DEPf-\R11'vlENT O F H EALTP \!,\!D HUMAN SERVICE::' 

OJ?FICE OF INSPECTOR GENERAL 

IV ,\-SHJ;\GTO-:. DC 2020 I 

JUN 2 8 2012 

TO: 	 George Sheldon, J.D. 

Acting Assistant Secretary 

Administration for Children and Families 

FROM: S"tuart Wright 

Deputy Inspector General 

for Evaluation and Inspections 

SUBJECT: 	 Memorandum Report: ACF Strengthened Its Oversight ofHead Start 

Eligibility in Fiscal Year 2011, OEI-05-11-00140 

This memorandum report describes the changes that the Administration for Children and 

Families (ACF) made to its oversight of Head Start eligibility between fiscal years 

(FY) 2010 and 2011, the extent to which grantees complied with requirements for 

keeping eligibility information on file, and the extent to which ACF issued findings of 

noncompliance or deficiency when eligibility information was not on file. 

SUMMARY 

In response to a request from Congressman John Kline, Chairman of the Committee on 

Education and the Workforce, we evaluated ACF' s efforts to strengthen its oversight of 

Head Start grantees in response to reported problems with grantees not correctly 

verifying children's eligibility. 

Overall, we found that ACF strengthened its oversight of eligibility between FY 2010 and 

FY 2011. Specifically, ACF altered its FY 2011 triennial reviews to determine whether 

grantees kept on file the source documents proving children's eligibility. Further, ACF 

began performing unannounced triennial reviews. In addition, ACF promulgated draft 

regulations that, once final, will require grantees to keep source documents on file. 

Finally, ACF developed an online (i.e. Web) complaint process for the Head Start 

program to capture complaints that could help the agency uncover problems with 

grantees. 

According to data collected during ACF's FY 2011 triennial reviews, 79 percent of Head 

Start grantees had complete eligibility information for all sampled children. ACF was not 

consistent in issuing findings to grantees missing eligibility information in FY 2011. In 

FY 2012, ACF has taken steps to reduce this variation in issuing findings. 
 

 

 

 

 

 

 

Page 2 of 16 – George Sheldon, J.D. 

BACKGROUND 

This study responds to a congressional request. In May 2010, a Government 

Accountability Office (GAO) official testified at a congressional hearing about possible 

cases of eligibility fraud at eight Head Start grantees.1 At this hearing, ACF committed to 

improving its oversight of Head Start eligibility. Following this hearing, Congressman 

Kline, then the Ranking Member of the Committee on Education and Labor, requested 

that the Office of Inspector General (OIG) conduct a review of Head Start. 

Head Start is an ACF-administered nationwide grant program designed to promote school 

readiness in children from low-income families. Head Start grantees provide early 

childhood education; medical, dental, and mental health care; and nutritional services. 

Grantees may be local public agencies, private organizations, Native American tribes, or 

school systems. 

In FY 2011, ACF provided $8 billion to serve almost a million children enrolled at Head 

Start grantees.2 ACF awards funds to 1,624 Head Start grantees nationally. 

Head Start Eligibility Requirements 

Children are eligible for Head Start if they are of the appropriate age, and if their families 

fall within one of the following eligibility categories: 

 the family is homeless,3 

 the family is eligible for or receiving public assistance (or is potentially 

eligible in the absence of child care),4 

 the family is caring for foster children,5 or 

 the family has an income below the poverty line.6, 7 

A Head Start grantee may have up to 10 percent of its enrollment consist of children 

whose families have incomes above the poverty line. An additional 35 percent of the 

grantee’s enrollment may consist of children with family incomes between 100 and 

1 Undercover Testing Finds Fraud and Abuse at Selected Head Start Centers: Hearing Before the United 

States House of Representatives Committee on Education and Labor, 111th Cong. (2010) (Statement of
 

Gregory D. Kutz, Managing Director, Forensic Audits and Special Investigations, GAO). 

2

 Department of Health and Human Services (HHS), Fiscal Year 2011 Budget in Brief. Accessed at 

http://dhhs.gov/asfr/ob/docbudget/2011budgetinbrief.pdf on June 15, 2012. 

