Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Community Action of Greene County, Inc.
Docket No. A-98-60
Decision No. 1674
DECISION
Community Action of Greene County, Inc. (CAGC) appealed a March 17, 1998 decision by the Administration for Children and Families (ACF) terminating CAGC's Head Start grant pursuant to 45 C.F.R. . 1303.14. ACF's decision was based on the results of a September 1996 On-Site Program Review (OSPR), an October 1997 follow-up OSPR, and a November 1997 special on-site inquiry. ACF determined that these reviews established four grounds for termination: failure to correct OSPR items found to still be out of compliance with performance standards in a follow-up review; failure to conduct the Head Start program in an effective manner and provide adequate supervision of staff; hiring of Head Start staff without Policy Council approval; and failure to provide to the Policy Council fiscal information required by regulation for its effective operation.
On August 10, 1998, ACF moved for summary disposition of CAGC's appeal on the four grounds specified in ACF's March 17, 1998 determination. ACF took the position that CAGC's violations of the regulatory requirements were material and either individually, or taken together, were a sufficient basis for ACF to terminate funding. ACF asserted that disposition of this case on the record is appropriate since there are no material facts in dispute. CAGC opposed ACF's motion, arguing that there are several material facts in dispute.
Having considered fully the parties' arguments and supporting evidence, we grant ACF's motion for summary disposition. As discussed in greater detail in our analysis below, many of the issues in this case are best resolved by documentary evidence, and CAGC failed to allege that testimony at a hearing would address any disputed facts the resolution of which we find to be necessary to decide the case. Thus, we conclude that the Board may properly dispose of the case on the basis of the record now before us. We further conclude after reviewing all of the evidence of record that CAGC failed to make the requisite demonstration with respect to any of the four grounds for termination. Specifically, we find that CAGC failed to demonstrate, by a preponderance of the evidence in the record, that it corrected the 15 OSPR items found during the follow-up review to still be out of compliance with performance standards; that it conducted its grant in an effective manner and provided for adequate supervision of Head Start staff; that it sought Policy Council approval to hire numerous Head Start staff members; and that it provided documentation repeatedly requested by the Policy Council. We conclude, moreover, that each of these grounds for termination is so material as to warrant termination of CAGC's Head Start grant under 45 C.F.R. .. 1303.14(b)(4) and (b)(9).
BACKGROUND
Overview of Applicable Law
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 and periodically reviews their performance in meeting program and fiscal requirements. See generally 42 U.S.C. . 9836. ACF, pursuant to a delegation from the Secretary of the Department of Health and Human Services (HHS), has 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. Parts 1304 and 1308. Each grantee is required to develop, with the advice and concurrence of its parent policy council, a written plan to implement the performance standards for each component area, and to update it at least annually. 45 C.F.R. . 1304.1-4. Section 1304.1-5(b) provides that, upon notice that it is not in compliance with performance standards, a Head Start program has 90 days to correct its deficiencies (although this time period may be extended to a maximum of one year in the case of certain deficiencies specified in subsection (f)). If a grantee has not corrected its deficiencies within the time period stated in the notice, the grantee is to "be notified promptly by the responsible HHS official of the commencement of suspension or termination proceedings or of the intention to deny refunding . . . ."
Part 1305 contains requirements relating to eligibility, recruitment, selection, enrollment and attendance in Head Start. Section 1305.10 provides that "[a] grantee's failure to comply with the requirements of this Part may result in a denial of refunding or termination . . ." of its Head Start grant.
The Head Start regulations at 45 C.F.R. . 1303.14(b) list nine grounds on which a Head Start grantee agency may be terminated. ACF here relied on the regulatory provisions for termination when a grantee has failed to meet the performance standards for operation of its Head Start program (45 C.F.R. . 1303.14(b)(4)) and when the grantee fails to abide by any other terms and conditions of its award, or any other applicable laws, regulations, or federal or state requirements or policies (45 C.F.R. . 1303.14(b)(9)).
The Head Start Act at 42 U.S.C. . 9841(a)(3) and regulations at 45 C.F.R. . 1303.16(a) provide that a grantee shall have an opportunity for "a full and fair hearing" on a proposed 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. . 1303.14(c)(2).
Procedural Background
CAGC is a community action agency that has been the designated Head Start agency in Greene County, New York for nearly 20 years. Notice of appeal dated 4/15/98, at 1.
From September 24-27, 1996, ACF conducted an OSPR of CAGC's Head Start program. By letter dated December 13, 1996, ACF notified CAGC that it had been found out of compliance with several OSPR items corresponding to performance standards and other regulatory requirements. ACF advised CAGC that, although these items of non-compliance did not constitute deficiencies, they must nevertheless be corrected within 90 days and a certification of compliance submitted to ACF. ACF Ex. 9. CAGC submitted a plan for correction of the OSPR items of non-compliance to ACF by letter dated May 12, 1997. See ACF Ex. 77.
Subsequently, in a letter dated July 8, 1997, ACF notified CAGC that there were a number of unresolved issues that must be satisfactorily addressed to assure CAGC's "continued eligibility for receipt of Federal Head Start funds." ACF Ex. 95, at 1, 5. As relevant here, ACF directed CAGC, within 15 days of receipt of the letter: to document the actions it had taken to obtain Policy Council approval of certain personnel actions; document the status of the actions it had taken to provide fiscal information requested by the Policy Council; and submit a certification of OSPR compliance signed by the Policy Council of Record.
By letter dated August 31, 1997, however, ACF noted that CAGC and the Policy Council of Record had agreed to mediation of these issues and set August 31, 1997 as the deadline to resolve them. See ACF Ex. 99. The letter also noted that the failure to resolve these issues in a satisfactory and timely manner "may result in findings of deficiencies in your Head Start program and the initiation of adverse proceedings against your agency." Id. at 2. By letter dated August 26, 1997, the Policy Council advised ACF that it would not participate further in mediation. ACF Ex. 101. ACF subsequently advised CAGC, by letter dated September 13, 1997, that ACF would be conducting "an inquiry into the reasonableness of the Policy Council's actions as they relate to the issues enumerated in our July 8, 1997 letter," and that "ACF will consider action to terminate your grant unless we conclude the Policy Council has acted in an arbitrary, capricious or illegal manner." ACF Ex. 105, at 2. ACF conducted this special on-site inquiry from October 12-14, 1997.
ACF also conducted a follow-up OSPR from October 29-31, 1997. By letter dated March 17, 1998, ACF notified CAGC of its intent to terminate its Head Start grant. ACF stated that its two reviews had determined that CAGC failed to correct most of the items of non-compliance found in the 1996 OSPR. ACF identified 15 items of non-compliance in eight component areas that remained uncorrected and stated that these items may be considered serious deficiencies which constitute grounds for termination of CAGC's Head Start grant. ACF also stated that, based on these two reviews, it had determined that there were several other grounds for terminating the grant: hiring of Head Start staff without Policy Council approval, in violation of 45 C.F.R. . 1304.5-2(a); failure to provide required fiscal information to the Policy Council, in violation of 45 C.F.R.
