution, EDA did
not take action to obtain a mediator until November 1994
notwithstanding the Policy Council's apparent willingness
to agree to mediation early in 1994. Respondent's Ex.
46; Tr. at 588. Thus, EDA's argument that regulations
implementing the Head Start Act Amendments might have
changed the outcome in this case is highly speculative.
We therefore reject EDA's argument that ACF did not
provide adequate assistance in attempting to resolve the
conflicts which led to the Policy Council's decision not
to approving EDA's refunding application.
E. ACF reasonably determined that the 1995-96 Policy
Council's retroactive approval of the 1993-94
application for refunding does not moot this case.
On October 2, 1995, the 1995-96 EDA Head Start Policy
Council voted on "the refunding application." Petition
by Lonoke County Economic Development Agency Head Start
Policy Council to Intervene, dated October 10, 1995, Ex.
A, 2nd page (minutes of October 2, 1995 Policy Council
meeting). Five of the seven Policy Council members
present voted to approve the refunding application and
two abstained. Id. The 1995-96 Policy Council voted
again on October 9, 1995 to approve the refunding
application. Tr. at 1929. The 1995-96 Policy Council's
petition to intervene alleged that, in light of the
Policy Council's votes, it would be a violation of "70.2"
(the Head Start regulations on parent involvement) to
have the Board hearing continue. Petition at para. 7.
Counsel for this Policy Council (who also represented
EDA) indicated at the hearing that the petition, in
effect, constituted a request for summary judgment on the
ground that the Policy Council's votes mooted the basis
for ACF's proposed denial of refunding. Tr. at 1687,
1702. The Board later denied the request for summary
judgment on the ground that "it was predicated on matters
in dispute as to which the Board has yet to make a
determination (e.g., whether the Policy Council was
properly constituted)." Letter to parties dated October
24, 1995, at 2. Upon further consideration, we conclude
that, regardless of whether the Policy Council was
properly constituted or convened, the 1995-96 Policy
Council's votes to approve the refunding application did
not moot the basis for ACF's proposed denial of
refunding.
ACF took the position that the Head Start regulations at
45 C.F.R. Part 1304, Appendix B, Chart C, require that a
policy council approve a refunding application before it
is forwarded to ACF. In this case, ACF asserted, it
would have continued to fund EDA's program only if the
refunding application had been approved before December
1, 1994 (i.e., before the current grant expired) by the
policy council in existence at the time. Respondent's
Post-Hearing Br. at 86. ACF argued that the 1995-96
Policy Council, which was not even in existence prior to
the expiration of the grant in question, therefore could
not retroactively approve the application for refunding
for the 1994-95 program year. Id. 25/
We agree that ACF was entitled to require that an
approved refunding application be submitted by the end of
the current funding year so that Head Start services
could continue with a minimum of disruption if it were
necessary to get a new grantee. The mere happenstance
that administrative proceedings on ACF's proposed denial
of refunding were still pending two years later should
not entitle EDA to renewal of a grant which ACF
reasonably proposed to deny based on the circumstances
which existed when the refunding application was due.
ACF nevertheless clearly believed it had discretion to
accept the decision of a policy council to approve a
refunding application even if this decision was made
after the current grant expired. This is apparent from
the fact that ACF twice agreed to continue funding EDA's
Head Start program, first through December 31, 1994 and
then through January 31, 1995, in order to give EDA an
opportunity to resolve conflicts with the Policy Council
through mediation. See Respondent's Ex. 53 and 57. See
also Respondent's Ex. 64, at 1.
We conclude, however, that ACF did not abuse its
discretion in proceeding with this case notwithstanding
the 1995-96 Policy Council's approval of the refunding
application. This Policy Council was elected in
September 1995, more than two years after the 1993-94
Policy Council first voted not to approve the refunding
application. Tr. 1920, 2109. The record indicates that
the 1995-96 Policy Council was not fully cognizant of the
grounds on which this action was taken. Most of the
members of this Policy Council were newly elected. Tr.