3

 Head Start Act § 645(a)(1)(B)(ii), 42 U.S.C. § 9840. 

4

 Head Start Act § 645(a)(1)(B)(i), 42 U.S.C. § 9840.
 5

 45 CFR § 1305.2(l). 

6 Head Start Act § 645(a)(1)(B)(i), 42 U.S.C. § 9840. 

7

 In FY 2011, the poverty line was $22,350 for a family of four. 76 Fed. Reg. 3637–3638 (Jan. 20, 2011). 

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Page 3 of 16 – George Sheldon, J.D. 

130 percent of the poverty line.8 The remaining 55 percent of enrollment must consist of 

children from families with incomes below the poverty line.9 

Families applying for Head Start services must provide information that allows Head 

Start grantees to verify that children are eligible. Families may provide information such 

as documents from relevant homeless shelters, documents regarding public assistance, 

documents confirming foster care, or income tax forms. Such documents are hereinafter 

referred to as “source documents.” 

Requirements for Head Start Grantees Verifying Eligibility 

Federal regulations require all Head Start grantees to verify eligibility before enrolling 

children whose participation is based on family income.10 To verify children’s eligibility, 

Head Start grantees must examine all source documents presented by families. Grantees 

are not required to keep copies of source documents on file, although ACF has 

encouraged grantees to do so.11, 12 

Although grantees are not required to keep source documents on file, they are required to 

keep forms demonstrating that they verified eligibility for all enrolled children.13 

Grantees must indicate on these forms what documents they examined to verify 

eligibility. They must sign these forms to attest that children are eligible for Head Start 

services. Grantees may use a form that they designed themselves or an ACF-designed 

form.14 Hereinafter, forms designed by Head Start grantees and ACF-designed forms will 

both be referred to as “verification forms.” See Appendix A for a copy of the 

ACF-designed verification form. 

8

 Families must live in a designated service area to be eligible for Head Start services. In addition, Head
 

Start grantees must establish and implement outreach and enrollment policies before enrolling children
 

from families with incomes between 100 and 130 percent of the poverty line. Head Start Act 

§ 645(a)(1)(B)(iii), 42 U.S.C. § 9840. 

9

 For American Indian or Alaskan Native grantees, up to 49 percent of enrollment may consist of children
 

from families above the poverty line. 45 CFR 1305.4(b)(3)(iv). In addition, grantees that meet certain
 

conditions and in areas with populations of 1,000 or less may establish their own criteria for eligibility. 

Head Start Act § 645(a)(2), 42 U.S.C. § 9840. 

10 45 CFR § 1305.4(c).
 11 ACF, Policy Clarifications—I—Eligibility, Recruitment, Enrollment, and Attendance, OHS-PC-I-009, 

April 23, 2007. Accessed at 

http://eclkc.ohs.acf.hhs.gov/hslc/standards/Policy%20Clarifications%20and%20FAQs on June 18, 2012. 

12 ACF, Income Eligibility for Enrollment in Head Start and Early Head Start Programs, 

ACF-PI-HS-10-02, May 10, 2010. Accessed at 

http://eclkc.ohs.acf.hhs.gov/hslc/standards/PIs/2010/resour_pri_002_051010.html on June 15, 2012. 

13 45 CFR § 1305.4(e).
 14 ACF, Income Eligibility for Enrollment in Head Start and Early Head Start Programs, 

ACF-PI-HS-10-02, May 10, 2010. Accessed at 

http://eclkc.ohs.acf.hhs.gov/hslc/standards/PIs/2010/resour_pri_002_051010.html on June 15, 2012. 

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Page 4 of 16 – George Sheldon, J.D. 

ACF Oversight of Head Start Eligibility 

Federal law requires ACF to perform periodic monitoring and oversight of Head Start 

grantees.15 ACF determines through onsite visits whether Head Start grantees abide by 

eligibility requirements. Onsite reviews should occur for first-year grantees, for 

operating grantees (on a triennial basis), for grantees that are found to be out of 

compliance, and a study—known as the Erroneous Payments Study—identifying 

improper payments. ACF further oversees grantees through yearly risk management 

meetings. 

