Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Richmond Community Action Program, Inc.
DATE: April 18, 1996
Docket No. A-95-167
Decision No. 1571
DECISION
The Richmond Community Action Program, Inc. (RCAP)
requested a hearing on the determination by the
Administration for Children and Families (ACF) to
terminate RCAP's Head Start grant effective August 1,
1995. ACF's determination was based on a December 1993
On-site Program Review and a January 1995 follow-up
review, which found large numbers of deficiencies, both
in the part of RCAP's Head Start program which RCAP
operated directly and in the part of the program operated
by RCAP's delegate, Powhatan-Goochland Community Action
Agency, Inc. (P-G). Based on these findings, ACF
determined that RCAP failed to meet the performance
standards for operation of a Head Start program; failed
to comply with eligibility and enrollment requirements in
the Head Start program; failed to comply with Head Start
grants administration requirements; and failed to comply
with other applicable regulations.
After the parties' initial documentary submissions, ACF
moved for summary disposition of RCAP's appeal. RCAP
responded in writing, and both parties were permitted an
opportunity to argue orally about the motion. Based on
consideration of the parties' arguments and of the
record, we grant the motion for summary disposition.
While RCAP raised some disputes of fact concerning
particular ACF review findings, RCAP conceded some
findings and RCAP's offer of proof is not sufficient to
raise a genuine dispute concerning other findings. Even
assuming RCAP could prevail on the factual issues timely
raised (which we assume for purposes of this decision),
the findings for which RCAP raised no genuine dispute of
fact establish four separate bases for terminating RCAP's
Head Start program under 45 C.F.R. 1303.14(b). Thus,
no evidentiary hearing is required because the factual
disputes RCAP raised are not material to our decision.
Specifically, we conclude that--
RCAP failed, in both 1993 and 1995, to record
ongoing observations about the growth and
development of each child. Thus, RCAP failed to
comply with the Head Start performance standard at
45 C.F.R. 1304.2-2(d). RCAP's noncompliance is
material because RCAP was not recording observations
for any of the roughly 300 children served directly
by RCAP and because such recording is key to
providing each child an individualized program to
maximize educational development.
In 1993, RCAP failed to have completed
Individualized Education Programs (IEPs) for
children requiring disabilities services. In 1995,
RCAP failed to have complying IEPs for 23 of the 33
children evaluated as being in need of these
services. Although RCAP asserted that it had IEPs
for some of these children (attempting in an
untimely way to increase the number in dispute),
RCAP provided no IEPs to support any of its
assertions. RCAP also acknowledged that some of the
IEPs it said it had were from the prior program
year, without offering evidence that would rebut
ACF's findings that these IEPs were not complete and
current. IEPs containing specified information,
including annual goals, are required by 45 C.F.R.
1308.19, and are critical to determining what
services should be provided to meet special needs
and who should provide them. RCAP's proffered
testimony about the difficulties of developing IEPs
and about services actually provided would not rebut
the findings of noncompliance, and would at most
slightly lessen the seriousness of the
noncompliance.
In 1993, RCAP's income verification forms were not
signed by staff and did not indicate the method of
verification, as required by 45 C.F.R. 1305.4(e).
In 1995, out of a random sample of 31 children's
records, two did not have any verification and six
did not have complete income verification forms.
The income verification forms which RCAP submitted
do not rebut the sample findings. Proffered
testimony about RCAP's income verification process,
even if true, would not be sufficient to overcome
findings about the failure to document that that
process was followed in individual instances. RCAP
is required to have at least 90% of enrolled
children at or below poverty guidelines. Even if
RCAP did not need to verify income eligibility for
10% of the children in the sample, RCAP's
noncompliance is material. An additional 16% of the
290 enrolled children (about 46 children) did not
have properly signed forms indicating the method of
documenting income-eligibility as required. Lack of
proper documentation of income-eligibility for these
children means a lack of assurance that RCAP was
serving children most in need of Head Start
services.
In both 1993 and 1995, RCAP failed to have
documentation for each child receiving full-day
services that is required by the regulation at 45
C.F.R. 1306.32(d)(3) to justify full-day services.
While RCAP conceded for only 10% of the children
receiving such services that it lacked such
justification in 1995, this is still significant
noncompliance. The justification for each child is
important to ensure that scarce Head Start funds are
not being used to substitute for day care available
from other sources. RCAP's attempt to withdraw its
concession was untimely and unsupported.
P-G was deficient in meeting 31 different Head Start
requirements in both 1993 and 1995, relating to Head
Start performance standards, eligibility
requirements, disability services requirements,
administrative requirements, and other requirements.
Even if RCAP did not fail in its duty to monitor its
delegate P-G, the delegate's deficiencies may be a
basis for terminating RCAP's program in whole or in
part. P-G's deficiencies are substantial
noncompliance, as P-G itself admitted. While the
number of children served by P-G was less than 10%
of RCAP's entire program, P-G's failures meant that
48 children for whom funding was awarded to RCAP did
not receive the services they deserved.
RCAP had an opportunity to correct its noncompliance in
each of these areas and failed to do so, despite being
provided considerable technical assistance. Indeed,
while RCAP made some improvements, in other areas its
failures were more significant in 1995. The undisputed
findings constitute material failure to comply with Head
Start performance standards, with eligibility and
enrollment requirements, with grants administration
requirements, and with other applicable regulations, and
thus provide four separate bases for termination. 45
C.F.R. 1314(b)(4), (b)(5), (b)(6), and (b)(9). 1/
Below, we first set out background information on 1) the
applicable laws and regulations in the Head Start
program; 2) the standards for Board review of Head Start
terminations; 3) RCAP's program and ACF's review
findings; and 4) the procedural history of this case. We
then provide our analysis of the undisputed findings,
including any related legal issues raised by RCAP, and
the basis for our conclusions.
I. BACKGROUND
A. Overview of the applicable law and regulations
The Head Start program is designed to deliver
comprehensive health, educational, nutritional, social
and other services to economically disadvantaged 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. See
generally 42 U.S.C. 9836. Head Start agencies may
operate part of their funded programs through delegate
agencies. 42 U.S.C. 9837. The law requires that a
Head Start agency utilize --
organization, management, and administration which
will assure, so far as reasonably possible, that all
program activities are conducted in a manner
consistent with the purpose of this
subchapter. . . . Each such agency shall establish
or adopt rules to carry out this section, which
shall include rules to assure full staff
accountability in matters governed by law,
regulations or agency policy . . . .
42 U.S.C. 9839(a); see also 45 C.F.R. 1301.30.
In the mid-70s, the Secretary promulgated program
performance standards covering the education, health
(including medical, dental, mental health and nutrition),
social services, and parent involvement component areas
of Head Start. See 45 C.F.R. Part 1304. When the
regulations were first promulgated, the preamble to the
final rule explained that the standards had been
developed based on seven years experience with the
program, had been field tested, and were considered
reasonable and attainable. 40 Fed. Reg. 27,562 (June 30,
1975). The program performance standards covering
services for children with disabilities were later
published as 45 C.F.R. Part 1308.
Generally, each grantee is required to develop, with the
advice and concurrence of its Policy Council, a written
plan to implement the performance standards for each
component area, and to review it at least annually and
revise and update it as necessary. 45 C.F.R. 1304.1-4.
Congress has provided that Head Start projects must be
operated consistent with the performance standards, and
that the "extent to which such standards have been met
shall be considered in deciding whether to renew"
funding. 42 U.S.C. 9846(b).
ACF is required to conduct a full review of each Head
Start agency at least once during each three-year period.
42 U.S.C. 9836a(c)(1)(A). The performance standard
regulations require a 90-day opportunity for corrective
action on deficiencies in meeting performance standards.
See 45 C.F.R. 1304.1-5(b); see also Campesinos Unidos,
Inc., DAB No. 1518 at 14 (1995).
Head Start regulations list nine grounds for which a Head
Start grantee agency may be terminated or have its
refunding denied. As applicable here, funding may be
terminated when a grantee has failed to meet the
performance standards for operation of its Head Start
program; failed to meet eligibility and enrollment
requirements; failed to meet grants administration
requirements; or failed to abide by any other terms and
conditions of its grant or applicable laws or
regulations. 45 C.F.R. 1303.14(b)(4), (b)(5), (b)(6)
and (b)(9).
The Head Start Act at 42 U.S.C. 9841(a)(3) and
corresponding regulations at 45 C.F.R. 1303.14 provide
that a grantee which is terminated shall have an
"opportunity for a full and fair hearing" on the
termination. Procedures for the conduct of a hearing are
set forth at 45 C.F.R. 1303.16. The Board is
authorized to act on behalf of the Secretary to provide
this opportunity for hearing. 57 Fed. Reg. 59,260
(December 14, 1992). The Board's procedural regulations
at 45 C.F.R. Part 16 apply to these proceedings insofar
as they are not inconsistent with Part 1303. 45 C.F.R.
1303.15(b)(1).
The Board has previously determined that a requirement
affording an opportunity for an evidentiary hearing is
not contravened by a summary disposition if there are no
genuine issues of material fact. See, e.g., Campesinos
at 10, citing Travers v. Shalala, 20 F.3d 993, 998 (9th
Cir. 1994). 2/ Moreover, in proposing stringent
requirements for Head Start termination appeals, ACF
explained that "prompt resolution of disputes is
important for stability and continuity in providing
quality Head Start services," and allows "all concerned
to focus on the provision of services rather than on the
disputes themselves." 57 Fed. Reg. 3395-3396 (January
29, 1992). It would not be consistent with either the
purposes of the Head Start Act or of the regulations to
waste Head Start resources on an unnecessary evidentiary
hearing that would delay resolution of a termination
dispute.
Under the circumstances here, where RCAP has had ample
opportunity to identify genuine disputes of material
fact, we conclude that RCAP has been provided with an
opportunity for a full and fair hearing, as required by
the Act and regulations.
B. Burden of Proof and Materiality
The Board has previously stated that the provisions of 45
C.F.R. 1303.14 require ACF to make a prima facie case
that there exists sufficient evidence to satisfy the
regulatory standards for termination or denial of
refunding. See North Shore Community Action Programs,
Inc., Docket No. A-94-15, Ruling on Appellant's Motions
at 7 (December 23, 1993); see also Lake County Economic
Opportunity Council, Inc., Docket No. A-95-66, Rulings on
Burden of Proof, Materiality, and Jurisdiction Under 45
C.F.R. Part 1303 (May 19, 1995) (Lake County Rulings).
Once ACF has set forth legally adequate reasons to
support a denial of refunding or termination, and has
provided sufficient specificity for the grantee to
respond to the substance of individual findings, the
regulations require the appellant to respond.
Specifically, section 1303.15(d)(3) provides that a
grantee's appeal "must set forth the grounds for the
appeal and be accompanied by all documentation that the
grantee believes is relevant and supportive of its
position." See also 45 C.F.R. 16.8(a)(1), (2). The
Board may provide for further procedures to develop the
record for its analysis. Where there is a dispute of
material fact, the resolution of which requires an
evidentiary hearing, the Board will hold such a hearing.
This process has practical underpinnings. A grantee
always bears the burden to demonstrate that it has
operated its federally funded program in compliance with
the terms and conditions of its grant and the applicable
regulations. See, e.g., Meriden Community Action Agency,
Inc., DAB No. 1501 at 41 (1994); Rural Day Care
Association of Northeastern North Carolina, DAB No. 1489
at 8, 16 (1994) aff'd No. 2:94-CV-40-BO (E.D.N.C.,
Dec. 19, 1995); see also 45 C.F.R. 74.61(b) and (g).