. 1304.5-4(b)(3); and failure to conduct the Head Start program in an effective manner and provide adequate supervision of Head Start staff, in violation of 45 C.F.R. .. 1301.30 and 1306.20(a). ACF further stated that it had concluded that "the actions taken by the Policy Council, to the extent they relate to the issues enumerated above, on the whole were reasonable and were not arbitrary, capricious or illegal . . . ." Letter dated 3/17/98, at 9.
On April 24, 1998, CAGC timely appealed (pursuant to an extension of time granted for good cause shown), requesting a hearing on the proposed termination. In its letter acknowledging the appeal, the Board established deadlines for discovery, briefing and submission of evidence. Following the receipt of the parties' submissions, the Presiding Board Member held a telephone conference to identify the issues for hearing and to schedule a hearing. At that time, however, counsel for ACF indicated that ACF wished to file a motion for summary disposition. The Board therefore deferred scheduling a hearing in order to permit ACF to file its motion. The Board thereafter permitted CAGC to respond to the motion, and ACF to reply to CAGC's response.
Applicable Legal Standards
The standards applicable to terminations are well-settled. 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 Mansfield-Richland-Morrow Total Operation Against Poverty, Inc., DAB No. 1671 (1998); Target Area Programs for Child Development, DAB No. 1615, at 6 (1997), and cases cited therein. 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 1303.14(c)(2) provides that a grantee's appeal "must fully set forth the grounds for the appeal and be accompanied by all of the documentation that the grantee believes is relevant and supportive of its position." See also 45 C.F.R. . 16.8(a)(1), (2).
In prior cases involving a Head Start termination or denial of refunding, the Board has held that once presented with a prima facie case, a grantee must present evidence sufficient to challenge ACF's case or risk disposition of its appeal without a hearing. See, e.g., Springfield Action Commission, DAB No. 1547 at 5 (1995). 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., Lake County Economic Opportunity Council, Inc., DAB No. 1580 at 5 (1996); 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); see also 45 C.F.R. . 74.21(b)(2). 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, the Board has held that the ultimate burden of persuasion is on the grantee to show that it was in compliance with program standards.
For policy reasons, the Head Start Act and regulations do not allow grantees an unlimited amount of time to correct deficiencies in performance standards; otherwise, families would not receive the full benefits of the Head Start program and grantees would not have an incentive to improve their programs until termination or denial of refunding proceedings were initiated. Meriden at 6. Moreover, the regulations do not require ACF to provide grantees with any opportunity to correct non-compliance with requirements that are not part of the performance standards. See Lonoke Economic Development Agency, DAB No. 1568, at 53 (1996). Thus, a grantee's allegation that it came into compliance with performance standards or other requirements after the time provided for correction ended would not be relevant to a determination of whether denial of refunding or termination was warranted. ACF's December 13, 1996 letter notified CAGC of numerous OSPR items with which CAGC was found out of compliance during a September 24-27, 1996 OSPR review. Pursuant to several extensions, ACF gave CAGC until August 31, 1997 to correct these OSPR items. ACF's report on its October 29-31, 1997 follow-up OSPR visit identified 15 OSPR items which had not been corrected by the time of that review. ACF also conducted a special on-site inquiry on November 12-14, 1997. In addition to noting CAGC's failure to correct the 15 OSPR items, ACF's report on this "inquiry" found that CAGC had failed to correct a number of other deficiencies which ACF had directed CAGC to correct in its July 8, 1997 letter. The relevant time period for this matter is therefore September 24, 1996 through November 14, 1997. Accordingly, any actions that occurred outside of this period are not relevant for purposes of determining whether termination of CAGC's Head Start grant is warranted.
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. See Lake County at 6 (1996).
Further, once the Board has determined that a grantee has failed to meet program requirements, we must consider whether the deficiency or deficiencies are so material to the grantee's performance of the grant that termination is warranted. The concept of "materiality" found in 45 C.F.R. . 74.62 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. 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.
ANALYSIS
In support of its motion for summary disposition, ACF argued that the record fully supports each of the four grounds for termination, thereby making further Board proceedings unnecessary. We agree with ACF that disposition of this appeal on the existing record is appropriate. CAGC has had ample opportunity in the proceedings before the Board to develop the record and demonstrate its compliance with the applicable requirements. Many of the issues in this case are best resolved by documentary evidence. The record before us includes not only the parties' briefs but also extensive documentary exhibits submitted by both parties and numerous affidavits submitted by CAGC. Although CAGC argued that an in-person hearing was necessary, CAGC failed to identify any dispute of material fact as to the four grounds for termination that requires a hearing for its resolution. Thus, while compliance with some of the applicable requirements could conceivably be established by testimonial rather than documentary evidence, CAGC did not allege that testimony at a hearing would address any disputed facts the resolution of which we find to be necessary to decide this case. Moreover, CAGC's proffers of hearing testimony provide no basis for concluding that the testimony would address any such facts. In addition, none of the affidavits submitted by CAGC address any material facts in dispute, so that a hearing is not necessary to assess the affiants' credibility. Finally, CAGC conceded that in several instances it failed to comply with the applicable requirements, arguing instead that there were extenuating circumstances that excused its non-compliance. We find, however, that the alleged extenuating circumstances do not excuse the non-compliance or that the record conclusively establishes that such circumstances did not exist. Accordingly, we grant ACF's motion for disposition of this appeal on the record before us.
Below, we discuss in turn each of the four grounds upon which ACF proposed to terminate CAGC's Head Start grant, concluding that each one is substantiated by the record and is so material as to warrant termination.