Triennial Reviews. ACF conducts standardized, onsite reviews for each grantee once 

every 3 years. Known as “triennial reviews,” these reviews evaluate whether grantees are 

complying with a range of rules and regulations.16 In FY 2011, 537 grantees—roughly 

one-third of the total of 1,624 grantees—received triennial reviews. 

Generally, ACF sends Head Start grantees written notification 30 days prior to the date of 

an upcoming triennial review. However, ACF has the authority to perform unannounced 

reviews, including unannounced triennial reviews.17 

While onsite, triennial reviewers complete an electronic, standardized guide that aids 

them in evaluating different areas of grantees’ performance, such as eligibility 

verifications, financial management, and children’s health.18 Reviewers record the results 

of their examination in ACF’s review software. When evaluating grantees’ performance 

in verifying eligibility, reviewers examine verification forms and source documents for a 

sample of children enrolled at each Head Start grantee. Reviewers choose a separate 

sample for each grantee, based on the number of children enrolled at the grantee. 

ACF reviews the data collected during triennial reviews for each grantee and determines 

whether grantees are compliant with Federal regulations. If ACF determines that 

grantees are out of compliance with Federal regulations, it issues findings. There are two 

types of findings. The more severe type is a “finding of deficiency,” hereinafter referred 

to as a deficiency.19 The less severe type—a “finding of noncompliance,” hereinafter 

referred to as a noncompliance—is issued if a grantee is not compliant with Federal 

regulations but its infraction does not warrant a deficiency. In FY 2009, the latest year 

with data available, ACF issued deficiencies to 5 percent of grantees reviewed. That 

15 Head Start Act § 641A(c), 42 U.S.C. § 9836A. 

16 Ibid. 

17 Head Start Act § 641A(c)(1)(D), 42 U.S.C. § 9836A. 

18 Triennial reviewers may include ACF staff and contracted staff with experience in early education. 

19 A deficiency is legally defined as a systemic or substantial material failure of a grantee in specific areas
 

of performance, a systemic or material failure of the governing body of any grantee to fully exercise its 

legal and fiduciary responsibilities, or an unresolved area of noncompliance. Grantees may receive a
 

deficiency in areas of performance involving: health, safety or civil rights; denial of parental roles and 

responsibilities related to program operations; failure to comply with standards on early childhood
 

development and health services, family and community partnerships, or program design and management;
 

misuse of Federal funds; loss of legal status or financial viability; and failure to meet any other Federal or 

State requirement and unwillingness or inability to correct. Head Start Act § 637(2), 42 U.S.C. § 9832. 

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Page 5 of 16 – George Sheldon, J.D. 

same year, ACF issued noncompliances to 75 percent of grantees reviewed. 20 

Hereinafter, we will collectively refer to deficiencies and noncompliances as “findings.” 

ACF uses “findings letters” to notify all grantees of its assessment of their compliance. 

These letters outline grantees’ strengths and weaknesses, including any findings. These 

letters also describe the specific Federal regulations that are related to each finding. After 

sending findings letters, ACF may perform followup reviews of grantees that were out of 

compliance to determine whether the grantees corrected the problems that resulted in 

findings. 

Erroneous Payments Study. ACF conducts the Erroneous Payments Study each year to 

identify a national rate of improper payments to Head Start grantees. ACF defines the 

national rate of improper payments as payments to grantees that have “more than the 

allowed percentage of children enrolled whose family income exceeds the eligibility 

guidelines.”21 In FY 2011, Head Start’s national error rate was 0.6 percent, amounting to 

$43 million in improper payments.22 This was down from the previous year’s error rate 

of 1.7 percent and overpayment amount of $123 million.23 

Like triennial reviews, ACF’s Erroneous Payments Study consists of standardized onsite 

reviews. ACF chooses grantees from a stratified sample of all Head Start grantees 

receiving triennial reviews that year. The Erroneous Payments Study takes place 

concurrently with the triennial reviews, but uses a different protocol, different sampling 

methodology, and different reviewers. 

Risk Management Meetings. Staff at ACF regional offices conduct an annual risk 

management meeting with each Head Start grantee to discuss strengths and weaknesses.24 

These meetings include discussions about children’s eligibility. ACF may hold these 

meetings in person or over the phone. 