at 2112. Barbara Dixon, one of the new members,
testified that she had no idea what the 1994-95 Head
Start Policy Council's complaints against the EDA Board
were. Tr. at 2090-2091. In addition, Dixon testified
that another Policy Council member, Rosie Lynch,
abstained from voting on October 2, saying that she had
not seen the refunding application and did not know what
was in it. Tr. at 2126. Covella Jackson, the 1995-96
Policy Council Chairperson, who was also a new member,
was able to identify at the hearing only three bases for
the decision of the 1993-94 Policy Council not to approve
the refunding application, and did not demonstrate
knowledge of any of the details involved. Tr. at 1941-
1943, 1959-1960. Moreover, the members of this Policy
Council had not received any training on either 70.2 or
the budget. Tr. at 1962, 2010, 2120. The 1995-96 Policy
Council thus was not equipped to evaluate whether, as the
1993-94 Policy Council found, EDA failed to recognize the
Policy Council's partnership role in the management of
the Head Start program under the Head Start Act and
implementing regulations.
ACF also questioned whether the 1995-96 Policy Council
was convened in accordance with the Policy Council bylaws
as revised 5/95. Respondent's Hearing Ex. 12. 26/ We
need not determine whether any of the alleged procedural
irregularities rendered the 1995-96 Policy Council
incompetent to conduct business, however, since there
were other grounds for finding that this Policy Council
could not retroactively approve the 1994-95 refunding
application. 27/
F. ACF gave EDA an opportunity to come into compliance
with the requirement for Policy Council approval of
an application for refunding, in accordance with the
procedures for a denial of refunding based on a
violation of a performance standard.
EDA asserted that it was entitled under 45 C.F.R.
1304.1-5 to notice of violation of the performance
standards and to a 90-day period to come into compliance.
EDA argued that the Board should find in EDA's favor
since these procedures were not followed here.
Appellant's Post-Hearing Br. at 23-24. We find no merit
in this argument.
The regulations in question provide that, if the
responsible HHS official is aware that a Head Start
program is not in compliance with performance standards,
"he shall notify the grantee promptly in writing of the
deficiencies and inform the grantee that it . . . has a
period stated in the notice not to exceed 90 days to come
into compliance." 45 C.F.R. 1304.1-5(b).
ACF advised EDA by letter dated September 14, 1994 that,
pursuant to 45 C.F.R. Part 1304, Appendix B, the
refunding application received by ACF on September 7,
1994 "cannot be considered as valid until policy council
approval has been obtained." Respondent's Ex. 34, 2nd
page. ACF also advised EDA by letter dated November 29,
1994, that, without Policy Council approval of EDA's
refunding application, ACF would be unable to continue
funding EDA after November 30, 1994. Respondent's Ex.
48. (The November 29 letter referred to letters dated
November 9 and November 28 which it said gave the same
advice.) ACF's letters did not specifically provide for
a period of time to come into compliance. Nevertheless,
since ACF did not issue the notice of intent to deny
refunding appealed from here until April 28, 1995, EDA
clearly had substantially more than 90 days in which to
attempt to persuade the Policy Council to reverse its
decision not to approve the refunding application. 28/
EDA also argued that it did not receive notice of the
specific reasons which ACF said supported the Policy
Council's decision until Respondent's Hearing Ex. 1 was
introduced at the hearing in September 1995. However,
EDA was advised of most of the Policy Council's reasons
for not approving the refunding application in a letter
from the Policy Council Chairperson dated August 30, 1994
and in a September 15, 1994 statement of the Policy
Council Chairperson. 29/ Respondent's Ex. 2 and 33. As
explained previously, we do not consider here any of the
reasons in Respondent's Hearing Exhibit 1 which were not
given to EDA by the Policy Council in support of its
decision. Thus, the lack of earlier notice of
Respondent's Hearing Exhibit 1 did not prejudice EDA.
EDA also argued that it would have requested one year to
obtain Policy Council approval of the refunding
application pursuant to 45 C.F.R. 1304.1-5(f)(4) had it
been given an opportunity to come into compliance.
However, that section allows HHS to extend the time for
compliance only if the grantee cannot come into
compliance within 90 days "because of lack of funds and
outside community resources. . . ." There is nothing in
the record which suggests that this was the reason for
EDA's failure to obtain Policy Council approval of its
refunding application.