Moreover, a grantee is clearly in a better position to
establish that it did comply with applicable requirements
than ACF is to establish that it did not. Therefore,
once presented with a prima facie case, a grantee must
present evidence sufficient to challenge ACF's case or
risk summary disposition.
Regarding the question of how the Board should analyze
the record developed under Part 1303 in conjunction with
Part 16, the appropriate standard to be applied to
competing evidence is preponderance of the evidence.
That standard requires "evidence which is of greater
weight or more convincing than the evidence which is
offered in opposition to it; that is, evidence 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). This is the commonly accepted standard for
administrative proceedings. Lake County Rulings at 3.
Further, the concept of "materiality" found in 45 C.F.R.
Part 74 is read into 45 C.F.R. Part 1303 because the
Department-wide grants administration regulations in
Part 74 apply to the extent that they are consistent. 3/
Given the general statutory preference for continuing
funding to existing grantees (42 U.S.C. 9836(c)(1))
and, where appropriate, permitting a grantee the
opportunity to correct deficiencies (42 U.S.C.
9836a(d)(1)(B)), it is consistent to read materiality
into 45 C.F.R. 1303.14(b), which lists the bases for
termination or denial of refunding actions. Certainly,
ACF should not seek to end a grantee's Head Start
participation on a mere technicality.
We note that RCAP argued that, under 1994 amendments to
the Head Start Act, it should have an opportunity to
correct all deficiencies, not just those involving
performance standards. In response, ACF said that it was
relying here only on the 55 OSPRI items for which RCAP
had an opportunity to take corrective action. In light
of this, we determined that we did not need to address
RCAP's argument on the effect of the amendments, since
RCAP had had an opportunity to correct. Ruling of
1/31/96 at 2.
C. RCAP's program and ACF's review findings
The following facts were agreed to by the parties or are
based on documents in the parties' joint appeal file. 4/
RCAP received Head Start funding of $2,173,479 to serve a
total of 575 children for the period August 1, 1993
through July 31, 1994 (program year 1993-94). For the
period August 1, 1994 through July 31, 1995 (program year
1994-95), RCAP received a total of $2,405,782 to serve
587 children. Of these children, 319 were to be served
in the three centers and home-based program operated
directly by RCAP. Pursuant to its delegate agreement
with RCAP and the grant award, P-G was funded to provide
center-based services in both years to 36 children and
was also funded in 1994-95 to provide home-based services
to 12 children. (Thus, in 1994-95 P-G was funded to
serve slightly more than 6% of the total of children for
whom RCAP received funding.) The remaining children were
served by RCAP's other delegate agency, the Richmond
Public Schools.
In December 1993, ACF conducted a review of RCAP's entire
program, using its On-Site Program Review Instrument
(OSPRI). The OSPRI consists of OSPRI "items," each of
which reflects one or more regulatory requirements. The
OSPRI is divided into different parts, according to the
various program components. To determine compliance with
certain recordkeeping requirements, ACF uses a Family
Tracking System sample. Copies of the OSPRIs filled out
by the reviewers for each program component were provided
to RCAP in an exit conference held on December 17, 1993.
5/ The 1993 review found noncompliance with a total of
86 OSPRI items, including 45 in the part of the program
operated directly by RCAP and 39 in the part of the
program operated by P-G.
Following the 1993 review, ACF--through the Technical
Assistance Support Center (TASC)--provided 10 days of
training to RCAP, as well as various forms of technical
assistance. 6/ RCAP was given a deadline of January 18,
1994 for submitting Grantee Improvement Plans, showing
what actions it would take to correct the deficiencies
found. When RCAP requested an extension of time for
improvement plans, RCAP was notified that failure to come
into compliance could jeopardize future funding. Ex.
J-10 at 1.
Beginning January 23, 1995, ACF reviewers performed a
follow-up review using the OSPRI to determine whether
RCAP had come into compliance. This review found
noncompliance with a total of 184 OSPRI items, including
60 in the part of the program operated directly by RCAP
and 124 in the part of the program operated by P-G. ACF
identified 55 of these OSPRI items as "repeat
deficiencies", 24 for RCAP and 31 for P-G.
Based on the OSPRI findings, ACF issued a letter, dated
June 30, 1995 informing RCAP that it was proposing to
terminate RCAP's funding for its entire Head Start
program, based on failure to meet Head Start performance
standards, failure to comply with Head Start eligibility
requirements and limitations on enrollment, failure to
meet grants administration requirements, and failure to
meet other terms and conditions of its financial
assistance award, as well as other regulatory
requirements.
D. Procedural history
RCAP's request for hearing included only vague, general
allegations and was accompanied by voluminous
documentation, much of which appeared irrelevant to ACF's
bases for termination. In the first telephone
conference, held by the Board on August 8, 1995, the
Board set procedures which required ACF first to clarify
which OSPRI findings it was relying on for its
termination. (ACF ultimately clarified that it was
relying only on the 55 repeat deficiencies.) The parties
agreed to resubmit documentation after this, either in a
joint appeal file or in separate appeal files. RCAP was
also to submit clarification with regard to each OSPRI
item on which ACF was relying, stating whether RCAP was
conceding or disputing the facts found in either the 1993
or 1995 OSPRI and identifying any legal issues. Instead,
RCAP submitted a motion, asking the Board to dismiss some
of the OSPRI items, to treat others as one noncompliance,
and to waive the requirement that RCAP identify factual
disputes with specificity. The Board denied these
requests. Ruling of 1/31/96.
The Prehearing Conference, originally scheduled for
November 16, 1995 was postponed because of the potential
shutdown of the Department of Health and Human Services
for lack of funds. The parties agreed to a modified
procedural schedule, which included a deadline for RCAP
to submit clarification of the findings in dispute,
including those related to its delegate, P-G. See
11/21/95 Summary of the Results of Telephone Conference
Call. This submission again failed to meet the Board's
direction that RCAP specify more clearly what factual
findings RCAP was disputing. The Department did shut
down, for two periods of time, and subsequently ACF moved
for summary disposition based on the existing record,
asserting that RCAP had not documented compliance because
the documentation RCAP submitted was unrelated to the
period in dispute or to the noncompliance at issue. ACF
also asserted that RCAP had not demonstrated that there
was any genuine issue of material fact in dispute
warranting a hearing.
In a telephone conference on February 7, 1996, the Board
again modified the procedures, among other reasons, to
provide RCAP an opportunity to submit a written response
to the motion for summary disposition. The Board
specifically informed RCAP that if it did not raise
genuine disputes of material fact, the Board might
proceed to decision without a hearing. See 2/14/96
Summary of Results of Telephone Conference.
The parties agreed that the Board would reschedule the
Prehearing Conference and would expand the purposes of
the conference to permit the parties to present oral
arguments on the motion for summary disposition. P-G
submitted a separate response to the motion for summary
disposition. That response indicated that P-G was
raising no dispute of fact concerning the OSPRI items
related to P-G. P-G acknowledged that its noncompliance
was "substantial", but argued that it had come into
compliance since the 1995 review and that there were
"mitigating circumstances", including a lack of
monitoring by RCAP. The Board invited P-G to appear at
the Prehearing Conference to state how these issues were
relevant to the Board's determination. The Board
specifically gave P-G notice that if it did not appear,
the Board would infer that P-G did not wish to pursue its
arguments with the Board or to present evidence at a
hearing. See 3/27/96 Letter to P-G. P-G subsequently
notified the Board that it would not appear.
Prior to the Prehearing Conference, the Board issued a
Notice, identifying some areas that still needed
clarification. The conference was held on April 3, 1996.
The Prehearing Conference was continued by telephone on
April 5, 1996, for the purpose of addressing procedural
matters related to a hearing, should one be held. The
Board also permitted the parties a brief period to
attempt to clarify or to reach stipulations on certain
issues and an additional opportunity for RCAP to state
why the Board should not go to decision on the findings
RCAP had conceded. 7/ As discussed below, instead of
clarifying its previously stated positions, RCAP's
submission made some new assertions. It did not address
the materiality of the conceded findings.
II. ANALYSIS
In this section, we first address some general arguments
made by the parties. We then analyze the review findings
for which RCAP did not timely raise any genuine issue of
material fact. We first discuss each of the findings
related to the part of the program operated directly by
RCAP, and then discuss the findings related to the part
of the program operated by P-G, giving more detail about
the findings we consider most significant and explaining
why P-G's failures may properly form a basis for
terminating RCAP's funding. In discussing the findings,
we refer to them by the item number from the OSPRI. We
state with respect to each of the findings or groups of
findings why we consider the noncompliance shown by the
findings to be significant.
In discussing the documentation submitted by RCAP, we
have discussed only documentation that RCAP identified as
relevant to ACF's findings at issue here. The Board has
previously ruled that evidence of corrective actions
taken after a follow-up review are not relevant evidence
to dispute findings made concerning a grantee's program
at the time of an initial OSPRI and a follow-up review.
Meriden Community Action Agency, Inc, DAB No. 1501 at 6-7
(1994). RCAP was informed of this ruling, and did not
argue that it was erroneous. See 8/10/95 Summary of
Telephone Conference.
Based on our discussion, we conclude generally that the
undisputed findings for the two parts of the program
(which together were funded to serve 367 children) for
the two years show that RCAP's program had materially
failed to meet Head Start performance standards, to
comply with eligibility and enrollment requirements, to
comply with grants administration requirements, and to
comply with other applicable regulations. 8/
A. General arguments
In its motion for summary disposition, ACF argued that
RCAP had not raised any genuine dispute of fact. ACF
said essentially that none of RCAP's documentation or
proffered testimony was relevant to ACF's review
findings. RCAP has since then clarified considerably
what its testimony would be, has submitted additional
information, and has raised additional legal arguments
about interpretation of some of the requirements. While
we are granting ACF's motion for summary disposition, we
do not mean to imply that we agree completely with ACF's
evaluation of RCAP's offer of proof. For example, ACF
dismissed volunteer sign-in sheets as irrelevant "in-kind
documentation" (so-called because a grantee must keep
such records if it uses volunteer services as part of its
in-kind match for federal funds). We agree with RCAP,
however, that such evidence is relevant to general
findings about the degree of parent or volunteer
participation in the program. Moreover, as RCAP argued,
some of ACF's findings were based on judgmental
evaluations of the sufficiency or effectiveness of RCAP's
plans or actions, and testimony would generally be
helpful in evaluating these items. In addition, we agree
with RCAP that an ACF reviewer erroneously interpreted a
requirement for annual reviews and subsequent updates "as
necessary" as always requiring annual updates.
That RCAP may have raised genuine disputes that would be
material to findings on individual OSPRI items, however,
does not mean that those disputes are material to our
decision, therefore precluding summary disposition. If
there are undisputed findings that provide a sufficient
basis for termination under the regulations, we do not
need to address additional disputed findings.
We also note that ACF appears to misunderstand the
standard for summary disposition. For purposes of
summary disposition, we must view the proffered evidence
in the light most favorable to the non-moving party. 9/
This is particularly important with respect to the
undisputed noncompliances in the part of the program
operated by P-G. ACF argued that we should grant summary
disposition because those findings are prima facie
evidence that RCAP failed in its duty to monitor P-G. We
discuss this issue below, but note here that, while the
findings for P-G are prima facie evidence of failure to
monitor, we cannot therefore go to summary disposition
without considering whether RCAP has offered evidence
which, viewed in RCAP's favor, would be sufficient to
rebut ACF's evidence of failure to monitor.
ACF also argued that the decision in Community Action of
Laramie County, Inc., 866 F.2d 347 (10th Cir. 1989) meant
that ACF had discretion to terminate a grantee based on
only one or two findings of noncompliance. Tr. at 14.
As discussed above, however, applicable regulations
require that termination be for material failure to
comply. Thus, ACF may terminate based on one or two
findings only if that meets the regulatory standard.