ACF’s Response to GAO’s Investigation 

In FY 2010, GAO found that employees at 8 of 13 Head Start grantees disregarded 

portions of applicants’ documents so that families would appear to be below the poverty 

line.25 In response to the GAO investigation, ACF made a series of promises to 

strengthen its oversight of eligibility. 

20 ACF, Report to Congress on Head Start Monitoring, FY 2009, p. 18.
 21 HHS, FY 2011 Agency Financial Report, November 2011, p. III-33. Accessed at 

http://www.hhs.gov/afr/2011afr.pdf on February 8, 2012. 

22 Ibid. 

23 Ibid. 

24 ACF, Head Start Risk Management Process, ACF-IM-HS-08-06, February 5, 2008. Accessed at 

http://www.acf.hhs.gov/programs/ohs/policy/im2008/acfimhs_08_06.html on March 23, 2012. 

25 GAO, Undercover Testing Finds Fraud and Abuse at Selected Head Start Centers, GAO-10-1049,
 

September 2010. 

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Page 6 of 16 – George Sheldon, J.D. 

ACF stated that it would strengthen its existing oversight processes. This included 

performing “a top-to-bottom review” of triennial reviews, the Erroneous Payments Study, 

and risk management meetings.26 

ACF also stated that it would use unannounced triennial reviews to better determine how 

Head Start grantees operate on a daily basis.27 According to ACF staff, 10 percent of 

triennial reviews in FY 2011 were to be unannounced. 

Further, ACF committed to developing new processes to improve oversight, including 

developing an online complaint process for Head Start (hereinafter referred to as a 

“Web-based hotline”) and an Office of Program Integrity.28 Established in 

September 2010, ACF’s agencywide Office of Program Integrity is intended to strengthen 

internal procedures and improve financial management in all ACF-funded programs, 

including Head Start. This Office of Program Integrity did not work on the Head Start 

program in FY 2011. 

In addition, ACF stated that it would develop new guidance and regulations regarding 

eligibility verification. Following the congressional hearing, ACF issued a program 

instruction encouraging Head Start grantees to keep source documents for eligibility 

verifications on file.29 In addition, ACF promulgated draft regulations regarding income 

eligibility.30 

Related Reports 

In 2006, OIG issued a report on enrollment levels among Head Start grantees.31 OIG 

found that almost all Head Start grantees had high enrollment levels. OIG also found that 

Head Start grantees reported that it was difficult to fill enrollment slots with children 

whose families were below the poverty line. OIG recommended that ACF address 

challenges to maintaining full enrollment. Since the report’s release, ACF has taken steps 

to meet this recommendation. 

GAO has produced two reports identifying weaknesses in ACF’s triennial reviews. In 

2005, GAO expressed concerns that triennial reviewers may not be rigorously adhering to 

the review guide, and may not achieve consistent results.32 In 2008, GAO followed up on 

26 Examining GAO’s Review of Selected Head Start Grantees: Hearing Before the United States House of
 

Representatives Committee on Education and Labor, 111th Cong. (2010) (Statement of Carmen Nazario, 

Assistant Secretary for Children and Families, HHS). 

27 Ibid. 

28 Ibid. 

29 ACF, Income Eligibility for Enrollment in Head Start and Early Head Start Grantees, 

ACF-PI-HS-10-02, May 10, 2010. Accessed at 

http://eclkc.ohs.acf.hhs.gov/hslc/standards/PIs/2010/resour_pri_002_051010.html on March 23, 2012.
 30 76 Fed. Reg. 14841–14854 (Mar. 18, 2011). 

31 OIG, Enrollment Levels in Head Start, OEI-05-06-00250, April 2007. 

32 GAO, Comprehensive Approach to Identifying and Addressing Risks Could Help Prevent Grantee 

Financial Management Weaknesses, GAO-05-176, February 2005.
 

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Page 7 of 16 – George Sheldon, J.D. 

its previous report, finding that ACF was implementing new processes that should 

improve the consistency of triennial reviews.33 

METHODOLOGY 

Scope 

This study looked at changes to ACF’s oversight of eligibility between FY 2010 and 

FY 2011. By analyzing data from this timeframe, we can determine what changes 

occurred in ACF’s oversight of eligibility immediately after the May 2010 congressional 

hearing where a GAO official testified. 