I. Failure to Correct OSPR Items of Non-Compliance
In September 1996, ACF conducted an on-site program review (OSPR) and found CAGC out of compliance with numerous OSPR items. By letter dated December 13, 1996, ACF advised CAGC that it had found 15 OSPR items out of compliance. Specifically, ACF found that:
In its December 13, 1996 letter, ACF stated that these OSPR items must be corrected within 90 days of receipt of that letter and that a certification of such compliance must be submitted to ACF. See ACF Ex. 9. ACF wrote to CAGC again on April 17, 1997, extending the due date for the OSPR response to May 14. See ACF Ex. 65. ACF also stated that the certification of compliance must be signed by the chairperson of the Board of Directors and the chairperson of the Policy Council. By letter dated May 12, 1997, CAGC submitted its response to the OSPR report. See ACF Ex. 77. The response was signed by the Chairperson of CAGC's Board of Directors. CAGC noted in its response that the Chairperson of the Policy Council had not approved it. By letter dated July 8, 1997, ACF stated that it was unable to approve the certification of compliance because CAGC "did not provide any evidence that the Policy Council of Record . . . was involved in the process and approved the certification." ACF Ex. 95, at 4. ACF requested that CAGC submit "a Certification of OSPRI Compliance," signed by the chairperson, Board of Directors, and the chairperson, Policy Council of Record, within 15 days of CAGC's receipt of the letter. Id. ACF further stated that failure to do so "may result in a finding of deficiency in your Head Start program and may subject your agency to adverse action." Id. ACF later agreed to extend this deadline to August 31, 1997 when CAGC and the Policy Council agreed to mediation of the issue of the certification of OSPR compliance. See ACF Ex. 99, at 1. As noted in the background section of this decision, however, mediation was unsuccessful. ACF conducted a follow-up OSPR in October 1997, as well as a special on-site inquiry in November 1997, and determined that CAGC had failed to correct 15 of the items of non-compliance found in the earlier OSPR and that the Policy Council's actions with respect to this matter had been reasonable. ACF concluded that "[i]n as much as the grantee has not corrected these items of non-compliance within the timeframes prescribed in the ACF letter of December 13, 1996, and subsequent correspondence, these items of non-compliance may be considered serious deficiencies in the Head Start program and constitute grounds for termination of the grant" under 45 C.F.R. . 1304.1-5(e). ACF notice of proposed termination, dated 3/17/98, at 8. Section 1304.1-5(e) provides for notice of the commencement of suspension or termination proceedings or of the intention to deny refunding, as appropriate, "[i]f the grantee . . . has not complied with the performance standards" within the required time period.
CAGC conceded that it developed a "Community Needs Assessment program" and "Management Systems and Procedure" only after the 1998 Policy Council was seated. See CAGC Br. dated 9/14/98, at 23-24. CAGC also conceded that it lacked the Policy Council approval required to correct the remaining OSPR items at the time of the follow-up OSPR in October 1997, although it contended that it had "developed well written component plans, budget, impasses procedure, budget protocols and training procedures for the Policy Council" that were "available for review by the Policy Council by June 1997." CAGC Br. dated 9/30/98, at 2-3. On their face, these concessions establish that CAGC failed to correct all of the OSPR items of non-compliance within the relevant period.
CAGC nevertheless took the position that none of the OSPR items of non-compliance was a proper basis for termination because the Policy Council of Record had arbitrarily refused to cooperate with CAGC's attempt to prepare a plan to correct the non-compliance. CAGC stated that, after receiving the 1996 OSPR report in December 1996, CAGC promptly prepared a quality improvement plan for correction of the OSPR items and solicited Policy Council comment on and approval of the plan during the late winter and early spring of 1997. According to CAGC, if the Policy Council had approved its OSPR response in a timely manner, "the items of non-compliance would have been cured well in advance of the follow-up review in October of 1997." CAGC Br. dated 4/24/98, at 25. CAGC asserted that the Policy Council arbitrarily refused to approve the OSPR response and argued that ACF therefore could not properly terminate the grant based on CAGC's failure to correct the OSPR items.
Contrary to what CAGC alleged, however, the record does not show that CAGC attempted to consult with the Policy Council concerning correction of the OSPR items in the late winter and early spring of 1997. As indicated above, ACF issued the report on its OSPR on December 13, 1996, and set a deadline of 90 days from receipt for correction of the non-compliant OSPR items. CAGC's Executive Director asserted in an affidavit that, "[o]n or about December 13th, I met with the [Head Start Director], the Policy Council parents and Community Representatives at which time I informed them of the content of the OSPRI Report . . . ." Affidavit dated 9/14/98, at 2. Nevertheless, correspondence from CAGC's Executive Director shows that he did not provide a draft of the OSPR response to the Policy Council Chair until May 1, 1997, and that the final OSPR response was not provided to her until May 8, 1997. See CAGC Exs. MM, NN and FFF. The record also shows that a copy of the OSPR report itself was not provided to the Policy Council until May 14, 1997, the same day that CAGC sent its OSPR response to ACF. See CAGC Ex. OO, EEE and FFF. Consequently, CAGC's claim that the Policy Council was responsible for its failure to correct the OSPR items of non-compliance is not credible since CAGC delayed for months before consulting the Policy Council about the OSPR response.
CAGC also suggested that its failure to correct the OSPR items of non-compliance was excused because it relied on the Head Start Director to work with the Policy Council to develop the OSPR response. See CAGC Br. dated 9/30/98, at 4. We are not persuaded that such reliance was justified since the record shows that CAGC had notice that the Head Start Director was not performing this function as expected. The record shows that CAGC corresponded with the Head Start Director several times regarding the OSPR response (see, e.g., CAGC Exs. ZZ and AAA.) CAGC itself noted, however, that it was clear from a February 19, 1997 memorandum that the Head Start Director sent to HHS that she had not worked with the Policy Council on the OSPR response as of that date. See id., citing CAGC Ex. S-B. Moreover, CAGC noted that the portion of the OSPR response that the Head Start Director prepared and submitted to CAGC's Executive Director on March 5, 1997 "was devoid of any information as to how [she] proposed to get the Policy Council to approve the OSPRI response and the various component plans that needed their approval." See id., citing CAGC Ex. S-G. CAGC did not point to any subsequent efforts by the Head Start Director to consult with the Policy Council regarding the OSPR response. Since CAGC clearly knew by March 5 that the Head Start Director was not consulting with the Policy Council on the OSPR response, the responsibility for the continued absence of consultation falls squarely on CAGC.
Moreover, CAGC's May 12, 1997 OSPR response did not contain a certification that the OSPR items of non-compliance had been corrected, but merely consisted of a plan for correction, or Quality Improvement Plan. (Indeed, the cover letter to CAGC's OSPR response stated that "all non-compliance have been, and will continue to be corrected." ACF Ex. 77, at 2 (emphasis added).) CAGC's plan also did not contain any timetable for correction of the OSPR items of non-compliance. Thus, even if the Policy Council had approved CAGC's Quality Improvement Plan by May 14, when the Policy Council had the documents necessary for its review, there was no assurance that the OSPR items of non-compliance would have been corrected before ACF's reviews in October and November of 1997.
In summary, we conclude that CAGC cannot reasonably blame the Policy Council for CAGC's failure to correct the OSPR items of non-compliance within the relevant period when CAGC itself delayed in consulting the Policy Council concerning the OSPR response and made the choice not to move directly to correct the non-compliances. We further conclude CAGC's failure to correct the OSPR items of non-compliance constituted material non-compliance with the performance standards reflected by each of the OSPR items since CAGC necessarily also failed to have in place the basic plans and procedures required to operate a Head Start program.