Indeed, in implementing 1994 Amendments to the Head Start
Act, ACF itself indicated that not all noncompliances
would be considered deficiencies for which it would give
a grantee notice that it must make corrections or risk
defunding. ACYF-IM-HS-95-15, 3/23/95.
Of course, determining materiality may depend in part on
an exercise of programmatic judgment. In such
circumstances, we would normally defer to ACF as the
administering agency, and not substitute our judgment for
ACF's. RCAP alleged here, however, that ACF had
"undercut" RCAP's program, and suggested that ACF's
judgments had been influenced by a desire to terminate
RCAP because it was a community action program. RCAP
relied for this allegation on several different
assertions. First, RCAP said that Exhibit App-54 showed
that ACF improperly circumvented RCAP in dealing with
RCAP's delegates. All that exhibit indicates, however,
is that RCAP was not copied on a notice to the Acting
Head Start Director of P-G about the 1993 OSPRI, asking
P-G to provide certain information relevant to the
review. RCAP did not allege that ACF failed to give RCAP
notice that the review would include P-G's part of the
program, nor did RCAP allege any specific prejudice to it
from not receiving a copy of this letter.
Second, RCAP said its testimony would show that one of
the reviewers in 1995 met with the Policy Council and
told them that failure of the Policy Council to approve
one of the required plans might place RCAP's program in
jeopardy, and that this information led to the
disapproval by Policy Council members who were
disgruntled with RCAP. Even assuming RCAP could prove
this and show that the intent of the remark was to
undercut RCAP's program (which is unlikely), it would not
show a general intent by ACF (rather than this reviewer
who was only a consultant for ACF) to undercut RCAP's
program. Moreover, for purposes of our decision, we
assume that RCAP had approval of this plan.
RCAP also said that it could show that an ACF employee
was biased against RCAP because he had a personal
relationship with a person who had been an RCAP Board
member who may have been disgruntled. RCAP's offer on
this point was vague, somewhat inconsistent, and
unrelated to any specific time period. ACF acknowledged
that this employee was a liaison with RCAP until the
summer of 1994, was team leader for the 1993 review, and
wrote the 1993 review report. RCAP did not allege any
further involvement by the employee in the reviews or any
involvement in the decision to terminate. 10/ ACF
asserted that he was not involved in the 1995 review or
in the decision to terminate RCAP's funding. In any
event, there would be no basis for concluding that the
findings we rely on here were influenced by any bias this
employee may have had, even if RCAP could prove it. The
findings we rely on here were made by reviewers (not by
this employee), did not require subjective judgment, and
were effectively undisputed.
Finally, we reject RCAP's general arguments that none of
the undisputed findings of noncompliance are material
because they are merely paperwork, technical
requirements, and that we need expert testimony to
evaluate the findings. Our determination regarding
materiality of the undisputed findings is in part based
on the conceded numbers of noncompliance and of children
affected and on the variety of parts of the program
affected. With respect to individual OSPRI items, we
base our evaluation of their significance on the plain
terms of the regulation and on their intent, as stated in
the statute, the regulations, or the preambles.
Moreover, RCAP is simply mistaken when it argued that
termination should normally be only for "financial"
reasons. The bases for termination listed at 45 C.F.R.
1303.14(b) specifically include failure to meet
performance standards or eligibility standards or any
other terms of the grant, as well as failure to meet
financial requirements.
B. Undisputed noncompliances in the part of the program
operated by RCAP directly
As noted above, RCAP was funded in program year 1994-95
to serve through its own center-based and home-based
programs a total of children 319 children (although the
OSPRI indicates that only 290 children were enrolled at
the time of the 1995 review). The undisputed findings we
discuss in this section relate to performance standards
for the education and disabilities services components of
RCAP's program, to eligibility requirements, or to
program option requirements.
Item 16 - RCAP - Education Component
Head Start performance standards are "the Head Start
program functions, activities and facilities required and
necessary to meet the objectives and goals of the Head
Start program as they relate directly to children and
their families." 45 C.F.R. 1304.1-2(h). The Head
Start performance standard at 1304.2-2(d) provides:
The education services component of the plan shall
provide procedures for on-going observation,
recording and evaluation of each child's growth and
development for the purpose of planning activities
to suit individual needs. It shall provide, also,
for integrating the educational aspects of other
Head Start components into the daily education
services program.
The 1993 OSPRI indicates that RCAP was found out of
compliance with this standard. The OSPRI indicated,
among other things, that the reviewer found that
children's records did not indicate timely updating of
each child's progress, that staff did not have a summary
of all the children's developmental levels, and that
classroom plans did not reflect activities designed to
meet children's needs individually and in small groups.
Ex. J-1 at 11. The reviewers' notes on the OSPRI state
in relevant part:
Although the ESI [Early Screening Inventory] was
administered to children in the first three months
of the school year, there was no evidence of any on-
going assessment of the children. Some of the
initial ESI screenings were scored incorrectly and
some were incomplete. Teachers had attempted to
write goals for children but they were generally
age-appropriate rather than individually appropriate
goals. Classroom plans were also written with
mainly age-appropriate activities. However,
interactions between teacher and students were
observed that were individually appropriate (e.g.,
questioning).
* * *
There is no evidence in the records reviewed that
the child's development/growth is assessed, updated
or communicated to parents. Individualizing for
each child is not indicated.
Id. 11/
The review report is almost verbatim from the notes,
except that it also states:
A process for assessing and reviewing each child's
growth, development progress needs to be developed.
The process should include summaries of the child's
developmental level and appropriate activities
modified for each child. The process should include
ways to record and use the information in
communications with parents.
Ex. J-8 at 27-28.
In 1995, RCAP was also found out of compliance with this
standard, based in part on indicators of noncompliance
which included that children's records did not indicate
the assessment procedure used or timely updating of each
child's progress, that staff did not have a summary of
all the children's developmental levels, and that
classroom plans did not reflect activities designed to
meet children's needs individually and in small groups.
Ex. J-19 at 11.
The 1995 review report stated:
There are no initial developmental assessments or
evidence of on-going assessment of the children in
any of the folders examined. Staff have not been
adequately trained to observe children, translate
observations into scores on the Child Observation
Record (COR) and most importantly, use information
to plan for individual needs and age appropriate
activities. Individualization was not observed.
Ex. J-22 at 8.
In response to the report, RCAP submitted two Child
Observation Records, a blank ESI form, and a staff
meeting agenda from 2/28/95. Ex. J-29 at 190-206. RCAP
also submitted to us two ESI forms dated in 1989. Ex.
App-43. 12/
ACF argued in its motion for summary disposition that the
documents submitted by RCAP at Exhibit J-29 were non-
responsive to ACF's findings, and that RCAP's additional
records were immaterial. ACF Motion at 12-13.
In its written response, RCAP argued that the Board must
determine if RCAP's documents are non-responsive. RCAP
asserted that its staff was trained. RCAP further argued
that the OSPRI requirement goes beyond the regulation.
RCAP argued that the regulation merely requires
procedures, and that RCAP's "procedures for observing,
recording and evaluating" are sufficient. According to
RCAP, a "score" on a child observation record is not
required. RCAP offered testimony from four witnesses
(two of whom it identified as parents), whom RCAP said
would testify about "ongoing observation, evaluation and
their awareness of procedures." RCAP Response at 9.
In the oral argument, ACF argued that recording is
required. Even if no particular form is required, ACF
said, the regulation contemplates that the procedure
adopted will be used. ACF argued that these requirements
were the heart of delivering education services. ACF
also noted that its findings were based on its Family
Tracking System sample, and that RCAP's documents were
not related to the children whose records were sampled.
13/
RCAP conceded that the procedures in its Educational Plan
called for use of the ESI to do an initial assessment of
each child, and use of a Child Observation Record (COR)
to record ongoing observation. Tr. at 95. RCAP said
that its testimony would show ongoing observation and
assessment and individualization. According to RCAP, ACF
is relying on a technical requirement.
RCAP's documents do not dispute the sample findings. As
ACF said, the forms submitted are either outside the
review periods, do not relate to sample children, or are
merely blank forms. Exs. J-29 at 190-206; Ex. App-43.
The other document is a meeting agenda about training on
"Assessments/Goals/Observations" dated after the 1995
review. Ex. J-29 at 192.
Contrary to what RCAP argued, the regulation clearly
requires more than that a grantee have procedures for
ongoing observation, recording, and evaluation of each
child's growth and development. As the Board noted in
Campesinos Unidos, Inc, DAB No. 1518 (1995), while the
Head Start performance standards are framed in terms of
required procedures in the grantee's component plans, the
regulations as a whole clearly contemplate that a grantee
cannot meet the standards unless it not only has the
requisite procedures, but also implements them. RCAP was
aware of this at least by the 1993 OSPRI, when it was
found out of compliance for failing to have in children's
files complete records of initial assessments or any
records timely updating children's progress.
We agree with RCAP that the regulation itself does not
require any particular type of recording, and ACF did not
dispute this. The regulation plainly requires some type
of recording, however, and RCAP itself chose to record
initial assessments through the ESI and ongoing
observations through the COR. RCAP submitted no
documentary evidence which rebuts the review findings
that ESIs were incomplete in 1993 and not in the records
in 1995, or the findings that no CORs were in the records
in either year. Indeed, while arguing that scores on a
COR were not important, RCAP offered no evidence to show
recording of the missing information in any form. RCAP's
proffered testimony would not rebut the findings that
RCAP did not record complete initial assessments nor any
ongoing observations.
The recording requirements are not merely "technical," as
RCAP alleged, but are among the standards that were
determined to be necessary and required to meet program
objectives. This standard is related to the objective of
the Education Services component of the Head Start
program to provide children with experiences that will
enable them to develop "in a manner appropriate to their
age and stage of development. . . ." 45 C.F.R. 1304.2-
1(a). Guidance on the standard indicates that the
grantee should record ongoing assessments and
observations for each child and that the intent is that
the records be used in program planning. Ex. J-34 at 11.
Moreover, RCAP itself adopted a formal recording process
as part of its Education Component plan. The COR adopted
by RCAP indicates on its face that one purpose is to
report to parents on their child's progress, based on
anecdotal records of the child's behavior over several
weeks or months. Ex. J-29 at 190.
Thus, we conclude that RCAP failed to meet a performance
standard in the Education Component of its program. This
noncompliance is significant.
Item 161 - RCAP - Disabilities Services
Each Head Start program must generally ensure that 10% of
the total enrollment opportunities are offered to
children with disabilities. 45 C.F.R. 1305.6(c).
In addition to the program performance standards
mentioned above, the Head Start regulations provide
specific performance standards for services for children
with disabilities. 45 C.F.R. Part 1308. These standards
complement the standards at Part 1304 to ensure that
children with disabilities enrolled in Head Start receive
all the services to which they are entitled. 45 C.F.R.
1308.1 and 1308.4(a) and (c). Each Head Start grantee
and delegate agency must develop a written disabilities
service plan and revise it annually, providing strategies
for meeting the special needs of such children and their
parents. 45 C.F.R. 1308.4 (a) and (b). The purpose of
the plan is to assure that all components of the Head
Start program are appropriately involved in the
integration of special needs children and their families
into the program and that resources are used efficiently.
45 C.F.R. 1308.4(a)(1) and (2). Among other things,
Part 1308 requires Head Start programs to: design
comprehensive services which meet program standards for
locating and serving children with disabilities and their
parents; screen children by 45 days after the start of
the program in the Fall in order that needed services may
be provided in a timely manner; and develop an
Individualized Education Program (IEP) within 30 days
after a child is determined to be in need of services.
Ex. J-37 at 2 and 3.