Although ACF performs other types of reviews, we analyzed data only from triennial 

reviews and the yearly Erroneous Payments Study. We did not analyze data from other 

types of reviews, such as followup reviews or reviews for first-year grantees. Because 

ACF does not always use its full standardized review guide when performing followup 

reviews, such reviews may not necessarily evaluate how grantees verify eligibility. ACF 

performed only six first-year reviews in FY 2011, so we believe that excluding these few 

reviews does not significantly affect our results. 

This study did not analyze changes that ACF may have made to its oversight processes 

unrelated to eligibility, such as new regulations regarding grant renewal. 

Data Collection and Analysis 

We reviewed: (1) documents including protocols, guides, relevant laws and regulations, 

and findings letters; (2) ACF’s national review schedule; (3) structured interviews with 

Head Start grantees and ACF; (4) triennial review data; and (5) complaint data from the 

Web-based hotline. 

Changes to ACF’s Oversight of Eligibility 

Triennial Review. We collected and analyzed FY 2010 and FY 2011 standardized review 

guides, other guidance, and national schedules, as well as interview responses, to 

determine whether and how ACF made changes to triennial reviews. 

We calculated the percentage of unannounced triennial reviews in FY 2010 and FY 2011. 

To do this, we analyzed ACF’s national schedule of reviews and documents identifying 

grantees that received an unannounced triennial review. We called all Head Start 

grantees that ACF identified as having received unannounced triennial reviews to 

confirm that these grantees did not receive advance written notifications with the dates of 

their reviews. Of these grantees, only one grantee stated that it received advance 

notification before the triennial review was conducted. For the purpose of our analysis, 

we considered this grantee to have received an announced triennial review. 

33 GAO, A More Comprehensive Risk Management Strategy and Data Improvements Could Further 

Strengthen Program, GAO-08-221, February 2008. 

ACF Strengthened Its Oversight of Head Start Eligibility in Fiscal Year 2011 (OEI-05-11-00140) 
 

Page 8 of 16 – George Sheldon, J.D. 

Erroneous Payments Study. We collected and analyzed FY 2010 and FY 2011 protocols, 

guides, data dictionaries, and interview responses to determine whether and how ACF 

changed its Erroneous Payments Study. 

Web-based Hotline. We collected and analyzed data from the complaint-tracking 

database that ACF implemented. We collected and analyzed all data since the 

Web-based hotline was developed in June 2010. After identifying all of the 

eligibility-related complaints that ACF received via this hotline, we analyzed how 

frequently ACF investigated these complaints and what actions it took to do so. 

Risk Management Meetings. We collected and analyzed FY 2010 and FY 2011 risk 

management protocols and ACF interview responses to determine whether and how ACF 

changed its risk management meetings. 

Assessing Grantee Compliance with Eligibility Requirements and Related Findings 

We reviewed triennial review data for the 533 Head Start grantees that received such 

reviews in the first three quarters of FY 2011 (i.e., from October 1, 2010, to 

June 30, 2011). During the fourth quarter of FY 2011, ACF performed only 4 triennial 

reviews, for an annual total of 537 such reviews. 

Of these 533 grantees, we analyzed triennial review data for 530 grantees. We removed 

three grantees from our analysis: one because we did not receive the triennial review 

data due to an administrative error, and two because ACF was still in the process of 

issuing findings letters to these grantees at the time of our review. The triennial review 

data for the remaining 530 grantees contained eligibility information for 49,436 sampled 

children. 

We determined the number and percentage, by grantee, of sampled children with 

complete eligibility information on file. We considered a grantee to have complete 

eligibility information if the verification forms for each sampled child: (1) were present 

in the file and signed by a grantee employee, (2) indicated which documents were 

reviewed to verify eligibility, and (3) indicated the child’s eligibility category. We 

considered a grantee to be missing eligibility information if it was missing information in 

any of these components for at least one child. 

For the sampled children, we determined what types of source documents—such as pay 

stubs or W-2 forms—were on file, and how frequently grantees kept these documents on 

file. We also determined the number and percentage of source documents kept on file for 

sampled children at each Head Start grantee. 