In any event, the lack of Policy Council approval of a
refunding application also violates the terms and
conditions of the grant, and therefore provides a basis
for the denial of refunding under 45 C.F.R.
1303.14(b)(9). The regulations do not provide for an
opportunity to come into compliance where there is a
finding that the grant terms and conditions have been
violated.
VI. Conclusion
We conclude that the determination of the 1993-94 Policy
Council not to approve EDA's application for refunding
for the 1994-95 program year was not arbitrary,
capricious, or illegal. Accordingly, ACF may properly
deny refunding on the ground that EDA's failure to obtain
Policy Council approval constitutes a material failure to
meet the performance standards for operation of Head
Start programs, which is a basis for the denial of
refunding under the Head Start regulations. We further
conclude that EDA did not show that there is any valid
reason why ACF should be required to continue funding EDA
regardless of this material violation of the regulations.
_______________________
Donald F. Garrett
________________________
M. Terry Johnson
________________________
Norval D. (John) Settle
Presiding Board Member
1. EDA was, however, required to develop a Program
Improvement Plan to achieve compliance with the
deficiencies found by the on-site review. Appellant's
Ex. 44, 6th page.
2. The Policy Council representatives to the EDA
Board in the 1993-94 and 1994-95 program years were
white. In addition, there was a white member of the EDA
Board in a prior year. Tr. at 2933-2934.
3. In its last brief, ACF asserted that the proposed
denial of refunding was not based on the failure to meet
performance standards, but was "because [EDA] failed to
obtain Policy Council support for its refunding
application." Respondent's Post-Hearing Reply Br. at 1.
(This assertion was made in response to an argument by
EDA that ACF did not follow the procedures for the denial
of refunding based on a violation of the performance
standards. We address this matter at the end of this
decision.) However, in its pre-hearing brief, ACF
described Appendix B as part of the performance standards
on parent involvement, and noted that failure to meet
performance standards was one of the grounds on which a
refunding application may be denied. Respondent's Pre-
Hearing Br. at 3-4. Furthermore, elsewhere in its last
brief, ACF asserted that the denial of refunding was
justified "pursuant to 45 C.F.R. 1303.14(b)(4), (7) and
(9). . . ." Respondent's Post-Hearing Reply Br. at 19.
Section 1303.14(b)(4) involves a grantee's failure "to
meet the performance standards for operation of Head
Start programs . . . ." Moreover, guidance issued by the
Head Start Bureau specifically states that Appendix B of
45 C.F.R. Part 1304, in which the requirement for Policy
Council approval of an application for refunding appears,
is part of the performance standards. Respondent's Ex.
65 ("Parent Involvement Policy Questions Raised at Parent
Involvement Institute").
4. Yoakum also appears in the record as Bonnie Yoakum
Suttles. See Tr. at 236-237.
5. We consider separately whether the Policy
Council's decision constituted an act of discrimination
based on race and was therefore illegal. In addition, we
consider separately whether the fact that many of the
parents may have disagreed with the Policy Council's
decision rendered that decision arbitrary or capricious
and thus invalid.
6. For example, we are not persuaded that the Policy
Council reasonably relied on the ejection of Policy
Council Chairperson Bonnie Yoakum from the EDA Board
executive session on February 15, 1994. The EDA Board
had been prepared to allow Lucretia Hale, another Policy
Council member, to participate in the executive session,
but was unwilling to allow Yoakum to participate since
the Policy Council had clarified only minutes before the
executive session that Yoakum rather than Hale was to be
its representative to the EDA Board and Yoakum was
unknown to the Board. Another example is the hiring of
Talecia Hodge as EDA's bookkeeper without Policy Council
approval. Hodge was hired in August 1992. The Policy
Council did not object to her hiring for nearly two years
and did not complain about EDA's failure to obtain
approval to hire other Head Start staff, including the
Head Start Parent Involvement and Social Services
Coordinator. Still another example is the public remark
of EDA Board Chairperson Richard Young expressing lack of
agreement with all the tenets of 70.2 (the Head Start
parent involvement regulations), which is not very
meaningful since the context of his statement was not
given.
7. According to Alice Rufus, the EDA Executive
Director, she had been on the personnel committee "from
day one." Tr. at 3082. See also Tr. at 3076-3077. The
record shows that Rufus participated in a personnel
committee meeting on August 17, 1993. Appellant's Ex.