The IEP is a specific type of plan, used in other
federally funded disability programs, developed through
a required process, involving an IEP meeting between the
child's parent and specified professionals. While
efforts must be made to secure a parent's participation,
the regulations indicate that the meeting may go forward
without the parent so long as efforts to involve the
parent are documented. 45 C.F.R. 1308.19(j)(4). The
purposes of the IEP include setting annual goals
(including short-term objectives for meeting these
goals), identifying what services the child needs, and
identifying who should provide them. 45 C.F.R.
1308.19(e).
The regulations provide that "every child receiving
services in Head Start who has been evaluated and found
to have a disability and in need of special education
must have an IEP before special education and related
services are provided." 45 C.F.R. 1308.19(b). In
1993, RCAP was found out of compliance with this
requirement. Ex. J-1 at 80. The review report stated:
Essential details are not in the Individual
Education Plan. For example the following
information is missing:
o Annual goals
o Identification of personnel responsible for the
services
o The date of initiation of the plan of operation
and its duration, along with family goals.
Ex. J-8 at 33. 14/
In 1995, RCAP was found out of compliance again. Ex. J-
19 at 107 and 115-119. The review report stated:
Review of children's records revealed that ninety-
nine (99) children have been referred for
evaluations. To date, only thirty-six (36) children
have received evaluations. Of those, thirty-three
(33) have been recommended to receive services. Of
those recommended to receive services, only ten (10)
records indicate that the IEP process has been
completed. This translates in twenty-three (23)
children with identified needs who have yet to be
served because of incomplete IEPs and fifty-three
(53) children who have not been evaluated.
Ex. J-22 at 18. In our ruling of January 31, 1996, we
determined that, since no finding was made on failure to
have evaluations in 1993, the issue related to a repeat
deficiency is whether each disabled child determined in
need of services had an IEP which was complete under the
regulations. We note, however, because an IEP is
particular type of plan, as defined in the regulations,
an incomplete IEP is not an IEP as contemplated by the
regulations.
ACF argued in its motion that since RCAP submitted no
IEPs, RCAP had conceded the ACF finding. ACF Motion at
49-50. ACF argued correctly that the documents submitted
by RCAP are irrelevant, because they are just draft
documents on collaboration developed after the 1995
review (Exhibit App-37) or a chart of children reviewed
under the programþs health component(Exhibit App-50).
RCAP responded that its disabilities services coordinator
would testify that children in need of services were
actually receiving the services even if an IEP had not
been completed. RCAP stated that a total of 17 children
had IEPs in their folders when the review was conducted
in January 1995, and 11 of these came from the 1993-94
year. RCAP also said its testimony would show that the
IEP process is cumbersome and time-consuming, as parent
input and approval for an IEP is difficult because
parents with children in full-day care work long hours
and are often hard to meet with. RCAP Response at 15-16.
ACF argued that services cannot be provided without an
IEP, and that RCAP did not deny that IEPs were not done
or were incomplete for at least 16 of the 33 children
evaluated as being in need of IEPs.
Exhibit J-19 at 107 indicates that the reviewer found
there were 17 IEPs in children's files but that seven had
expired, so only ten IEPs were current. Since this
seemed basically what RCAP had acknowledged, the Board
asked the parties to clarify whether they agreed on this.
The parties were unable to stipulate. RCAP asserted
instead:
RCAP Head Start had active IEPs on 20 children at
the time of the review. Thirteen were carry over
from F/Y 1993-1994. Eight were in place before the
review January 27, 1995. [sic] Forty-one IEPs were
developed after the review. Therefore, no child in
need of service did not go without receiving any
service, as indicated [sic]. All children on the
list identified for follow-up did not require
service or an IEP. Three were receiving services
outside of Head Start. Eight children received
services through Head Start, but had no IEP. RCAP
had a problem securing approval of the treatment
plan by the children's doctors, after many attempts.
Children listed received all appropriate services
when the specific diagnosis was made.
RCAP's 4/10/96 submission at 2. RCAP also said:
As previously stated, [two individuals] will testify
to this OSPRI.
Id. Previously, however, RCAP had offered testimony from
only one of these individuals, RCAP's disabilities
services coordinator. RCAP Response at 15-16. RCAP did
not specify what testimony the second witness would offer
or how she had relevant information.
RCAP's new assertions are untimely, inconsistent with
RCAP's previous assertions, and internally inconsistent.
The Board asked only for clarification of whether RCAP
was conceding that seven of the 17 IEPs RCAP had said
were in the files at the time of the review were not
current, as ACF had found. RCAP did not clarify this and
provided very confusing information.
In any event, RCAP did not, despite numerous
opportunities, submit any IEPs to support its assertions.
Indeed, its latest assertions seem to concede that only
eight IEPs were developed in program year 1994-95,
whereas the ACF reviewer had found ten were current.
Even if RCAP's testimony would show it did have 20 IEPs
in the files at the time of the review (instead of 17 as
RCAP originally said), RCAP did not offer testimony that
those IEPs were current and complete. Indeed, in view of
the OSPRI findings that the IEPs reviewed in 1993 were
incomplete (which RCAP did not specifically dispute),
testimony would be inadequate to establish that any IEPs
from program year 1993-94 met IEP requirements. 15/ In
addition, IEPs set annual goals and should be updated
annually. Thus, RCAP has failed to offer satisfactory
evidence that it had complying IEPs for more than the ten
children for whom the reviewers found that RCAP had
current and complete IEPs. In other words, the record
supports a conclusion that RCAP failed to have complying
IEPs for 23 of the 33 children evaluated as being in need
of services.
The proffered testimony on the difficulties of developing
IEPs is not specific enough to show that these
difficulties were the reasons why RCAP did not have
complying IEPs for the children at issue here. Moreover,
the regulation (developed by knowledgeable people) set a
deadline for an IEP meeting of 30 calendar days after the
child is determined to be in need of services. Since the
evaluations were to take place within 45 days after the
start of the program year (which was August 1, 1994), the
deadlines for meetings should have been no later than
mid-October. Since the 1995 review was not until late
January, RCAP had had more than ample time to address any
difficulties with developing IEPs. Moreover, RCAP
offered no documentation of attempts to set IEP meetings
for these children.
With respect to RCAP's testimony on providing services to
the children without IEPs, at most this testimony, if
true, would mitigate slightly the seriousness of RCAP's
noncompliance. Services provided without the benefit of
input from the IEP process simply are not the services
contemplated by the regulations. Indeed, the regulation
specifically states that the child must have an IEP
before services are provided.
We do not agree with RCAP that the IEP requirement is
just a technical, paperwork requirement. The regulations
clearly indicate that the IEP process is important for
setting annual goals for each child and for determining
what services each child needs and who should provide
them. The IEP requirement is a longstanding one for
children with disabilities served by federally funded
programs. Moreover, the 1993 review clearly informed
RCAP that ACF considered the details in the plan, such as
who would provide the services and what the goal of the
services was, to be "essential."
Thus, we conclude that RCAP materially failed to comply
with performance standards for its services to disabled
children. 16/ (We note, moreover, that some of the
noncompliances in the part of the program operated by P-G
also relate to performance standards for disabilities
services and buttress our conclusion about the
materiality of the noncompliances.)
Item 169 - RCAP - Eligibility requirement
Regulatory requirements on income-eligibility for Head
Start children have been in effect since 1978. 43 Fed.
Reg. 14,934 (April 7, 1978). The regulations include a
requirement that at least 90% of the children served by
each Head Start program be from families with incomes
below the Office of Management and Budget poverty line.
45 C.F.R. 1305.4. The preamble explained that this
requirement was based on 1) the statutory mandate that
services be "focused primarily" on low-income families;
and 2) the "Department's belief that such children have
the greatest need for comprehensive child development
services and that their families are the least likely to
have access to such services." 43 Fed. Reg. at 14,936.
The proposed regulation would have required that income
documentation (which applicants were required to provide)
be retained in the child's record to verify income
eligibility. In response to comments that this might
form an invasion of privacy and was too burdensome, the
Department adopted instead the following requirements,
originally at 45 C.F.R. 1305.7 and, since October 9,
1992, at 1305.4:
(d) Verification must include examination of any of
the following: Individual Income Tax Form 1040, W-2
forms, pay stubs, pay envelopes, written statements
from employers, or documentation showing current
status as recipients of public assistance.
(e) A signed statement by an employee of the Head
Start program, identifying which of these documents
was examined and stating that the child is eligible
to participate in the program, must be maintained to
indicate that income verification has been made.
The preamble explained: "To insure that primarily low-
income families participate in the program, the
Department believes that some form of income
documentation must be reviewed by the Headstart agency."
43 Fed. Reg. 14,936.
RCAP was marked out of compliance with this requirement
in the 1993 OSPRI. The reviewer noted:
Income verification does not include signature of
staff and method of verification.
Ex J-1 at 87; Ex. J-8 at 34.
In 1995, RCAP was again found out of compliance with this
requirement. Ex. J-19 at 120, 122, and 128-130. The
1993 OSPRI states that, in the FTS sample, two records
did not have any verification and six did not have
complete income verification. The review report stated:
Required information to document income, methods
used to verify income, and signatures of staff
verifying eligibility were absent from records
reviewed.
Ex. J-22 at 19.
ACF argued in its motion that RCAP had not raised a
genuine dispute because the forms submitted by RCAP do
not relate to the children in the sample. ACF also said:
"Moreover, the information in the forms shows an
incorrect implementation of the eligibility procedures
leading to the very problems shown on the face of the
forms, which are riddled with incomplete or inadequate
verification." ACF Motion at 28-29.
RCAP responded that employees are not required to verify
by looking behind documentation and not required to
retain documentation in the file. RCAP conceded,
however, that the employee must review documentation "and
note that he or she has seen it." RCAP Response at 16.
RCAP argued that the forms used by RCAP meet the test and
that its Head Start Director would "testify that a staff
person verified eligibility after review of the income
verification document." RCAP Response at 16.
At the Prehearing Conference, ACF clarified that it was
not questioning the adequacy of RCAP's forms as revised
after the 1993 review, but that the problem was that the
person signing the verification did not always check a
box to show the method used to verify income and was not
always an employee, as required.
RCAP argued that no grantee can comply perfectly and the
Board will have to decide what degree of noncompliance is
acceptable. RCAP said at most its noncompliance was
technical.
During the Prehearing Conference, the Board asked RCAP to
clarify whether it was contesting findings for the sample
files, and, if not, whether it was arguing that its
documents showed that the sample does not fairly
represent the universe of records and that RCAP did in
fact properly verify income for a larger percentage of
children than the sample showed. RCAP was also asked to
clarify how the income verification forms it submitted
related to the sample children and to the total number of
children served. Tr. 200-214; 307-308. The Board
provided RCAP a brief opportunity to clarify this in
writing. RCAP's submission failed to clarify this, so we
consider the sample to be unchallenged. 17/
RCAP's sole response was to state: "This is a form
problem. Two (2) forms were not signed by staff members,
but were signed by members of the Policy Council."
RCAP's 4/11/96 submission at 2.
The regulation plainly requires that the verification be
by an employer, and RCAP conceded that two forms for
sample children were not properly signed. The regulation
also plainly requires that the signed statement identify
the method of verification, and RCAP clearly understood
this (at least after the 1993 review). RCAP did not meet
the terms of the regulation. RCAP's proffered testimony
goes to what its policy and process is, but RCAP did not
offer testimony from the staff or Policy Council members
who signed the defective statements that would show that
in fact they followed the policy and procedure and looked
at one of the acceptable types of income documentation.