Accordingly, CAGC's failure to correct 15 OSPR items of non-compliance was a proper basis for terminating CAGC's Head Start grant.
II. Failure to Conduct the Head Start Program in an Effective Manner and Provide Adequate Supervision of Head Start Staff
Section 1301.30 of 45 C.F.R. provides that "Head Start agencies . . . shall conduct the Head Start program in an effective and efficient manner . . . ." Section 1306.20(a) provides that "Grantees must provide adequate supervision of their staff." ACF found that CAGC had violated the staffing regulations for the following reasons:
ACF Ex. 95 (ACF letter dated 7/8/97) at 2.
ACF asserted that "[o]n their face, these facts . . . are prima facie evidence of inadequate and ineffective management of the Head Start program." ACF Br. dated 8/10/98, at 53.
For the most part, CAGC did not dispute the facts asserted by ACF. However, CAGC took the position that, in making these facts a ground for termination, ACF was improperly sanctioning CAGC for the management failings of the Head Start Director. See CAGC Br. dated 4/24/98, at 26-27. We disagree. As ACF pointed out, "ACF's objections go to the manner in which CAGC managed its program, and not to the substance of CAGC's particular decisions." ACF Br. dated 8/30/98, at 10. In other words, ACF did not question CAGC's reasons for suspending the Head Start Director, but rather objected to the fact that CAGC repeatedly suspended her and filled her position with a different individual each time. Because of these actions, CAGC's Head Start program lacked stable leadership throughout most of 1997. In addition, CAGC did not explain how the Head Start Director was to blame for its failure to fill the coordinator positions.
CAGC also suggested that the Policy Council was at fault in this matter because it was unwilling to approve the termination of the Head Start Director, thus preventing CAGC from selecting a permanent replacement for her. See CAGC Br. dated 4/24/98, at 26. CAGC alleged that, although it "submitted the termination of [the Head Start Director] to the Policy Council, . . . [t]he Policy Council arbitrarily refused to address the issue." Id. at 17. However, CAGC's Executive Director indicated in his affidavit that Policy Council approval to terminate the Head Start Director was not requested until October 7, 1997. Affidavit dated 4/24/98, at 13. By that time, CAGC had already suspended the Head Start Director on two separate occasions and had two Acting Head Start Directors. Thus, CAGC cannot reasonably argue that the Policy Council was responsible for its failure to provide stable leadership.
CAGC also argued that its failure to fill the Education Coordinator position was due to the fact that the Policy Council had revised the position description to require only a high school diploma, something that CAGC's Board of Directors found unacceptable. See CAGC Br. dated 9/14/98, at 29. Even if the Policy Council acted unreasonably in this regard, however, CAGC did not give any reason why it failed to fill four other coordinator positions for all or part of the year. CAGC's Head Start grant application for the period 4/1/97 - 3/31/98 requested funding for a full-time Education Coordinator, Health Coordinator, Social Services Coordinator, Parent Involvement Coordinator, Disabilities Coordinator, Nutrition Coordinator, and Transportation Coordinator. See CAGC Ex. 17 at unnumbered pages 6, 9. This document demonstrates that CAGC viewed these positions as necessary to its successful operation of a Head Start program. Moreover, coordinators were clearly necessary in view of the substantial size of CAGC's Head Start program. (CAGC's grant application for the budget period beginning 4/1/97 requested $965,000 in federal funds to run a program with a total of 178 children at four centers. See CAGC Ex. 17.) Accordingly, CAGC's failure to fill several coordinator positions for most of 1997 is compelling evidence of CAGC's failure to conduct its Head Start program in an effective and efficient manner.
Moreover, clearly the Policy Council was not implicated in the fact that one of the Acting Head Start Directors, A.V., worked only approximately 15 hours a week in that capacity for over three months (3/28/97 - 7/2/97). CAGC did not dispute that having a part-time Acting Head Start Director was detrimental to its ability to adequately supervise Head Start staff.
In summary, we conclude that, in repeatedly suspending its Head Start Director and in replacing her with a series of Acting Head Start Directors, including one who served in that capacity only 15 hours a week, and in failing to fill several component coordinator positions, CAGC failed to conduct its Head Start grant in an effective manner and provide adequate supervision of Head Start staff. In reaching this conclusion, we take no position on the merits of any dispute between CAGC and the Head Start Director or the Policy Council. Rather, we rely solely on CAGC's failure to take decisive action to ensure that the program had stable and effective leadership and coordination. We further conclude that this constituted material non-compliance with the applicable regulations since the Director and component coordinator positions were critical to the successful operation of CAGC's Head Start program.
Accordingly, we conclude that this non-compliance was a proper basis for termination of CAGC's Head Start grant.
III. Hiring of Head Start Staff Without Policy Council Approval
The Head Start regulations require that a grantee must obtain the approval of the Policy Council in order to hire the Head Start Director or any Head Start staff and must consult with the Policy Council prior to seeking such approval. 45 C.F.R. Part 1304, Appendix B, Chart C, Section III, (b) and (c). ACF interpreted this requirement in an information memorandum issued on November 5, 1987, ACYF-IM-87-33, which stated in part:
Appendix B of the Head Start Performance Standards (70.2) requires that the Policy Council/committee approve proposed actions to hire or fire Head Start staff prior to any action being taken. In addition, the Policy Council/committee must be consulted in the decision making process prior to the point of seeking approval.
ACF Ex. 1, response to question 3.
ACF found that CAGC hired or appointed certain personnel without Policy Council consultation and approval, in violation of this regulation. See ACF's notice of proposed termination dated 3/17/98, at 2-3.
On appeal, CAGC took the position that the lack of Policy Council approval was not a proper basis for termination because the Policy Council acted arbitrarily in refusing to approve the hires. However, CAGC did not provide documentation showing that it even sought Policy Council approval of any of these hires prior to making them. (Although the record is also largely devoid of evidence of consultation by CAGC with the Policy Council, ACF did not rely on this as a basis for termination.) Moreover, CAGC failed to establish, except in one case, that Policy Council approval was not required for individuals it asserted were hired on a temporary basis. Since CAGC did not show that it requested the required approvals, there can be no issue of whether the Policy Council arbitrarily withheld its approval.
Below, we discuss each individual as to whom ACF found that there was no request for Policy Council approval, finding that CAGC failed to request such approval in the case of eleven individuals and that approval was not required for only one additional individual.