20A. However, the Policy Council bylaws as revised 8/94
clearly did not include the Executive Director on the
personnel committee.
8. However, the report of an October 7, 1994 training
session at EDA (which took place after the interviews)
states that an agreement was reached at that session that
the personnel committee would be composed of two members
of the Policy Council and two members of the Board.
Respondent's Ex. 77, 1st page. The meeting was attended
by four EDA Board members, the EDA Executive Director,
the Head Start Director, and the Policy Council
Chairperson. Id.
9. A related item in Appellant's Hearing Exhibit 1 is
"Disrespectful treatment of the Policy Council
Chairperson at EDA Board meetings." According to the
Policy Council Chairperson, Bonnie Yoakum, the rude
treatment consisted primarily of the tone of voice in
which she was spoken to. Tr. at 272. Yoakum explained
that "people can be overly friendly to you . . . and make
you as uncomfortable as being cold. But the tone things
came across as rude." Id. We are not persuaded that
this rises to the level of disrespectful treatment on the
part of the EDA Board members, however.
10. These events took place after the 1993-94 Policy
Council had voted twice not to approve the refunding
application and thus were not a basis for those votes.
However, as discussed later, ACF was willing to accept a
later decision by this Policy Council to approve the
refunding application. Thus, these events are relevant
because the Policy Council could reasonably have relied
on them in deciding not to change its earlier decision
not to approve EDA's refunding application.
11. ACF also alleged that other Policy Council
members were pressured to sign this petition. See
Respondent's Post-Hearing Br. at 55, 69. However, the
Policy Council did not refer to any additional instances
of such pressure in the explanations for its decision
submitted to ACF in February 1995.
12. It is not clear at what point EDA's theory to
this effect was formulated. One of the consultants who
provided training to EDA testified that EDA Executive
Director Alice Rufus told her (at some point in time
which the consultant did not identify) that race might be
a factor in the Policy Council's actions. Tr. at 953.
However, at a training session on October 1, 1994, when
EDA Board President Richard Young, Policy Council
Chairperson Bonnie Yoakum and Head Start Director Lillie
Turner listed the obstacles to a good working
relationship between EDA and the Policy Council, racial
bias was not listed as an obstacle. Respondent's Ex. 75,
at 2-3.
13. Lucretia Hale, one of the black Policy Council
members who voted on October 13, 1994 not to approve
EDA's refunding application, testified that she thought
at the time that she was voting on "70.2," not on the
refunding application. Tr. at 2396, 2398-2399, 2454-
2455. She further testified that she voted "no" because
Head Start Director Lillie Turner had told her to vote
that way. Tr. at 2399, 2460. However, Hale did not
specifically state that she would have voted differently
at that time if she had known what she was voting on.
14. Rufus alleged that four individuals on the 1993-
94 Policy Council--Ernest Beeson, Judith Tarver, Lisa
Davis, and Gayle Lesher--were not duly elected by the
parents but were placed on the Policy Council by Turner
and Head Start Parent Involvement and Social Services
Coordinator Mary Abshure. Tr. at 2614-2618, 2699-2700,
2712-2713. See also Appellant's Post-Hearing Br. at 17,
57. Rufus later claimed that even if there were minutes
which showed that these individuals were duly elected,
"it was with some trickery of Lillie Turner and Mary
Abshure." Tr. at 3017-3018. However, of the four
individuals in question, only Beeson was present on
either occasion when the Policy Council voted not to
approve EDA's application for refunding. See Appellant's
Ex. 1 and 2. Thus, even if these individuals had been
placed on the Policy Council as part of a conspiracy, it
did not affect the Policy Council's decision not to
approve the refunding application. Moreover, there is
nothing in the record which indicates that Turner or
Abshure engineered Beeson's election (or that of any of
the other individuals in question).
Rufus also questioned whether Beeson was eligible to
serve on the Policy Council since he was a paid
substitute for the Head Start program. Tr. at 2615-2616.