The failure of the person reviewing the income
documentation to check the method of verification is not
merely technical. The regulations require verification
through specific types of income documentation. As
explained above, stating the method of verification was
adopted as a substitute for maintaining the income
documentation in the file, and therefore is important to
ensure that, at the time the child enters the program,
the proper information has been reviewed. Without this,
there is no assurance that the grantee is consciously
directing its program toward the children most in need of
Head Start services, consistent with statutory and
regulatory intent.
RCAP, in arguing about another item, referred to the fact
that it is permitted to have 10% of its children over the
poverty level. 18/ The regulation appears to require
verification for all children served. Even if RCAP did
not need to verify income for 10% of the children in the
sample, RCAP's noncompliance is material. An additional
16% of the sample children did not have properly signed
forms indicating the method of documenting income-
eligibility as required. (Extrapolating from the sample
and assuming a universe of 290 children, this would mean
about 46 children for whom income was not properly
verified; as indicated in note 17 above, the actual
number may have been substantially higher.) Lack of
proper verification of income-eligibility for these
children means a lack of assurance that RCAP was serving
children most in need of Head Start services. This is
still substantial noncompliance with the income
verification requirement.
While this was the only noncompliance with these
requirements by RCAP directly, P-G failed to meet
eligibility and enrollment requirements, as discussed
below. These requirements are key to ensuring that Head
Start funds benefit the children to whom the program is
directed. The regulations recognize the importance of
eligibility and enrollment requirements by identifying
them as a separate basis for termination. 45 C.F.R.
1303.14(b)(5). When the requirements were recodified in
1992, grantees were notified that failure to comply with
these requirements might result in termination. 45
C.F.R. 1305.10.
Thus, we conclude that RCAP materially failed to comply
with eligibility and enrollment requirements.
Item 211 - RCAP
Regulations at 45 C.F.R. Part 1306 governing Head Start
program options were effective for funding awarded after
June 7, 1993. These regulations address the full-day
variation of a center-based program option. A Head Start
grantee may not implement such a variation unless it
demonstrates that alternative enrollment opportunities or
funding from non-Head Start sources are not available for
Head Start families needing full-day child care services.
45 C.F.R. 1306.32(d)(2). The notice of proposed
rulemaking noted that this policy was adopted from
previous Head Start guidance and that Head Start "does
not have the resources to provide a substantial amount of
full day care for children." 53 Fed. Reg. 49,569
(December 8, 1988).
The regulations specifically state:
Head Start grantees may provide full day services
only to those children and families with special
needs that justify full day services or to those
children whose parents are employed or in job
training with no caregiver present in the home. The
records of each child receiving services for more
than six hours per day must show how each child
meets the criteria stated above.
45 C.F.R. 1306.32(d)(3).
In 1993, RCAP was found out of compliance with this
requirement, and the OSPRI noted: "No documentation
provided." Ex. J-1 at 119. The review report stated:
The grantee must develop and implement a criteria to
justify full day services for families in work and
training and not other care givers at home.
Ex. J-8 at 35.
In 1995, RCAP was again found out of compliance. Ex. J-
19 at 162. The review report stated:
Review of records indicate that many files of
children receiving full-day services do not contain
signed documentation, in accordance with the
regulation, justifying full-day services.
Ex. J-22 at 22.
RCAP had responded to the review report by stating that
it had reviewed the records of the children in the FTS
sample and that only ten of those received full-day
services. RCAP said:
Of these ten nine have verified documentation in
their folders showing that parent(s) were employed,
in school or in training and that there was no
caretaker at home to care for the child. Subsequent
to the review the required documentation for the
other child was obtained. The certifications are
attached.
Ex. J-29 at 45-54; 256-65. Attached were statements for
only nine children, signed between 3/17/94 and 9/8/94 by
parents seeking to obtain full-day services.
In its motion, ACF argued that this material did not
dispute the review findings that only seven children had
properly verified forms at the time of the review, citing
Exhibit J-19 at 85-86 (the FTS sample results) and
Exhibit A-19 at 54-64. 19/ ACF noted that RCAP had also
submitted family income verification forms for numerous
children. Exs. App-29, 30, 31. ACF argued that this was
information which was either outside the sampled cases or
after the review period and therefore did not contradict
the findings. ACF argued that the forms for justifying
full-day services do not show parents were employed or in
training and had no other caretaker at home, as required.
ACF also argued that RCAP's Exhibit App-39, a roster of
Head Start children, is not what the regulation requires.
ACF Motion at 53-54.
RCAP responded that its counsel had "reviewed the form
and does not see any deficiency." RCAP Response at 26.
RCAP also said that the family income verification forms
which RCAP had submitted for the children show income pay
stubs or a W-2, which supports their employment. RCAP
said that RCAP's decision to enroll or not was based on
the income verification form and the parent's
applications. Stating that ACF had said that 70% of the
sample children had proper, verified forms, RCAP said its
view was that only one form of all those "checked" was
out of compliance. Thus, RCAP said, the Board will have
to decide if seven or nine of the forms were properly
verified forms. Id. RCAP offered no testimony on the
review findings for this item.
Exhibit J-19, at pages 85-86, lists the 40 children in
the sample (including 25 in centers operated directly by
RCAP and six in RCAP's home-based program) and at the
bottom indicates that the reviewer found that proof of
need for full-day services was lacking for 14 of the
children in RCAP's centers. The Board asked RCAP to
explain whether RCAP was saying that only ten children in
the sample were receiving full-day services, to identify
which of the ten children these were, and to identify
which nine of the children RCAP was alleging had the
right forms. Tr. at 305-306. Since RCAP could not
clarify this at the Prehearing Conference, the Board
permitted RCAP a brief opportunity to submit written
clarification.
RCAP's April 10, 1996 submission stated:
Attached to this letter is a list of the 31 children
of whom the nine full-day children are shown. Along
with the exhibit, we have included the income
verification forms [for all sample children]. . . .
There are nine children in full day, not 10, and all
of the nine were certified.
At 2. The list was not attached, but was subsequently
provided.
We first note that ACF's findings went to whether there
were signed verifications, but the regulation requires
only that the records show the need for full-day
services. RCAP appears to be correct that income
verification forms may evidence employment and thus
should be considered as part of the records relevant to
justifying full-day services. The income verification
forms, however, do not address whether there is another
caregiver in the home. On the other hand, the
application forms RCAP submitted, to be filled in by a
parent who sought to obtain full-day services, certified
that "I have no one in my home to provide day care
services for my child during the day." Ex. J-29 at 257-
265. The form also states that it is to be completed if
the parent is "employed, in school or training . . . ."
Id. Thus, we find no problem with the form itself, at
least for purposes of this summary disposition.
RCAP submitted these forms for only nine sample children,
however. The question then becomes whether we should
accept RCAP's belated assertion that there were only nine
sample children who received full-day services, rather
than the ten for whom RCAP had originally acknowledged it
needed justification. RCAP offered no testimony on this
point to support either assertion. The first time RCAP
said there were ten sample children receiving full-day
services, RCAP said that this assertion was based on "a
review of the records." Ex. J-29 at 45. In its latest
submission, RCAP simply made the assertion that the
number was nine, without providing any information on why
it had previously given ten as the number or how it had
now determined that nine was correct. 20/ In response to
ACF's motion, RCAP had indicated only that it disputed
ACF's findings with respect to nine out of ten sample
records, conceding that "one form out of all those
checked was out of compliance." RCAP Response at 26. In
view of this concession, and the numerous chances the
Board had previously given RCAP to state its grounds for
appeal, we simply cannot accept RCAP's latest unsupported
assertion as adequate and timely repudiation of its
earlier assertion. Thus, we conclude that the record
supports a finding that RCAP failed to have justification
in its records for one out the ten children in the sample
(10%) for whom such justification was required.
This 10% noncompliance therefore means RCAP provided a
significant amount of full-day services without properly
documenting that the services were needed. The
regulations and their history plainly indicate the
importance of justification of the need for full-day
services, not only to implement a full-day program, but
in the choice of children who receive them. Moreover,
RCAP conceded in the oral argument that its service area
was underserved. Tr. at 239. In light of this, any use
of scarce Head Start funds for full-day services for
children who do not need them means less funds available
to meet the needs of other children.
Thus, we disagree with RCAP that its noncompliance
evidenced in this OSPRI item is merely technical. We
conclude that RCAP failed to comply with requirements on
program options. This conclusion forms part of the basis
for termination under 45 C.F.R. 1303.14(b)(9), together
with other failures to meet regulatory requirements in
the part of the program operated by P-G.
C. Undisputed findings in the part of the program
operated by P-G
1. RCAP's responsibility as grantee
At various times during Board proceedings, RCAP tried to
dissociate itself from the findings related to its
delegate agency, P-G, even suggesting that RCAP would
join in a termination of the part of the program operated
by P-G. RCAP moved to sever the findings related to P-G
from RCAP's appeal and to have these findings considered
separately from RCAP's termination. The Board denied
this motion.
The Head Start regulations specifically provide that the
activities of a delegate agency may be the basis in whole
or in part for a termination of a grantee's assistance.
45 C.F.R. 1303.14. Under the Head Start program, the
grantee is the Head Start agency which has submitted an
approvable application and has been granted financial
assistance by ACF to operate a Head Start program. 45
C.F.R. 1303.2. In turn, a grantee may delegate by
written agreement the carrying out of all or part of its
Head Start program to a delegate agency, but the funding
for the delegate agency comes directly from the grantee
and not ACF. 45 C.F.R. 1303.2. It is the grantee who
contracts with the delegate agency and who also has the
right to reject such a refunding application or to
terminate the written agreement between it and the
delegate agency because of defects in the operation of
delegate's program, provided it gives proper notice of
the deficiencies, provides or provides for technical
assistance to the delegate to help correct the
deficiencies and gives the delegate the opportunity to
make appropriate corrections. 45 C.F.R. 1303.20.
Moreover, the program performance standard regulations
specifically provide that both grantees and their
delegate agencies must be in compliance with or exceed
the performance standards; if a grantee or its delegate
does not comply with the performance standards within the
time granted by ACF to correct the deficiencies, the
grantee will be notified promptly by ACF of the
commencement of termination proceedings. 45 C.F.R.
1304.1-5; see also 45 C.F.R. Parts 1301, 1305, 1306 and
1308 regarding other Head Start requirements which apply
both to the grantee and delegate agency and for which
failure to comply may be the basis for termination of the
grant.
Thus, the regulations, taken as a whole, indicate that it
is the grantee who is directly responsible for the
operation of the Head Start program and against whom ACF
may take appropriate action. 21/
The Board made it clear to RCAP that, while P-G had a
right to participate in any hearing involving issues
related to P-G's performance, RCAP had a responsibility
under the regulations to identify disputes regarding all
of the findings. RCAP initially indicated only generally
that 10 of the 31 items related to P-G were "challenged."
In response to the motion for summary disposition, P-G
made its own submission, effectively conceding all 31
items, and RCAP said it was not raising any disputes of
fact with respect to these items.
2. Issues with respect to RCAP's monitoring of P-G
ACF's findings based on its review of RCAP included two
findings of noncompliance related to RCAP's monitoring of
its delegates. Under Item 187, ACF found that RCAP
failed to comply with the requirement that it have and
implement a written procedure which describes an ongoing
monitoring process that assures specific program
objectives and activities are completed in a timely
manner. Exs. J-1 at 97; J-8 at 23-24; J-19 at 135-136;
J-22 at 5. Under Item 191, ACF found that RCAP failed to
have an internal monitoring procedure for delegate
agencies which assures compliance with all contract and
program requirements and includes provision of technical
assistance for areas requested by the delegate agency.
In addition, ACF said that the extensive failures in
P-G's part of the program were prima facie evidence that
RCAP had failed in its duty to monitor P-G.