J.W. - Special Education Teacher
CAGC took the position that it had requested Policy Council approval to hire J.W. In support of its position, CAGC cited a letter dated April 24, 1997, from the Interim Head Start Director to the Policy Council Chair inviting the latter to interview "the final candidate" for the position in question. CAGC Ex. E; ACF Ex. 71. CAGC also cited a note from the Interim Head Start Director indicating that the Policy Council representative left before the interview began because the chair of the purported new Policy Council was also invited to the interview. Id.
This evidence does not establish that CAGC requested the Policy Council's approval to hire J.W. In offering the Policy Council Chair an opportunity to participate in the interview, CAGC did no more than identify J.W. as a candidate. This only constituted consultation with the Policy Council prior to seeking approval of the candidate. Moreover, we see no basis for finding that the Policy Council representative's decision not to attend the interview excuses CAGC's failure to request Policy Council approval once it ultimately decided to hire that candidate.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire J.W., as required by the regulations.
E.L. - Speech Therapist
CAGC took the position that it had requested Policy Council approval to hire E.L., citing the same documentation as in the case of J.W. For the reasons discussed above, we conclude that CAGC did not request Policy Council approval to hire E.L., as required by the regulations.
J.B. - Bus Driver
CAGC took the position that it had requested Policy Council approval to hire J.B. In support of its position, CAGC cited a May 7, 1997 memorandum to the Policy Council from the Assistant to CAGC's Executive Director which stated:
The selection has been made by [N.M.] based on qualifications. The applicant selected is [J.B.]. . . . Please approve this hire at your next Policy Council meeting.
CAGC Ex. G. ACF asserted that this memorandum merely asked the Policy Council to ratify J.B.'s hiring after the fact. ACF argued that this was a clear violation of the regulatory requirement for Policy Council approval. ACF noted that another memorandum from the Executive Director's Assistant to the Policy Council Chair, also dated May 7, stated that J.B.'s start date would be May 12. See ACF Ex. 76.
We conclude that CAGC did not request Policy Council approval to hire J.B. The fact that the Executive Director's Assistant specified a start date in her memorandum indicates that J.B. had already been hired when CAGC asked for the Policy Council's approval.
CAGC also appeared to argue that CAGC's failure to request Policy Council approval to hire J.B. was irrelevant because J.B. accepted other employment before he began working for CAGC. We disagree. Regardless of how the matter was ultimately resolved, CAGC clearly disregarded the requirement for Policy Council approval of the hiring of Head Start staff.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire J.B., as required by the regulations.
A.V. - Acting Head Start Director
CAGC took the position that Policy Council approval was not required to hire A.V. because A.V. was a temporary employee. CAGC relied on ACYF-IM-87-33, which stated in relevant part:
The policy council/committee must approve/disapprove the hiring/firing of all permanent and part-time staff, including those considered probationary.
The issue of temporary staff should be addressed in the personnel policies of the grantee. There may be a need to hire temporary staff in an emergency, but employment should be limited by policy to a short period of time (30 days would be appropriate). Individuals hired on a temporary basis for a longer period of time should be considered permanent employees and subject to the actions of the policy council/committee. The point of this interpretation is to make sure that temporary hiring is not used as a mechanism for circumventing the authority of the policy council/committee.
ACF Ex. 1, response to question 2.
ACF asserted that A.V. served as Acting Head Start Director for over three months and argued that Policy Council approval was therefore required for her appointment under the terms of ACYF-IM-87-33. (CAGC noted that A.V. was Acting Head Start Director from March 28 to July 2, 1997. CAGC Br. dated 4/24/98, at 8.) We agree. CAGC's personnel policies do not contain any definition of temporary employment (although they do contain a provision on "Temporary or Substitute Employees"), as required by ACYF-IM-87-33. ACF Ex. 5, at 3rd unnumbered page. In the absence of such a definition, CAGC has no reasonable basis for arguing that a temporary appointment can exceed the 30 days suggested in ACYF-IM-87-33 as an appropriate cut-off for such an appointment. A.V. not only worked more than 30 days, but CAGC did not assert that at the time it hired her, it intended to retain her for only 30 days, so that it need not have requested Policy Council approval to hire her. (CAGC's intent at the time of hiring should logically determine whether Policy Council approval is required, since that approval must be obtained in advance of hiring.)
Accordingly, we conclude that CAGC was required by the regulations but did not request Policy Council approval to hire A.V.
C.B. - Acting Head Start Director
CAGC took the position that it requested Policy Council approval to hire C.B. In support of its position, CAGC cited a June 26, 1997 memorandum from its Executive Director to the Policy Council Chair which stated that ". . . to facilitate a more effective day to day operations management, [C.B.] will replace [A.V.] as Interim Head Start Director, effective July 7, 1997." CAGC Ex. J. ACF argued that this memorandum showed that the Policy Council was merely given notice of CAGC's decision to hire C.B. after the fact. We agree. The fact that the memorandum specified a start date indicates that C.B. had already been hired.
CAGC also cited a memorandum dated July 18, 1997 from the Executive Director to the Policy Council Chair which asked her to state "why you will not acknowledge [C.B.] as Interim Director," and stated that "[C.B.] has been directed to operate the program until the Policy Council and the Board can resolve the issue of the Interim Director." CAGC Ex. K at 4th unnumbered page. In addition, CAGC cited the minutes of a July 15, 1997 Policy Council meeting, which state in part that the Policy Council "did not recognize [C.B.] in the position [the Executive Director] put her in." Id., at 2nd unnumbered page. CAGC's reliance on these documents is misplaced, however, since on their face they show that C.B. had already been given the job.
CAGC also submitted an affidavit of C.B. which stated that her appointment as Acting Head Start Director was "submitted to the Policy Council for review and approval," but the Policy Council never acted on her appointment. Affidavit dated 4/23/98, at 1. The affidavit does not allege that approval was requested before C.B. was hired as Acting Head Start Director, as required by the regulations (nor does it contain any specific information that would tend to support the allegation that approval was requested, such as who requested Policy Council approval or when or how such a request was made).
Accordingly, we conclude that CAGC did not request Policy Council approval to hire C.B., as required by the regulations.
R.B. - Acting Head Start Director
CAGC took the position that it requested Policy Council approval to hire R.B. In support of its position, CAGC submitted an October 15, 1997 memorandum from its Executive Director to the Policy Council Chair stating that he was appointing R.B. "to the Head Start directorship on a temporary basis, not to exceed 30 days." CAGC Ex. L. While we disagree that this memorandum constitutes a request for Policy Council approval, the memorandum clearly indicates that CAGC intended to hire R.B. as a temporary employee. Moreover, R.B. was in fact employed as Acting Head Start Director for less than 30 days. See CAGC Br. dated 4/24/98, at 9, specifying R.B.'s dates of employment as 10/18/97 through 11/4/97. As discussed previously, since CAGC did not have personnel policies that defined temporary employment, we use the 30 days suggested in ACYF-IM-87-33 as the cut-off.