We collected and analyzed all findings letters for grantees missing eligibility information 

for at least one child. We determined and reviewed the instances when ACF issued a 

finding related to missing eligibility information. When written deliberations between 

ACF headquarters staff and triennial reviewers about whether to issue a finding were 

available, we reviewed those deliberations. 

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Page 9 of 16 – George Sheldon, J.D. 

We determined the average percentage of incomplete eligibility information on file 

among all grantees and among grantees that were issued findings. To determine the 

relationship between missing eligibility information and findings, we analyzed how 

frequently ACF issued findings to grantees at varying thresholds of missing eligibility 

information. 

Although we combine both kinds of findings—noncompliance and deficiency—in our 

analysis, ACF rarely issued deficiencies to grantees missing eligibility information, 

issuing a deficiency to only one such grantee. The remaining grantees received 

noncompliances. 

Limitations 

We relied on data collected by triennial reviewers. We did not independently verify these 

data. 

We also did not independently verify complaints received through the Web-based hotline. 

We did not speak with the regional office staff who investigated these complaints or 

obtain corroborating documentation outside of the complaint-tracking database. 

Nonetheless, we were able to determine whether complaints were related to eligibility 

and whether ACF followed up on these complaints. 

We analyzed and reported on data from children sampled during triennial reviews in the 

first three quarters of FY 2011. We did not project our results to all enrolled children. 

During triennial reviews, ACF collects information from a sample of children’s files at 

each Head Start grantee. However, ACF does not use the results from this sample to 

project to the universe of all children enrolled at that grantee. When determining whether 

a grantee is compliant with eligibility laws, ACF relies on eligibility information 

collected from only this sample of children’s files. 

We could not analyze whether grantee employees disregarded any source documents. 

Any documents intentionally disregarded would likely not be on file, meaning that 

neither triennial reviewers nor OIG would see these documents when reviewing a sample 

of children’s files. 

Standards 

This study was conducted in accordance with the Quality Standards for Inspection and 

Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 

RESULTS 

In FY 2011, ACF strengthened its oversight of Head Start grantees in response to 

reported problems with grantees verifying eligibility 

In response to GAO’s investigation of eight Head Start grantees that disregarded 

families’ source documents, ACF strengthened its oversight of eligibility. ACF changed 

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Page 10 of 16 – George Sheldon, J.D. 

many of its preexisting oversight processes, including triennial reviews and the Erroneous 

Payments Study. ACF did not make any changes to the risk management meetings. 

ACF improved oversight of grantees through new actions. ACF promulgated draft 

regulations and developed a Web-based hotline to receive complaints. 

ACF took steps to strengthen its oversight of eligibility by focusing on source documents. 

At the May 2010 hearing on potential eligibility fraud, ACF committed to strengthening 

its existing oversight in response to GAO’s testimony. In FY 2011, ACF began 

examining source documents in triennial reviews and the Erroneous Payments Study. 

Even though grantees were not required in FY 2011 to maintain source documents, 

examining source documents gave ACF a more complete understanding of how grantees 

were determining children’s eligibility. ACF also issued draft regulations that would 

require grantees to keep source documents on file in the future. This would allow ACF to 

use source documents to perform its own assessment of children’s eligibility. 

In FY 2011, ACF prompted triennial reviewers to examine source documents and record 

whether grantees kept source documents on file. In addition, reviewers recorded whether 

verification forms identified which source documents had been initially reviewed by 

grantee staff to determine eligibility. ACF did not collect this information in FY 2010. 

ACF also instructed triennial reviewers to interview grantee employees and parents of 

Head Start children to discover what source documents were provided as proof of 

eligibility. By interviewing these individuals, triennial reviewers may better understand 

what source documents were provided at the time the child was enrolled. 

In addition, ACF added a question to its guide for the Erroneous Payments Study 

regarding the location of source documents. In both FY 2010 and FY 2011, ACF 

instructed reviewers for the Erroneous Payments Study to record which source 

documents were kept on file. Beginning in FY 2011, ACF prompted reviewers to record 

the location of source documents. Due to privacy concerns, some grantees may not keep 

source documents such as W-2 forms on file alongside the required verification forms. 