While we agree with ACF that the substantial
noncompliance in P-G's part of the program is prima facie
evidence of a lack of proper monitoring, we do not agree
that it is determinative here. As RCAP argued, it
offered evidence which it said would show that it did
monitor P-G and that the noncompliance was attributable
instead to circumstances at P-G and to the fact that RCAP
could not control P-G's Board of Directors. 22/
ACF challenged the sufficiency of RCAP's offer of proof,
arguing that the testimony RCAP offered concerning
telephone contacts and on-site visits by RCAP's Executive
Director, Program Planner, and a financial officer would
not show the systematic monitoring required. ACF also
pointed out the lack of correspondence between RCAP and
P-G, RCAP's failure to take any formal action to
terminate P-G as a delegate or to force compliance by P-G
with the delegate agency contract, and RCAP's failure to
provide technical assistance.
RCAP did not allege that it had taken action to terminate
P-G's funding, but ultimately submitted some
correspondence between RCAP and P-G.
The correspondence RCAP submitted does not show any
timely formal action by RCAP officials or its Board of
Directors to terminate funding of P-G or to bring it into
compliance with program requirements. Ex. App-63. In
light of the 1993 review findings and P-G's failure to
timely hire a replacement for its Executive Director, the
lack of formal action provides strong evidence that RCAP
failed in its duty to monitor P-G. The testimony
proffered by RCAP, viewed in the light most favorable to
RCAP, might show that RCAP did monitor P-G and that this
monitoring was systematic, but it would not overcome the
evidence which shows that RCAP did not take action
consistent with what the circumstances required.
Even assuming for purposes of this decision, however,
that RCAP could show that it did all it could reasonably
be expected to do to monitor P-G under the circumstances,
this would not alter our decision here. The
noncompliances in the part of RCAP's program operated by
P-G, irrespective of monitoring by RCAP, are substantial.
While alone they might be sufficient to justify
termination only of the part of the program operated by
P-G, they are sufficient when considered together with
the noncompliances in the part of the program operated by
RCAP directly to justify termination of all of RCAP's
funding.
RCAP offered testimony that ACF had asked RCAP to take on
P-G as a delegate, suggesting that this made ACF's action
unreasonable. ACF said that RCAP had merely responded to
a request for proposal to serve the Powhatan-Goochland
area published by ACF and had itself chosen to apply for
the funds and to designate P-G as its delegate. Even if
ACF officials did ask RCAP to take on P-G as a delegate
and P-G's operations were lacking when RCAP did this (as
RCAP suggested), RCAP clearly had notice through the
regulations of the possible effects of assuming
responsibility for a delegate agency. We also note that
the record indicates that P-G has been RCAP's delegate
since 1991, and RCAP could not reasonably allege that it
did not have sufficient time to bring P-G into
compliance.
We also note that, while P-G was to serve only about 6%
of the total number of children for whom RCAP was funded
in 1995, this is still significant when the effect of the
substantial noncompliance is considered. Effectively, 48
children who should have received Head Start services
meeting program requirements did not receive those
services.
3. P-G's failures to meet performance standards
The undisputed findings we discuss here show that P-G
failed to meet Head Start performance standards,
including requirements related to key aspects of the
education component of the program, in both 1993 and
1995, in spite of being provided an opportunity to
correct its noncompliances. (As noted above, the
reviewers found that the number of noncompliances
actually increased substantially between 1993 and 1995.)
Although P-G was non-compliant in only the education
component of the Part 1304 performance standards, these
noncompliances, taken together with the significant
deficiencies in the disabilities component performance
standards in Part 1308 shows material failure to deliver
needed services to the children RCAP was funded to serve
through its delegate. Together with the noncompliance
with performance standards in the part of the program
operated directly by RCAP, they show material failure to
meet Head Start performance standards and a basis for
termination under 45 C.F.R. 1303.14(b)(4).
Item 1 - P-G
As stated above, Head Start performance standards require
a written education plan that is approved by the Policy
Council and reviewed annually and updated and/or revised
as required.
The 1993 OSPRI found that there was no documentation
indicating that the education plan had been reviewed,
updated or revised annually. Exs. J-2 at 2 and J-8 at
39. The 1995 OSPRI found no evidence of review,
revision, and/or Policy Council approval of a written
education plan. Exs. J-20 at 2 and J-22 at 38.
Item 19 - P-G
This item is based on 45 C.F.R. 1304.2-2(e)(4), which
provides:
The [education component] plan shall provide methods
for enhancing the knowledge of both staff and
parents of the educational and developmental needs
and activities of children in the program. These
shall include:
(4) Participation in staff/parent conferences and
the making of periodic home visits (no less than 2)
by members of the education staff.
The 1993 OSPRI found no documentation showing two
required "teacher" home visits; parent interviews did not
confirm the home visits; and there was no evidence that
staff and parents had jointly developed plans for child
and family. Ex. J-2 at 12. The 1993 review report
indicated that P-G did not comply with this item and that
"documentation of home visits and the information
communicated during those visits must be recorded and
kept on file." Ex. J-8 at 19. The 1995 review found
that P-G still had no documentation or records to show
that the required home visits were made. Exs. J-20 at 12
and J-22 at 39.
Item 20 - P-G
This item is based on 45 C.F.R. 1304.2-2(e)(1), which
provides that methods for enhancing the knowledge of both
staff and parents of the educational and developmental
needs and activities of children in the program shall
include:
(1) Parent participation in planning the education
program, and in center, classroom, and home-program
activities.
The 1993 OSPRI found no parent participation in planning
and no parent training. Exs. J-2 at 14-15 and J-8 at 40.
The 1995 review also found no evidence of parent
participation in the planning of the educational program,
in the classroom or in home program activities. Exs. J-
20 at 14 and J-22 at 39.
Item 21 - P-G
This item is based on 45 C.F.R. 1304.2-2(e)(2), which
provides that methods for enhancing the knowledge of both
staff and parents of the educational and developmental
needs and activities of children in the program shall
include:
(2) Parent training in activities that can be used
in the home to reinforce the learning and
development of their children in the center.
The 1993 OSPRI found no evidence of parent training in
activities that could be used in the home to reinforce
the learning and development of their children in the
center. Exs. J-2 at 14-15 and J-8 at 41. The 1995
review also determined that there was no evidence of
parent training in activities that could be used in the
home to reinforce the program and activities provided in
the center to their children. Exs. J-20 at 14 and J-22
at 39.
Item 22 - P-G
This item is based on 45 C.F.R. 1304.2-2(e)(3), which
provides that methods for enhancing the knowledge of both
staff and parents of the educational and developmental
needs and activities of children in the program shall
include:
(3) Parent training in the observation of growth
and development of their children in the home
environment and identification of and handling
special developmental needs.
The 1993 OSPRI found no evidence of parent training in
the observation of growth and development of their
children in the home environment and identification and
handling of special developmental needs. Ex. J-2 at 14.
The 1995 OSPRI also determined that there was no evidence
of parent training of this kind. Exs. J-20 at 14 and J-
22 at 39.
Item 24 - P-G
This item is based on 45 C.F.R. 1304.2-2(e)(6), which
provides that methods for enhancing the knowledge of both
staff and parents of the educational and developmental
needs and activities of children in the program shall
include:
(6) Staff training in identification of and
handling children with special needs and working
with the parents of such children, and in
coordinating relevant referral resources.
The 1993 OSPRI found no evidence of staff training in the
identification and handling of children with special
needs and working with parents of such children and
coordinating relevant referral resources. Ex. J-2 at 14.
The 1995 OSPRI also found no evidence of staff training
in special needs and staff working with parents of
special needs children. The reviewer found no
documentation available that training in the
identification and handling of special needs children,
working with parents of such children, and in
coordinating relevant referral services had been
provided. Exs. J-20 at 14 and J-22 at 39.
Item 154 - P-G
The 1993 OSPRI states under this item:
An annually updated disabilities service plan guides
the program's efforts to meet the special needs of
children with disabilities and to include them and
their families in the full range of Head Start
activities and services. 45 C.F.R. 1308.4. The
disabilities service plan :
A. Describes options for ensuring a continuum of
services to meet children with disabilities'
special needs;
B. Designates a coordinator of services for
children with disabilities;
C. Provides evidence of consultation on the plan
with Head Start parents and staff across all
components; and
D. Describes the program's efforts to ensure
Head Start children's special education and
related services are provided or supervised by
personnel meeting state qualifications by the
1994-1995 program year.
The 1993 OSPRI found that PG did not meet any of the
four indicators. Ex. J-2 at 72. The 1995 OSPRI found
noncompliance with the same item. The reviewers also
noted that the disabilities plan process as required by
regulations issued and effective February 1993 had not
been completed. Exs. J-20 at 75 and J-22 at 51.
Item 155 - P-G
This performance standard is based on 45 C.F.R.
1308.4(n) and (o), which provide that the grant
application budget form and supplement submitted with
applications for funding must reflect requests for
adequate resources to implement the objectives and
activities in the disabilities services plan and fulfill
the requirements of the disability performance standards
and the budget request must address the implementation of
the disabilities service plan.
The 1993 OSPRI found that P-G did not have sufficient
resources to implement the plan because there was no
scheduled training for staff and parents to help meet the
special needs of children with disabilities and their
families. Exs. J-2 at 73 and J-8 at 42.
The 1995 OSPRI follow-up review found the same non-
compliance as in 1993; there had not been any scheduled
training for staff or parents to help meet the special
needs of disabled children. Ex. J-22 at 52. Moreover,
the reviewer noted that the plan had not yet been
completed or written. Ex. J-20 at 76.
Item 156 - P-G
This OSPRI requirement is based on 45 C.F.R. 1308.4(l)
which requires a commitment by the delegate to develop
interagency agreements with LEAs (Local Education
Agencies) and other agencies within the service area
serving children with disabilities and documentation of
that effort if no agreements are reached.
The 1993 OSPRI found that out of five performance
indicators for this item, P-G was out of compliance with
the following three: collaborative procedures for
referrals, evaluations, IEP meetings, and placement
decisions are implemented; Head Start reports annually to
the LEA the number of children with disabilities
receiving services; and resource sharing, including joint
training, occurs. Ex. J-2 at 73. The reviewer noted
that while there is some work with LEAs, it is not
collaborative and did not result in resource sharing or
joint training. The reviewer also noted that there are
no IEP meetings. Exs. J-2 at 73 and J-8 at 42.
The 1995 review found that P-G was out of compliance with
all five of the performance indicators; thus, there was
continuing noncompliance for the three cited in 1993.
Exs. J-20 at 76 and J-22 at 52.
Item 158 - P-G
This item is based on 45 C.F.R. 1308.5(b), which
requires that staff engaged in recruitment and enrollment
of children are knowledgeable about the provisions of 45
C.F.R. Part 84, Nondiscrimination on the Basis of
Handicap in Programs and Activities Receiving or
Benefitting from Federal Financial Assistance, and of the
Americans with Disabilities Act of 1990.
The OSPRI instrument indicates that the finding is based
on the reviewer's interview with staff engaged in
recruitment and enrollment of children with disabilities
concerning their understanding and familiarity with these
laws as well as review of documentation on the program's
accessibility. Ex. J-2 at 77.
The 1993 OSPRI indicated that P-G did not comply with
this item, as only the coordinator was aware and
knowledgeable about the referenced statute and
regulations. Ex. J-2 at 77. The 1995 OSPRI also found
that P-G did not comply with this requirement; the
reviewer indicated that there was no evidence of
compliance. Exs. J-20 at 77 and J-22 at 52.
Item 161 - P-G
This OSPRI item is based on the requirement in 45 C.F.R.