However, the record shows that until July 19, 1994,
Beeson was only a Policy Council alternate, and Rufus
stated that she had no knowledge that Beeson was a paid
substitute after that date. Tr. at 3020, 3023. Thus,
while there may have been a technical violation of ACF
policy (see Respondent's Ex. 10, ACYF-IM-87-33, dated
11/5/87, attached Parent Involvement Policy
Interpretations, at 5), it did not impinge in any way on
the Policy Council's decisionmaking.
15. The 1995-96 Policy Council Chairperson, Covella
Jackson, who, like McClain, was from Carlisle, testified
that she knew McClain and that "he can be manipulated."
Tr. at 1938, 1948. However, she did not provide any
factual basis for this assertion.
16. Linda Reasoner, one of the trainers, testified
that the Policy Council had complained to her about the
racial composition of the EDA Board. Tr. at 1006.
However, the fact that the Policy Council may have
desired to work with a board which was more
representative of the racial composition of the community
does not show that the Policy Council was racially biased
against the EDA Board as it was then constituted. The
record indicates that, at a training session on October
7, 1994 attended by four EDA Board members, the EDA
Executive Director, the Head Start Director, and the
Policy Council Chairperson, there was a discussion of
"the need to expand community representation on the Board
and to ensure a more racial and gender balance."
Respondent's Ex. 77, lst page. The next day, many of the
same individuals agreed that racial and gender diversity
should be one of the criteria in selecting community
representatives to the Policy Council. Respondent's Ex.
78, 2nd page.
17. EDA argued that it "really [did] not know the
basis" for ACF's decision because the official who signed
ACF's notice of intent to deny refunding, Regional
Administrator Leon McCowan, did not testify at the
hearing. Appellant's Post-Hearing Br. at 20. Prior to
the hearing, McCowan (who is black) was identified by
both parties as a possible witness. Supplemental Br. of
Appellant at 24; Respondent's Pre-Hearing Br.,
attachment. Although ACF later decided not to call
McCowan as a witness, this did not preclude EDA from
calling McCowan as its witness during the subsequent
presentation of its case. However, EDA did not do so.
Furthermore, as indicated above, Turnbo was the primary
decisionmaker and was subject to extensive cross-
examination by EDA.
18. In response to an inquiry made by EDA shortly
after the petitions were signed, ACF stated that "[t]here
are no regulations which would allow other parental input
to be substituted for [Policy Council] approval."
Respondent's Ex. 48.
19. EDA also proffered notes and letters in support
of EDA. Appellant's Exhibit 52. However, the Board
initially ruled that this exhibit would be excluded
unless EDA established that the authors of the notes and
letters were parents or guardians of Head Start children.
Notice of Hearing dated August 23, 1995, at 8. The Board
subsequently asked the parties to agree on some method of
establishing this. Tr. at 1017, 3237; Board's letter to
parties dated January 31, 1996. In the absence of any
indication that the parties reached such an agreement,
the exhibit is excluded with the exception of the May 25,
1995 letter at the second page of the exhibit, to which
ACF withdrew its objection. Tr. at 834. The May 25,
1995 letter has nine signatures and states, "We the
parents of Humnoke Head Start support the EDA Grantee for
keeping funding for the Lonoke County Head Start
Program."
20. EDA also submitted a petition dated November 28,
1994, signed by seven individuals purporting to be Policy
Council members. Appellant's Ex. 47, 2nd page. EDA did
not rely on this as evidence of the wishes of the
parents, but instead argued that the petition constituted
Policy Council approval of the refunding application.
However, the record clearly shows that the petition was
not signed at a meeting attended by the requisite number
of Policy Council members, but was brought to individual
Policy Council members to sign. Tr. at 2441. See also
Tr. at 675, 818-819. (Under the Policy Council bylaws as
revised 8/94, seven of the 13 Policy Council members, of
whom at least 51% must be Head Start parents, constitute
a quorum, which must be present in order for the Policy
Council to conduct business. Respondent's Ex. 87, at 3-
4.) Thus, the petition was not effective to approve the
refunding application. (ACF advised EDA of the same
conclusion by letter dated January 24, 1995.
Respondent's Ex. 58, at 1. ACF later articulated a
number of grounds for its conclusion in addition to the
one on which we rely. See e.g., Respondent's Post-
Hearing Br. at 53-54. We need not consider those grounds
here, however.)