Accordingly, we find that, in the case of this one employee, Policy Council approval was not required.
N.M. and C.L. - Consultants
CAGC took the position that it requested Policy Council approval to hire N.M. and C.L. In support of its position, CAGC submitted a September 9, 1997 memorandum from CAGC's Executive Director to the Policy Council Chair stating, ". . . I have retained [N.M. and C.L.] on a consultant basis for the opening of Program." CAGC Ex. N, at 4th page. CAGC also submitted a September 16, 1997 memorandum from CAGC's Executive Director to the Policy Council stating that these individuals "resigned [but were] retained to consult for Program opening." Id. at 2nd page. We see no basis for finding that CAGC requested Policy Council approval of these appointments. On their face, these memoranda simply advise the Policy Council that these individuals have already been hired. As previously discussed, such after-the-fact notification of personnel actions does not satisfy the requirement to consult with and obtain the approval of the Policy Council.
CAGC also asserted that N.M. and C.L. were hired on a temporary basis and argued that Policy Council approval was therefore not required. The record shows that N.M. and C.L. were retained in early September and were still employed at the end of October, a total of more than 30 days. See ACF Ex. 112, at 6. Moreover, CAGC did not assert that it intended at the time it hired them to retain them for no more than 30 days. As noted above, since CAGC did not have personnel policies that defined temporary employment, CAGC cannot reasonably claim that a temporary appointment can exceed the 30 days suggested in ACYF-IM-87-33 as a cut-off.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire N.M. and C.L., as required by the regulations.
L.O. - Bus Driver
CAGC took the position that it requested Policy Council approval to hire L.O. CAGC contended specifically that "[o]n September 16, 1997, [CAGC's Executive Director] requested that the Policy Council act on his request to transfer [L.O.] to the new position. For more than two (2) weeks the Policy Council failed to act on this request." CAGC Br. dated 9/24/98, at 11. However, the September 16 memorandum merely lists "[L.O.], temporary kitchen aid to bus driver" as one of several "personnel decisions that have, and may take place for the opening of Head Start." CAGC Ex. N, at 1. Nothing in this memorandum can reasonably be read as requesting Policy Council approval of the hire. Furthermore, a "Payroll/Personnel Change Notice" for L.O. showing a change in L.O.'s job title from "cook asst" to "temporary bus driver" bears both an "Effective Date" and an "Approved Date" of 9/8/97. CAGC Ex. P, at 9th unnumbered page. This indicates that L.O. had started working prior to the date on which CAGC alleged that the Executive Director requested Policy Council approval to hire her.
Moreover, although the "Payroll/Personnel Change Notice" identifies L.O.'s appointment as a bus driver as temporary, it was not. CAGC did not point to any evidence in the record that at the time it hired L.O., CAGC intended to retain her for only 30 days. In addition, another "Payroll/Personnel Change Notice" shows that L.O. was returned to her permanent position as cook assistant effective November 12, 1997. CAGC Ex. P. Thus, L.O. in fact worked as a bus driver for more than 30 days. As noted above, since CAGC did not have personnel policies that defined temporary employment, CAGC cannot reasonably claim that a temporary appointment can exceed the 30 days suggested in ACYF-IM-87-33 as a cut-off.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire L.O., as required by the regulations.
D.D. and G.G. - Volunteer Classroom Aides
CAGC took the position that Policy Council approval was not required for D.D. or G.G. CAGC appeared to argue that such approval was not required because these individuals were not paid Head Start employees, but instead were required by the Greene County Department of Social Services to volunteer at Head Start as a condition of maintaining their right to receive food stamps. See CAGC Br. dated 4/24/98, at 11-12. CAGC did not explain why the requirement in the regulations for Policy Council approval of "Head Start staff" would not apply to all individuals (other than parents) working for the program, regardless of whether they were paid. We see no reason for making any distinction between paid and unpaid staff since the Policy Council's interest in assuring that the program has qualified staff working with the children is the same in either case. Moreover, CAGC's suggestion that it was required to accept the services of these individuals is misleading, since the documentation shows merely that the Department of Social Services referred them to CAGC for an interview. See CAGC Exs. Q and R. Since CAGC clearly had a choice as to whether to hire these individuals, the Policy Council was entitled to a voice in the matter.
CAGC also argued that Policy Council approval was not required because both D.D. and G.G. worked only from September 24 to October 15, 1997 and were thus temporary employees. As noted above, since CAGC did not have personnel policies that defined temporary employment, we use the 30 days suggested in ACYF-IM-87-33 as a cut-off. CAGC's intent at the time it selected these individuals rather than the time that they actually worked should logically determine whether Policy Council approval is required, since that approval must be obtained in advance of hiring. The notices from the Department of Social Services to CAGC state the number of hours "per month" that D.D. and G.G. would be required to work, suggesting that their appointments could have continued for more than a single month. See CAGC Exs. Q and R. Thus, we conclude that D.D. and G.G. were not temporary employees.
CAGC also stated that, since the Policy Council did not meet during the period that these individuals worked, the Policy Council's "approval/disapproval" was "a moot point." CAGC Br. dated 4/24/98, at 11-12. As ACF pointed out, however, the Policy Council would have to have met and approved these individuals' appointments before they began working in order for CAGC to have complied with the regulation. Moreover, if the Policy Council was not scheduled to meet before the time when CAGC wished these individuals to begin working, CAGC should have requested that the Policy Council hold a special meeting (or at least poll its members by telephone) to consider whether to approve their appointments. CAGC did not point to anything in the record that indicates that it made any such efforts.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire D.D. and G.G., as required by the regulations.
M.R. - Substitute Teaching Assistant
CAGC took the position that Policy Council approval to hire M.R. was not necessary since M.R. was a temporary employee. In support of its position, CAGC submitted a "Payroll/Personnel Change Notice" which shows that M.R. was hired effective October 17, 1996 to work as a "Teacher Assistant-Sub." "when needed." CAGC Ex. S. There is nothing in this document that indicates that the position was temporary. In any event, ACF stated that what was at issue here was a later period during which M.R. was employed as a temporary program aide. ACF pointed to a September 16, 1997 memorandum from CAGC's Executive Director to the Policy Council Chair which lists "Temporary Program Aide - [M.R.]" as one of several "personnel decisions that have, and may take place for the opening of Head Start." CAGC Ex. P. CAGC did not address this matter further. As discussed earlier, since CAGC's personnel policies did not define temporary employment, CAGC cannot reasonably argue that a temporary appointment can exceed the 30 days suggested in ACYF-IM-87-33 as the cut-off. There is nothing in the record that indicates that CAGC intended to hire M.R. for 30 days or less or even that M.R. worked in this position for that limited a time period.