1308.19 which requires that every child receiving
services in Head Start who has been evaluated and found
to have a disability and in need of special education
must have an IEP before special education and related
services are provided to ensure that comprehensive
information is used to develop the child's program.
Section 1308.19(e) specifies what each IEP for each child
must include.
The 1993 OSPRI sets forth seven performance indicators
detailing what each IEP must include. Ex. J-2 at 77. P-G
did not comply with any of the indicators. Id. The
reviewer noted that the IEPs that were available in two
out of four cases were completely out of compliance; they
did not include any of the necessary details, signatures,
and were not completed as part of an IEP meeting. Exs.
J-2 at 77 and J-8 at 43. The 1995 review found the same
deficiencies; the reviewer noted, however, that no IEPs
existed and that services were not being provided. Exs.
J-20 at 80 and J-22 at 53.
Item 162 - P-G
This OSPRI item is based on 45 C.F.R. 1308.19(k), which
requires that the IEP be implemented as soon as possible
after the IEP meeting by modifying the child's program in
accordance with the IEP and arranging for the provision
of related services. The OSPRI instrument instructs the
reviewer to observe in the classroom a sample of
individual children with disabilities to see that they
are participating in a full range of activities provided
for all children and are receiving appropriate support
services as defined by the IEP; interview all staff and
related service providers and examine records to
determine that special education and related services are
provided as called for in the IEP; and interview teachers
to assure that they have engaged in team planning to
deliver services and make adaptations to meet the special
needs of the children with disabilities they serve. Ex.
J-2 at 77.
The 1993 OSPRI indicated that PG did not comply with any
of the required indicators. Ex. J-2 at 77. The reviewer
noted that IEPs were virtually nonexistent and did not
comply with the law. Id and J-8 at 43. The 1995 review
made the same findings of noncompliance, the reviewer
noting that IEPs did not exist and that services were not
being rendered. Exs. J-20 at 80 and J-22 at 53.
Item 163 - P-G
This OSPRI item is based on the regulatory requirements
of 45 C.F.R. 1308.19(f)-(i) that specify that an IEP
must be developed by a properly constituted
multidisciplinary team; an LEA representative must be
invited in writing to the meeting if Head Start is
initiating the request for a meeting; and the meeting is
held within 30 calendar days of a determination that a
child needs special education and related services.
The 1993 OSPRI found PG did not comply with these
requirements. Ex. J-2 at 78. The reviewer noted that
the two IEPs that existed and were reviewed (out of the
four cases sampled) were not prepared by a
multidisciplinary team and had no signatures at all. Ex.
J-2 at 78 and J-8 at 48. The 1995 OSPRI found PG did not
comply and noted that no IEPS existed and no services
were being provided. Exs. J-20 at 81 and J-22 at 53.
Item 164 - P-G
This OSPRI item is based on the regulatory requirement at
45 C.F.R. 1308.19(j) that vigorous efforts must be made
to involve parents in the IEP process and how this must
be accomplished. The reviewer reviews a sample of
individual records to determine the extent of these
efforts. Ex. J-2 at 78.
For the 1993 OSPRI, the reviewer found P-G did not comply
with this requirement. Ex. J-2 at 78. The reviewer
noted that there was no indication of any IEP meetings.
Ex. J-2 at 78 and J-8 at 43. The 1995 review also found
P-G out of compliance; the reviewer noted that IEPs did
not exist. Exs. J-20 at 80 and J-22 at 53.
4. P-G's failure to meet eligibility and enrollment
requirements
Part 1305 of the Head Start regulations sets out
eligibility requirements, recruitment procedures,
selection process, limitations for enrollment, and
attendance requirements. As originally published on
April, 1978, Part 1305 contained only eligibility and
certain enrollment requirements. 43 Fed. Reg. 14,936.
The general Head Start policies related to enrollment and
attendance (including requirements for average daily
attendance) were first published in 1976 and then were
revised on November 2, 1979. 44 Fed. Reg. 63,478.
Amendments to Part 1305 published on October 9, 1992,
essentially incorporated the 1979 policies into the
codified regulation, with no substantive change that is
relevant here. 57 Fed. Reg. 46,718.
The requirements for selection of children and families
for Head Start services serve important program purposes.
The policies were designed to ensure that resources are
effectively used and that those children and families who
can benefit the most from Head Start services are
selected for the program. 57 Fed. Reg. 46,718; Ex. J-36;
see also 44 Fed. Reg. 63,478; Ex. J-35 at 8 and 10.
Under OSPRI item 174, ACF found, in both 1993 and 1995,
that P-G did not comply with the requirement of 45 C.F.R.
1305.6(d) to maintain a waiting list that ranks
children according to the program's selection criteria.
Exs. J-2 at 86 and J-8 at 44; Exs. J-20 at 89 and J-22 at
55. The failure to comply with this requirement meant
that there was no assurance that eligible children
entered the program as vacancies occurred. Thus, there
was no documentation that PG was serving the number of
eligible children it was intended to serve or that those
children and families that could benefit the most from
the services were in fact selected for the program.
Together with the RCAP's failure to meet income-
eligibility in the part of the program operated directly
by RCAP, its shows material failure to comply with Head
Start eligibility and enrollment requirements, and a
basis for termination under 45 C.F.R. 1303.14(b)(5).
5. P-G's failures to meet administration,
management, fiscal and staffing requirements
The Head Start Act requires that each Head Start agency
must observe standards of organization, management, and
administration which will assure that all Head Start
program activities are conducted with the purposes of
Head Start in mind and in a manner which is effective and
efficient. 42 U.S.C 9839. The Head Start regulations
provide that Head Start agencies (which include grantees
and delegates) are bound by the Administration of Grants
regulations found at 45 C.F.R. Part 74. 45 C.F.R.
1301.10(a).
Head Start grantees and delegates are to have written
procedures for determining the allowability, allocability
and reasonableness of costs. 45 C.F.R. 74.61(f). They
are to have in place a system for providing cost data in
a timely manner to financial and program managers to aid
in the administration of their programs. 45 C.F.R.
74.61. The regulations further require that grantees and
delegates maintain accurate property records for all
personal property and that such property be inventoried
and checked against those records at least once every two
years. 45 C.F.R. 74.140(a).
The Head Start regulations require that a Head Start
agency conduct annual self-assessments of its program
with representation of its Board of Directors on the
annual self assessment review team. 45 C.F.R. 1304.
The program must have a system of internal communication
which incudes an internal record system, as well as a
system which generates accurate information and periodic
reports of activities to boards, council and staff. 45
C.F.R. 1304.5-4. A Head Start grantee/delegate must
establish personnel policies which are approved by its
Policy Council, and must follow those policies when
hiring or terminating employees. 45 C.F.R. Part 1305.
The following repeat findings of noncompliance of
administration, management, and fiscal Head Start
requirements were undisputed. The findings show that
RCAP failed to meet grants administration requirements in
45 C.F.R. Part 1301 (which incorporate by reference the
requirements in Part 74). While we do not rely on any
grants administration findings for the part of the
program operated directly by RCAP, the deficiencies in
the part of the program operated by P-G are substantial,
particularly in two areas: lack of program monitoring
and budgetary control to ensure that program objectives
are met and lack of property control to protect the
federal interest in property acquired with federal funds.
We note that, for the part of the program operated by
P-G, RCAP received total funding for 1994-95 of almost
$190,000 (including $16,000 to purchase a minivan). Ex.
J-33. Thus, the findings provide a basis for termination
under 45 C.F.R. 1303.14(b)(6).
Other findings discussed in this section show material
failure to comply with applicable regulations, and thus
establish a basis for termination of RCAP's funding under
45 C.F.R. 1303.14(b)(9), when considered together with
the failures in the part of the program operated directly
by RCAP.
OSPRI 185 - P-G
This item regarding the administration of a delegate or
grantee's Head Start program requires that the
grantee/delegate have and implement a written procedure
for program planning which is approved by the Board and
Policy Council and which includes a process for
formulation of component objectives with adequate time
for review of final objectives, including time tables and
budgets.
The 1993 OSPRI found no information or documentation
available relative to this item during the site visit.
Exs. J-2 at 94 and J-8 at 37. The 1995 review found no
information or documentation of a process for program
planning or establishing objectives. Exs. J-20 at 96 and
J-22 at 35.
Item 186 - P-G
This item related to the administration of the program
requires that grantees/delegates have and implement a
written procedure for developing, reviewing, and revising
budgets and workplans based on identified objectives.
The 1993 OSPRI found no information or documentation
available relative to this item during the review. Exs.
J-2 at 94 and J-8 at 37. The 1995 review also found no
information or documentation of such a process. Exs. J-
20 at 97 and J-22 at 35.
Item 187 - P-G
This item is based on 45 C.F.R. Part 74, Subpart J, which
requires the grantee and/or delegate to have and
implement a written procedure which describes an ongoing
monitoring process that assures specific program
objectives and activities are completed in a timely
manner.
The 1993 OSPRI found that PG did not comply. Exs. J-2 at
94 and J-8 at 37-38. The 1995 review indicated that
although a copy of a monitoring schedule existed, no
documentation of an ongoing monitoring process or
findings with a schedule for correcting deficiencies was
available or given to reviewers when requested. Exs. J-
20 at 97 and J-22 at 35.
Item 188 - P-G
This item provides that each program shall establish and
maintain an internal communication system, including the
following: an internal reporting system based on program
objectives that generate periodic reports of activities
in progress to advise Boards, Councils and staff; an
internal record system that provides accurate
information; and a process which provides needed
information such as publications, policies, guidelines,
minutes, correspondence, to and from staff, parents,
policy council and committees, delegate agencies and
boards.
The 1993 OSPRI found no evidence that an internal
communications system existed. Exs. J-2 at 96 and J-8 at
38. The 1995 review also found no evidence that an
internal communications or reporting system existed and
found, for example, that no system had been established
to generate periodic reports of activities in progress to
advise Boards, Councils or staff. Exs. J-20 at 99 and J-
22 at 35.
Item 201 - P-G
This OSPRI item is based on 45 C.F.R. 1306.20(a), which
requires that staff of Head Start programs must be
adequately supervised.
The 1993 OSPRI found P-G did not comply with this
requirement. Id. The reviewer noted that the lines of
supervision were unclear since the Head Start Director's
death in May (some 7 months prior to the 1993 review) and
that P-G should designate an administrator to conduct
yearly evaluations. Id. and Ex. J-8 at 44. The 1995
review indicated P-G still did not comply. Ex. J-20 at
110. The report indicated that while a Director had been
named, the Director now had the responsibility for all
component services, making it impossible to provide
adequate supervision under the circumstances. Ex. J-22
at 56.
Item 256 - P-G
This OSPRI item is based on 45 C.F.R. Part 74, Subpart O,
which specifies that property management standards for
nonexpendable personal property must include accurate
property records that cover all items with a purchase
price of $500 (for Part 74) and $5000 (for items governed
under Part 92) which describe: (1) the property; the
serial number; the source of the equipment; the
titleholder of the equipment; the acquisition date of the
item; the cost of the item; the percentage of federal
dollars used for acquisition; the current location, use,
and condition of the equipment; and disposition
information on the item, including the sale price; (2)
evidence of a system for conducting a physical inventory
of property at least once every two years and verifying
the inventory with the property records; and (3) a
control system that ensures adequate safeguards to
prevent loss, damage, or theft to the property and
requires investigation and full documentation of any
loss, damage or theft. Ex. J-2 at 133.
The 1993 OSPRI found P-G did not comply with any of these
requirements. Ex. J-2 at 133. The reviewer found no
evidence of specific policy procurement procedures,
property records, an inventory system, or a control
system. Exs. J-2 at 133 and J-8 at 39. The 1995 review
also found that P-G did not comply with these property
management requirements. Ex. J-20 at 136-141. The
reviewer found no evidence of accurate property records
as required; no evidence of a system for conducting a
physical inventory of property and verifying this with
property records; and no evidence of a control system.