21. However, it is clear from the testimony of both
Mary Abshure, the Head Start Parent Involvement and
Social Services Coordinator, and Sherry Evans, the 1994-
95 Policy Council Chairperson, that the parents were not
pressured to sign the November 15, 1994 petitions. Tr.
at 529, 615, 1217. See also Tr. at 2018, 2024, 2498-
2499. One individual, Policy Council member Farris
McClain, testified that his wife was misled into signing
a November 15, 1994 petition, but did not indicate how
she was misled. Tr. at 781. There is also
uncontroverted testimony that the Carlisle parents were
not pressured to submit their petition. Tr. at 2868.
22. The spokesperson subsequently clarified his
statement, however. Respondent's Ex. 91.
23. The 1994-95 Policy Council was not officially
seated until October 18, 1994. Appellant's Ex. 19.
Thus, it was the 1993-94 Policy Council which voted a
second time on October 13, 1994 not to approve the
refunding application. The vote was 7 to 1, with Rose
Jones, the EDA Board member selected by the Board as its
representative to the Policy Council, casting the sole
vote in favor of the refunding application. Respondent's
Ex. 2. Five of the individuals who voted not to approve
the refunding application had also voted the same way on
August 30, 1994. The three remaining Policy Council
members at the October 13, 1994 meeting were not present
at the August 30, 1994 meeting. Compare Respondent's Ex.
1 and 2.
24. The proposed rule provided that the grantee
agency must notify the Policy Group (Policy Council) of
its decision to submit an impasse to arbitration. It
further provided that "[f]ailure by the Policy Group to
designate an arbiter within seven (7) days . . . shall be
a default, and shall be considered to be approval of the
agency's proposed action." Respondent's Ex. 94, 3rd
page. EDA Executive Director Alice Rufus argued that ACF
should have applied this provision, finding the Policy
Council's February 2, 1995 vote not to participate in
mediation to be a default, because the proposed rule was
included in material which ACF provided to EDA. Tr. at
3188. See also Appellant's Ex. 34; Respondent's Ex. 62.
However, the proposed rule was merely provided to EDA as
an example of a conflict resolution procedure which EDA
could adopt. Since EDA never adopted this procedure,
there was no basis for applying it here.
25. ACF also took this position in response to an
October 3, 1995 letter from the 1995-96 Policy Council
Chairperson advising the Regional Administrator of the
votes on October 2 and 9, 1995. Letter from McCowan to
Smith dated October 25, 1995, at 1.
26. ACF noted that, contrary to the requirements of
the Policy Council bylaws as revised 5/95 (at Appellant's
Hearing Ex. 1), three days' written notice for a
specially called meeting was not given, officers were
elected in October instead of November and therefore had
not received the 70.2 or budget training that was to be
given in October, the Lonoke Center had three
representatives rather than two, and no community
representatives had been seated. Tr. at 1989-1990, 2063,
2082. In addition, ACF noted that the usual practice was
for the current policy council to hold a meeting and
conduct old business, after which the members of this
policy council would step down and the new members would
be officially seated. See Appellant's Ex. 19. That did
not occur in this case. See Petition by Lonoke County
Economic Development Agency Head Start Policy Council to
Intervene, Exhibit A, enclosure (minutes of October 2,
1995 Policy Council meeting).
27. Furthermore, we need not resolve the question,
raised by EDA Executive Director Alice Rufus, whether the
5/95 Policy Council bylaws were in fact approved by the
1994-95 Policy Council. See Tr. at 2732-2733. We note,
however, that the minutes of the May 23, 1995 Policy
Council meeting indicate that the revised bylaws were
approved. Respondent's Hearing Ex. 12.
28. The record shows that ACF initially sought to
deny refunding when the grant expired on November 30,
1994 without giving EDA the opportunity for a hearing.
Appellant's Ex. 25 and 26. However, the April 28, 1995
notice was clearly the operative document here.
29. EDA Executive Director Alice Rufus asserted that
she did not receive a copy of the August 30, 1994 letter
until September 15, 1994. Tr. at 2715-2716. However,
EDA would still have had adequate notice of the bases for
the Policy Council's decision stated in that letter even
if this was the case.