Without the prompt, reviewers for the Erroneous Payments Study in the past might have 

overlooked optional source documents kept in a separate location. 

In March 2011, ACF promulgated draft regulations. Once final, these regulations will 

increase the evidence that grantees must keep on file to support their eligibility 

determinations. These regulations would require grantees to keep source documents on 

file for all children. They would also require grantees to collect and retain signed 

statements from Head Start families attesting that the families had submitted complete 

and accurate eligibility information. The regulations would also require grantee staff to 

attend training on verifying eligibility, including how to identify eligibility fraud and how 

to verify source documents prior to enrollment. 

The regulations should increase the number of grantees keeping source documents; in the 

absence of such regulations, not all grantees kept source documents on file for all 

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Page 11 of 16 – George Sheldon, J.D. 

children. Almost a third of grantees did not keep source documents on file for any 

children sampled in the first three quarters of FY 2011. Only 13 percent of grantees kept 

source documents on file for all children sampled. See Chart B-1 in Appendix B for a 

breakdown showing different types and percentages of source documents kept on file in 

the first three quarters of FY 2011. 

ACF began performing unannounced triennial reviews. Following the congressional 

hearing about potential eligibility-related fraud, ACF promised to conduct unannounced 

triennial reviews. ACF reviewers began performing such reviews in July 2010, 2 months 

after the hearing. Two percent of FY 2010 triennial reviews were unannounced; all were 

conducted in the final quarter of FY 2010. In FY 2011, 11 percent of triennial reviews 

were unannounced. 

ACF investigated complaints related to eligibility that were submitted through its new 

Web-based hotline. Following the congressional hearing, ACF created a Web-based 

hotline for complaints. ACF advertised this Web-based hotline through an email to all 

Head Start grantees and 14,000 subscribers to Head Start-related email updates. By 

November 2011, ACF had received 289 complaints through its Web-based hotline. 

Of the 289 complaints, 16 were related to eligibility. These 16 complaints implicated 

15 separate grantees. These complaints were related to grantees and parents disregarding 

source documents, grantees enrolling “over-income” children in Head Start, or grantees 

not prioritizing the neediest children for enrollment. 

After investigation, ACF closed all Web-based hotline complaints related to eligibility. 

For all 16 complaints, ACF did not find any evidence of wrongdoing. 

ACF regional staff used a variety of methods to investigate the 16 Web-based hotline 

complaints related to eligibility. In five cases, ACF regional staff met with grantee 

employees onsite to review and discuss eligibility practices and policies. In one case, 

ACF regional staff performed a desk review of eligibility information. In seven cases, 

ACF regional staff had conversations with employees at the grantees in question. In 

three cases, ACF regional staff did not document specific actions taken to investigate 

these complaints. 

ACF’s triennial reviews found that most grantees had complete eligibility 

information for all children sampled 

Most grantees had complete eligibility information for all children sampled. Specifically, 

79 percent of grantees (417 out of 530) had required eligibility information for all 

children sampled in the first three quarters of FY 2011. Grantees were considered to 

have complete eligibility information if the verification forms for each sampled child: 

(1) were present and signed by grantee employees, (2) indicated which documents the 

grantee employees examined to verify the child’s eligibility, and (3) indicated the child’s 

eligibility category. 

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The 21 percent of grantees that were missing eligibility information were usually missing 

information for few children sampled. This group of grantees consisted of 113 of the 

530 grantees that received a triennial review in the first three quarters of FY 2011. 

These 113 grantees were missing eligibility information for an average of 8 percent of 

children sampled. The median percentage of information missing was 4 percent. The 

range was less than 1 percent to 100 percent.34 Only 3 percent of all grantees were 

missing information for 11 percent or more of children sampled. Chart 1 shows a 

breakdown of grantees by percentage of missing information. 

Chart 1: Percentage of Missing Eligibility Information Among Grantees 

79% 

18% 

3% Complete eligibility 

information (n=417) 

Missing eligibility information 

in 1-10% of children's files 

(n=96) 

Missing eligibility information 

in 11-100% of children's files 

(n= 17) 

Source: OIG analysis of triennial review data from the first three quarters of FY 2011. 