Ex. J-22 at 38.
6. P-G's other noncompliances
There were ten additional OSPRI items for which P-G was
found out of compliance in both 1993 and 1995 (items 16,
17, 173, 181, 182, 184, 205, 207, 218, and 252). As
explained above, P-G initially indicated through RCAP
that it was challenging these findings and submitted some
documentation. In response to the motion for summary
disposition, however, P-G did not identify any genuine
issue of material fact with respect to these items. RCAP
said that it was not disputing ACF's findings related to
these items.
While we do not need to rely on these findings for our
decision, we note that they include findings of
noncompliance relevant for each of the four separate
bases for termination and buttress our conclusions set
out above.
Conclusion
For the reasons stated above, we conclude that the review
findings for which RCAP did not timely raise a genuine
issue of fact establish four separate bases for
termination of RCAP's Head Start program:
RCAP materially failed to meet Head Start
performance standards. 45 C.F.R. 1303.14(b)(4).
RCAP materially failed to comply with eligibility
requirements and limitations on enrollment. 45
C.F.R. 1303.14(b)(5).
RCAP materially failed to meet grants administration
requirements. 45 C.F.R. 1303.14(b)(6).
RCAP materially failed to meet the requirements of
other applicable regulations. 45 C.F.R.
1303.14(b)(9).
Accordingly, we determine that there is no need for
further proceedings, and we grant ACF's motion for
summary disposition.
_____________________________
Cecilia Sparks Ford
_____________________________
Donald F. Garrett
_____________________________
Judith A. Ballard
Presiding Board Member
1.
We note that what is at issue before us is not
whether the area served by RCAP will have a Head Start
program, but whether RCAP should continue to administer
that program. ACF generally selects a replacement
grantee. ACF must consider the extent to which a
potential replacement grantee will continue services to
the eligible children who have been participating in the
program. Qualified personnel of the existing program are
also protected. 45 C.F.R. 1302.10 and 1302.11.
2. While the Travers decision does not directly
address the Head Start requirement for reasonable notice
and opportunity for a full and fair hearing, it involved
a statutory right to a formal hearing by an
administrative law judge under the Administrative
Procedure Act. See Meriden Community Action Agency v.
Shalala, No. 95-5092 (D.C. Cir., April 9, 1996) aff'g
880 F.Supp. 882 (D.D.C. 1995).
3. The concept of materiality applicable to these
proceedings is found in 45 C.F.R. 74.113. That
regulation has been amended and redesignated as 45 C.F.R.
74.62 since the 1993 review, but continues to require
materiality. See 59 Fed. Reg. 43,760 (August 25, 1994).
4. The exhibits submitted as part of the parties'
joint appeal file are designated with a "J" before the
exhibit number. RCAP's separately filed exhibits are
designated by "App" (for "appellant") and ACF's are
designated by "A". Neither party raised any objections
based on authenticity. They agreed generally that
separately submitted exhibits would be included in the
record, subject to objections based on relevancy and
weight. See, e.g., April 12, 1996 Summary of Results of
Telephone Conference at 1.
5.
RCAP asserted in response to the motion for
summary disposition that it did not receive notice of the
review results until June 1994. At the Prehearing
Conference, however, RCAP acknowledged that it did
receive copies of the OSPRIs at the exit conference, even
though it did not get the review report until June 1994.
Transcript of April 3, 1996 Prehearing Conference (Tr.)
at 45-46. RCAP denied that ACF gave it copies of
draft Grantee Improvement Plans at the time of the exit
conference, as asserted in a letter from the ACF team
leader for the 1993 review. Tr. at 44; see Exhibit
(Ex.) J-3; see also Ex. J-11. RCAP argued that the OSPRI
notes were illegible, that it did not know what ACF
wanted until it received the review report, and that
other grantees had had longer correction periods. With
respect to the items at issue here, the OSPRIs were
sufficient to give RCAP notice of the noncompliances
found and were not different from the review report.
Indeed, RCAP submitted a Grantee Improvement Plan as
early as January 1994 to address the OSPRI findings. Ex.
J-4. In any event, the admitted receipt of the review
report in late June 1994 meant that RCAP had well over 90
days to correct its deficiencies, which RCAP acknowledged
was all that was required. Tr. at 44-45.
6.
ACF provided documentation of what the TASC
provided to RCAP, including a summary listing at Exhibit
A-11. RCAP denied that it had received 27 days of
training, as it thought ACF was alleging. RCAP asserted
that it had received only 10 or 11 days of training. ACF
clarified that it was asserting that, on 27 different
days, ACF provided either training or technical
assistance through consultation or provision of guidance
materials, as listed in Exhibit A-11. RCAP was told it
should state whether it was denying that Exhibit A-11
accurately listed what was provided to RCAP, but RCAP did
not identify any specific assertion there as incorrect.
Notice of Prehearing Conference; Tr. at 63-68.
7.
In the teleconference, RCAP argued that it should
be afforded an additional opportunity to make arguments
about the significance of any noncompliance findings, if
the Board might go to decision based on only a few
findings that were conceded. The Board noted that,
during the oral argument on April 3, RCAP had had an
opportunity to argue about the significance of these
findings. ACF had clearly stated its position that ACF
had discretion to terminate based on only one or two
findings of noncompliance, and that the Board should
grant summary disposition based on the findings that were
conceded, or for which no relevant documentation was
submitted. Tr. at 12-14; 313-315. The Board nonetheless
permitted RCAP a brief opportunity to submit additional
arguments about the materiality of conceded findings.
8. We note that material failure to comply with only
one of these types of program requirements would be a
basis for termination under 45 C.F.R. 1303.14(b), which
lists the bases as alternative bases. Moreover, even if
we did not consider RCAP's failures in each of these
areas to be material, we would nonetheless conclude that
the failures cumulatively constituted a material failure
by RCAP to comply with the terms and conditions of RCAP's
grant, as required by termination provisions in 45 C.F.R.
Part 74.
9. Thus, for purposes of this decision, we assume
that RCAP would prevail on all of the findings other than
the ones on which we specifically rely here. We note,
however, that it is unlikely that, if we went to hearing,
RCAP would meet its burden of showing compliance with all
of the 20 OSPRI items for which RCAP raised a genuine
dispute.
10. RCAP did allege that it did not receive draft
Grantee Improvement Plans at the exit conference for the
1993 review, as stated in a letter from this employee.
It is undisputed, however, that RCAP nonetheless
submitted improvement plans in January 1994. RCAP
suggested that maybe ACF's evaluation of its plans as
inadequate was influenced by this employee, but offered
no evidence to support this. We do not find this
suggestion credible based on our examination of the plans
and on the undisputed fact that ACF provided considerable
assistance to RCAP in developing plans and in coming into
compliance after the 1993 review. RCAP later asserted
that the employee's attempts to undercut RCAP were shown
"by continuing to harass the RCAP administration as shown
by his numerous calls to . . . the City of Richmond
Licensing Department and by his supporting the
Chairpersons . . . in attempting to disrupt the smooth
operation of RCAP's Head Start Program." RCAP's 4/10/96
submission at 1. In light of findings related to
concerns about child safety at one of RCAP's centers and
questions concerning the license status, it is doubtful
we would find calls to licensing officials to be
inappropriate. Moreover, RCAP's allegations about this
employee being disruptive are very vague. RCAP sought to
establish this solely through questioning the ACF
employee and the former RCAP Chairperson as adverse
witnesses. Even assuming, however, that RCAP could show
inappropriate actions by this employee evidencing that he
was biased and not credible, that would not affect the
findings on which we base our decision here.
11.
The omitted notes relate to home visits, which are
not at issue here.
12. ACF also cited Exhibit J-19 at 97 as relevant to
this OSPRI item, but the OSPRI note there just goes to
whether parents interviewed were aware of procedures to
share information with parents/staff about their child's
need and progress. This note is not relevant to the
findings we discuss here.
13.
A number of ACF's findings were based on the
Family Tracking System sample, which ACF said was
randomly chosen. ACF offered testimony on the
statistical validity of its sample and noted in the
Prehearing Conference that RCAP had not claimed that the
sample was not statistically valid. RCAP did not
indicate any challenge to the statistical validity of the
sample or offer any evidence on the sample (other than
justification for full-day services as discussed below).
14. The review report cited to 45 C.F.R. 1308.4.
This section contains more general requirements, but
refers to the IEP, which is defined in 1308.19.
15. In its April 10, 1996 submission, RCAP said it
had revised its IEP on February 19, 1994 and was
attaching a copy of the revised IEP. The document
attached, however, is not an IEP, but simply a form for
giving notice to parents that a preliminary evaluation
had been done and that an IEP meeting will be scheduled.
16. ACF classified the disabilities services items
under the termination basis at 45 C.F.R. 1303.14(b)(9),
failure to abide by any other terms and conditions of an
award of financial assistance or any other applicable
law, regulations, or other applicable federal or state
requirements or policies. The requirement at issue here,
however, may also be classified as a performance
standard, relevant to the basis for termination under 45
C.F.R. 1303.14(b)(4).
17. Our own cursory review of the income verification
documents at Exhibit App-29 indicates that more than 100
of the forms contain no check indicating that the signer
looked at one of the permissible types of income
verification documents, such as a W-2. This indicates
that, if anything, the sample underestimated the number
of noncomplying forms.
18. The reviewer was concerned that the results of
the FTS sample review, which found that two children had
no forms and another two were overincome, indicated that
RCAP might not be complying with the 90% requirement.
Thus, she reviewed the forms for all 290 of the enrolled
children for purposes of determining how many were either
overincome or had no forms at all. The results of this
review showed 21 overincome children and four with no
income information at all. Ex. J-19 at 128.
19. ACF did not clarify how it calculated that only
seven children had proper forms, although for the 20
children in RCAP centers who are listed on the FTS form
on page 86 of Exhibit J-19 only seven are checked as
having "Proof of need for full day." The sample also
included, however, an additional five children from one
of RCAP's centers (St. James), only four of whom are
checked as having such proof. Ex. J-19 at 85.
20. After the Prehearing Conference, RCAP for the
first time submitted a list identifying which sample
children it claimed were full-day, part-day, or in the
home-based option. RCAP submitted no documentation to
support its classifications (simply resubmitting income
verification forms for the sample children) although RCAP
has forms that indicate the relevant program option, and
ACF had submitted only a few for the children in the
sample. See e.g., Ex. A-19 at 54. While the Board did
not specifically require RCAP to do more than identify
full-day children, this was in the context of RCAP having
asserted that only ten sample children were full-day (and
ACF not clearly disputing this). Since RCAP had not
previously claimed that only the nine children for whom
it had forms were full-day, it was incumbent on RCAP to
at least offer to support its classifications (especially
since RCAP offered no testimony on this OSPRI item). We
also note that at least three of the children identified
as full-day had improperly filled out income verification
forms, so there is no assurance that the parent was in
fact employed.
21. We also note that general grant administration
regulations at 45 C.F.R. Part 74 impose a duty on
grantees to monitor their subgrantees (which would
include a Head Start delegate agency). These regulations
are the basis for the OSPRI Items 187 and 191, which we
discuss below.
22. It is undisputed that an individual who was P-G's
Executive Director and responsible for Head Start died
about six months prior to the 1993 review; that P-G did
not hire a new Executive Director until March 1994; that
this person was unsatisfactory; that P-G's Board of
Directors gave her a bad performance review in November
1994; and that she later resigned, effective December 31,
1994. Tr. at 8-11.