Accordingly, we conclude that CAGC did not request Policy Council approval to hire M.R. as a temporary program aide in September 1997, as required by the regulations.
In summary, we conclude that CAGC did not request Policy Council approval for the hiring of eleven individuals during the relevant period (nor as a consequence did the Policy Council approve the hirings), as required by the applicable regulations. We further conclude that this constituted a material failure to comply with the regulations. The Board has previously stated that "[t]he Policy Council's authority to approve or disapprove the hiring or firing of Head Start staff is one of the major responsibilities conferred by the Head Start regulations." Lonoke at 15-16. This is so because the quality of the Head Start staff obviously has a direct impact on the quality of a Head Start program. Accordingly, CAGC's failure to request or obtain Policy Council approval prior to hiring several Head Start staff members was a proper basis for termination of CAGC's Head Start grant.
IV. Failure to Provide Required Fiscal Information to the Policy Council
The Head Start regulations require the Head Start agency to have a Parent Involvement Plan which provides "a system for the regular provision of information to members of Policy Groups" in order "to enable the Policy Group to make informed decisions in a timely and effective manner, to share professional expertise and generally to be provided with staff support." 45 C.F.R. 1304.5-4(b). (The regulations define a "Head Start Policy Group" as including the Head Start Policy Council. 45 C.F.R. Part 1304, Appendix B.) The regulations further provide that, "[a]t a minimum, information provided will include: . . . (3) Financial reports and statements of funds expended in the Head Start account; and (4) Work plans, grant applications, and personnel policies for Head Start." Id. ACF found that CAGC failed to comply with these regulations in that CAGC did not have a Parent Involvement Plan that provided a system for the regular provision of information to the Policy Council. This was part of the basis for ACF's finding, discussed previously, that CAGC failed to correct the OSPR items of non-compliance. In addition, ACF found that CAGC violated these regulations in that it failed to provide certain fiscal information requested by the Policy Council from January to June 1997. The two major types of information requested were information concerning the Head Start budget and information concerning the budget for the Child Enhancement Services (CES) program also run by CAGC.
By letter dated July 8, 1997, ACF directed CAGC to provide the fiscal information in question to the Policy Council. The Policy Council had requested ACF's assistance in obtaining this information, providing to ACF copies of all the correspondence requesting this information to which it alleged CAGC had not responded. ACF Ex. 95, at 5-6. In its March 17, 1998 notice of termination, ACF stated that, although CAGC had provided some information requested by the Policy Council, the information provided "was not sufficient nor was it provided on a timely basis to permit the Policy Council to operate effectively." At 4.
On appeal, CAGC asserted that its Executive Director responded to each request "promptly and completely." CAGC Br. dated 4/24/98, at 14. CAGC asserted specifically that "[w]hen the Policy Council sought various information, CAGC relayed that information to the Head Start Director for dissemination to the Policy Council." Id. As discussed below, we find that these assertions are not supported by the record. Moreover, CAGC did not allege that testimony at a hearing would establish that it responded to these requests.
CAGC also argued in the alternative that it was not required to provide some of the requested information to the Policy Council. As relevant here, CAGC argued that it was not required to provide information concerning its CES budget because the CES program was not funded by the Head Start grant, but rather by a contract with the Greene County Public Health Nursing Service. (The contract provided that Greene County would reimburse CAGC for providing special education services to children aged 3 to 5 who are determined to have a disability. See ACF Br. dated 8/10/98, at 45, n.12, citing Affidavit of R.S. dated 6/25/98, Ex. C.) We agree with ACF that CAGC was required to provide information concerning the CES budget because CAGC listed CES funds as other funds available to support the Head Start program under section 14 of the Head Start grant application for its 1997/98 grant. Thus, the Policy Council had a legitimate interest in the use of the CES funds.
Below, we discuss each of the Policy Council requests for fiscal information to which we conclude CAGC failed to respond.
January 29 and February 3, 1997 memoranda
In a memorandum dated January 29, 1997, addressed to the Assistant to CAGC's Executive Director, the Policy Council Chair requested the CES budget for 1997-98 and the Head Start grant "carry over balances." ACF Ex. 95, at p. 37 of enclosure. The Policy Council Chair again requested this information in a memorandum dated February 3, 1997, addressed to the Executive Director. Id. at p. 38 of enclosure. The Policy Council Chair indicated in the latter memorandum that she needed the information for the Policy Council finance committee meeting on February 11.
CAGC asserted that the CES budget reports that it sent to the Head Start Director on February 10, 1997 (at CAGC Exhibit V) were responsive to the request for the CES budget for 1997-98. ACF conceded that these reports would have responded to this portion of the Policy Council's request if provided. See ACF Br. dated 8/10/98, at 32, 45. CAGC alleged that it sent these reports to the Head Start Director on February 10, 1997, apparently relying on the fact that the reports bear a date of 2/10/97. However, this date, along with the time, appears merely to indicate when the reports were printed. CAGC did not point to other documentary evidence, or allege that it could provide testimony, that would show that the Head Start Director had these reports or provided them to the Policy Council.
CAGC asserted that it responded to the January 29 and February 3 requests for Head Start carryover balances by providing "Closeout figures for the 1997 grant" (which ended March 31, 1997) to the Head Start Director on February 11, 1997. See CAGC Br. dated 4/24/98, at 15, citing CAGC Exhibit Y as the document provided.
CAGC's position was contradicted by later correspondence between CAGC and the Head Start Director, which clearly indicated that CAGC had not provided projected closeout figures to the Head Start Director. See ACF Ex. 19 (memorandum dated 2/12/97 from CAGC's Finance Director to Head Start Director refusing to meet with Policy Council finance committee regarding calculation of projected close-out figures "since close out is a day to day operation in which the Policy Council Finance Committee has no jurisdiction"); ACF Ex. 20 (memorandum dated 2/19/97 from Head Start Director to ACF noting refusal of CAGC's Finance Director to meet "to project the close-out of the present grant"); ACF Ex. 21 (memorandum dated 2/19/97 from Head Start Director to CAGC's Finance Director reiterating request for "the projected close-out figures for this year's Refunding Grant"); ACF Ex. 28 (memorandum dated 2/21/97 from Head Start Director to Executive Director stating "I have been requesting from the Fiscal Department the projected close-out figures for the present 1996/97 Grant"); ACF Ex. 36 (memorandum dated 3/5/97 from Head Start Director to Executive Director asking why "Policy Council's several requests and my many requests for projected close-out figures" have been denied); ACF Ex. 45, at 2 (minutes of March 18, 1997 Policy Council meeting at which Head Start Director reported that there were "Still no Close Out figures"). These memoranda show that the Head Start Director was not given the close-out data to provide to the Policy Council.