ACF was not consistent in issuing findings to grantees missing eligibility 

information 

ACF did not issue findings to all grantees missing eligibility information. After 

reviewing grantees’ data collected during triennial reviews, ACF issued findings to only 

20 of the 113 grantees missing eligibility information. Of the 20 grantees that received a 

finding, 8 had missing eligibility information for 10 percent or less of sampled children. 

The remaining 12 grantees were missing eligibility information for 11 percent or more of 

sampled children. 

ACF did not always issue findings to all grantees missing similar amounts of information. 

For example, ACF issued a finding to one grantee missing information for 18 percent of 

34 Only one grantee was missing eligibility information for 100 percent of children sampled. This grantee 

lacked grantee signatures on all of the required verification forms, but otherwise the required forms were 

present and had complete eligibility information. 

ACF Strengthened Its Oversight of Head Start Eligibility in Fiscal Year 2011 (OEI-05-11-00140) 
 

 

Page 13 of 16 – George Sheldon, J.D. 

sampled children. However, ACF did not issue a finding to a grantee missing 

information for 19 percent of sampled children. 

Despite some inconsistency in issuing findings, ACF usually issued findings to grantees 

that were missing higher percentages of eligibility information. ACF issued findings to 

the majority (12 of 17) of the grantees missing information for 11 percent or more of 

sampled children. However, ACF issued findings to few (8 of 96) grantees missing 

information for 10 percent or less of sampled children. In FY 2011, ACF did not set a 

percentage of missing eligibility information that would trigger the issuance of a finding. 

However, in practice a threshold emerged, as ACF usually issued findings to grantees 

missing information in 11 percent or more of children’s files. Further, ACF staff reported 

developing a threshold for issuing findings in FY 2012. See Chart 2 for a breakdown of 

grantees by percentage of missing information. 

Chart 2: Findings by Percentage of Missing Eligibility Information 

10% 18% 

67% 

80% 

100% 90% 82% 

33% 

20% 

1% or less 

n=32 

2-5% 

n=42 

6-10% 

n=22 

11 -25% 

n=12 

More than 25% 

n=5 

Received Finding Did Not Receive Finding 

Source: OIG analysis of triennial review data from the first three quarters of FY 2011. 

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Page 14 of 16 – George Sheldon, J.D. 

CONCLUSION 

In response to a congressional request, we conducted a review of ACF’s monitoring and 

oversight of Head Start eligibility. ACF strengthened its oversight of eligibility in 

FY 2011 by improving its triennial reviews and its Erroneous Payments Study. ACF also 

promulgated draft regulations regarding eligibility and established a Web-based hotline 

for complaints. 

Once final, the regulations regarding eligibility will increase the evidence that grantees
 

must keep on file to support their eligibility verifications. The regulations would require 

grantees to keep source documents on file for all children. In addition, the regulations 

would require grantees to collect and retain statements signed by Head Start families. 

The statements would attest that the families had submitted complete and accurate 

eligibility information. 

Overall, in FY 2011 grantees largely kept required eligibility information. However, 

ACF was not consistent in issuing findings to grantees missing eligibility information. 

ACF has already taken steps to address this slight variability in issuing findings. In 

FY 2012, ACF staff reported setting a threshold for issuing findings related to missing 

eligibility information. By doing so, ACF is making an effort to increase consistency in 

issuing findings to grantees. 

This memorandum report is being issued directly in final form because it contains no 

recommendations. If you have comments or questions about this report, please provide 

them within 60 days. Please refer to report number OEI-05-11-00140 in all 

correspondence. 

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APPENDIX A 

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Page 16 of 16 – George Sheldon, J.D. 

APPENDIX B 

Chart B-1: Types and Percentages of Source Documents Kept on File 

30 

25 

22 

10 

8 

6 5 5 

1 1 

Source: Office of Inspector General analysis of triennial review data from the first three quarters of fiscal year 2011. 

Grantees may have multiple source documents on file for a child; as a result, percentages exceed 100. 

ACF Strengthened Its Oversight of Head Start Eligibility in Fiscal Year 2011 (OEI-05-11-00140)