Thus, there is no basis for CAGC's position that it reasonably relied on the Head Start Director to provide all the information requested in the Policy Council's January 29 and February 3 memoranda to the Policy Council.
March 7, 1997 memorandum
The Policy Council Vice-Chairperson requested information regarding the Head Start budget in a memorandum dated March 7, 1997, addressed to CAGC's Board of Directors. The Policy Council Vice-Chairperson, who had recently been chosen as the Policy Council representative to the Board, requested that the Board address at its next meeting her request for fiscal information to support the spending freeze imposed by CAGC on the current Head Start and CES budget. The Policy Council Vice-Chairperson stated that she had requested this information from CAGC's Executive Director on either March 6 or March 7, only to be told that she should set up an appointment with CAGC's Finance Director to review this information. See ACF Ex. 95, at page 42 of enclosure.
CAGC stated that it had provided the requested information to the Head Start Director by letter dated March 4, 1997, as evidenced by CAGC Exhibit DD. This letter, which was transmitted to the Head Start Director by telefacsimile on March 4, shows the amount remaining in each Head Start budget category as of February 29, 1997, but does not show any CES budget amounts. ACF did not comment directly on whether this document was responsive to the Policy Council's request, but simply took the position that since the Policy Council did not receive this information from the Head Start Director, CAGC itself was obligated to respond. See ACF Br. dated 8/10/98, at 36.
We agree with ACF that it was incumbent on CAGC to respond to the March 7 memorandum in question here. Clearly, the memorandum would not have been sent if the Policy Council had received the requested information which CAGC had furnished to the Head Start Director three working days earlier. Thus, at the very least, CAGC should have responded that this information had recently been provided to the Head Start Director. Not only did CAGC not do that, but its Executive Director, when approached in person by the Policy Council Vice-Chairperson on March 5 or 6, made no mention of having given the information to the Head Start Director but instead told the Policy Council Vice-Chairperson to ask the Finance Director for the information. Moreover, CAGC itself indicated that it learned in March 1997 that the Head Start Director was not sharing any fiscal information with the Policy Council. See CAGC Br. dated 4/24/98, at 15. Thus, CAGC may have known when it received the Policy Council Vice-Chairperson's letter that it was not justified in relying on the Head Start Director to communicate information to the Policy Council.
CAGC also appeared to challenge the legitimacy of the Policy Council Vice-Chairperson's request for information, contending that the minutes of the February 24, 1997 CAGC Board of Directors meeting indicate that the Policy Council Vice-Chairperson "was present and received detailed information concerning the budget and the use of ECS funds that she was supposed to convey to the Policy Council." CAGC Br. dated 9/14/98, at 27, citing ACF Ex. 29 (minutes of Board meeting). However, there is nothing in the minutes that indicates that a spending freeze was being imposed (although there was a resolution approving an application for a line of credit to pay April expenses and some discussion of getting a bridge loan in case grant funds were not received in time). Thus, any fiscal information provided at that Board meeting may not have addressed the concerns raised by the spending freeze.
April 16, 1997 letter and April 22, 1997 memorandum
The Policy Council Chair requested, by letter dated April 16, 1997 addressed to CAGC's Executive Director, "feedback" on several items, including the status of the Head Start spending freeze. See ACF Ex. 95, at pp. 44-45 of enclosure. The Policy Council Chair reiterated her request for this information in a memorandum dated April 22, 1997, also addressed to CAGC's Executive Director. See ACF Ex. 95, at p. 47 of enclosure.
CAGC took the position that it responded to these requests by letter dated June 23, 1997 (at CAGC Ex. HH). We reject this position because the June 23 letter does not mention the status of the Head Start spending freeze (although it addresses several of the other items listed in the Policy Council's April 16, 1997 letter).
April 17, 1997 memorandum
In an April 17, 1997 memorandum, addressed to CAGC's Finance Director, the Chair of the Policy Council's ECS Committee requested that the Finance Director attend a meeting on April 23 "so you can address our council with a detailed quarterly financial report for the Enhanced Children Services component of the Head Start Program." ACF Ex. 95, at p. 46 of enclosure. The memorandum requested "written confirmation by April 18, 1997" (presumably of the fact that the Finance Director would attend the meeting to provide the requested financial report). The memorandum also requested the CES budget from 1/1/96 to present and the CES projected budget through 12/31/97 for two different staffing patterns. ACF Ex. 95, p. 46 of enclosure.
CAGC maintained that the Finance Director responded to this memorandum by letter dated April 17, 1997. See CAGC Br. dated 4/24/98, at 20, citing CAGC Ex. II. (The brief identified the date of the Policy Council memorandum as April 22, but it clearly intended to refer to the April 17 memorandum.) Since the cited letter is a response to an April 18 memorandum from a different person and does not specifically refer to CES funds, it is not an adequate response.
June 18, 1997 memoranda
ACF found that CAGC failed to provide some of the information requested in four memoranda from the Policy Council Chair, all dated June 18, 1997 (at ACF Exhibit 95, p. 53-56 of enclosure). ACF asserted specifically that CAGC's Finance Director refused to respond to the Policy Council's requests for a breakdown of various categories of expenditures as well as for CES budgetary information. See ACF Br. dated 8/10/98, at pp. 43-44 (citing ACF Ex. 91). CAGC did not dispute ACF's finding that it failed to adequately respond to the June 18 memoranda.
In summary, we conclude that CAGC repeatedly failed over the course of several months to respond to written requests by the Policy Council for Head Start budget information to which the Policy Council was clearly entitled under section 1304.5-4(b) as well as budget information for the CES program in which the Policy Council had a legitimate interest. CAGC failed to respond to these requests even though in each instance the Policy Council took the initiative to request the information. Without knowledge of how program funds had been spent and what funds remained to be spent, the Policy Council could not properly carry out its shared responsibility under the Head Start regulations for making decisions about the nature and operation of the program. CAGC's lack of response to repeated requests for important fiscal information constituted material non-compliance with the requirement in the applicable regulations that the grantee regularly provide information to the Policy Council to enable it to make informed decisions in a timely and effective manner.
Accordingly, we conclude that CAGC's failure to respond to the Policy Council's requests was a proper basis for termination of CAGC's Head Start grant.
CONCLUSION
Based on our analysis of the record, as reflected in the discussion above, we conclude that CAGC materially failed to comply with Head Start performance standards and other regulations applicable to its Head Start grant. Thus, termination of CAGC's grant is warranted based on 45 C.F.R. . 1303.14(b)(4) and (b)(9).
______________________
Cecilia Sparks Ford
______________________
M. Terry Johnson
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Donald F. Garrett
Presiding Board Member