Department of Health and Human Servces


OFFICE OF


INSPECTOR GENERAL


A REVIEW OF HHS CHILDREN'


PROGRAMS


:vCE. 

Richard P. Kusserow 

INSPECTOR GENERA I1 q",faa MACH 1992 
OFFCE OF INSPECfOR GENERA 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as

amended. is to protect the integrity of the Department of Health and Human Servce' (HHS) programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by three OIG operating components: the Offce of Audit Servces, the 

Office of Invcstigations, and the Offce of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems, and recmmends courses to


correct them.


OFFCE OF AUDIT SERVICE 

The OIG's Office of Audit Servces (OAS) provides all auditing servce for HHS, either by
 co'nducting audits with its own audit resources or by overseeing audit work done by others.


. Audits examine the performance of HHS programs and/or its grantee and contractors in 

carryng out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote ecnomy and effciency throughout the Department. 

OFFICE OF INTIGATIONS 

The OIG's Office of Investigations (01) conducts criminal, civi, and admitrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative effort of 01 lead to cral convictions, 

administrative sanctions, or civil money penalties. The 01 also overs State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFCE OF EVALUATION AN INSPECTONS 

The OIG's Offce of Evaluation and Inspections (OEI) conducts shor-term management and


program evaluations (called inspections) that lOCUS on isues of concern to the Department


the Congress, and the public. Tbe findings and recmmendations contained in these inpetion 

report generate rapid, accurate, and up-to-date information on the effciency, wlnerabilty, 

and effectiveness of departmental programs. 

This report was prepared under the direction of Emile Baebel, Chef, Public Health and 

Human Servce, Offce of Evaluation and Inspetions. Participating in the project was: 

Susan E. Hardwick 
Department of Health and Human 
 Servces 

OFFICE OF


INSPECTOR GENERAL


REVIEW OF HHS CHILDREN'


PROGRAMS


Vl' 

Richard P. Kusserow 

INSPECTOR GENERA 

cIa OEI-12-91-01510 
EXECUTIVE SUMMAR 


PUROSE 

The purpose of this report is to consolidate recent Office of Inspector General (DIG) 

findings on programs of the Department of Health and Human Servces (HHS) that 

protect the health and welfare of children. 

BACKGROUN 

Children need adequate income, access to health care, positive opportunities for 

development, and stable family environments. HHS programs touch on all these 

fundamental needs. Some HHS programs have recently been expanded to provide 

more servces to children, and the Administration for Children and Familes (ACF) 

was created to faciltate coordination and cooperation among children s programs. 

While change is underway to improve servces for children, more improvements could 

be made. In the past few years, the OIG has released a number of reports 

recommending management or policy improvements in the programs of the 

Department that serve children. Our recommendations were targeted at improving 

the quality of 
 ervces and program effciency and effectiveness. Agency offcials have 

implemented some of these recommendations. 

SCOPE 

This report has been organized into four broad issue areas that deal with the problems 

that some children face: income, health care, educational and developmental 

opportunities, and living environment. In each issue area, we identify how the 

Department deals with specific aspects. of these problems and the fidings of DIG 

reviews. 

ISUE 

ADEQUATE INCOME 

Maxmizing family economic self-suffciency through child support 

A specifc set of practices at the State and local level generally results in 

establishing patemity, the first step in child support. 

Many opportnities exist for improved child support collections with both AFDC 

and non-AFDC absent parents. 

Ineffective gamishment systems hamper child support collections. 
Problematic cash management practices weaken the child support program. 

Reducing error and fraud in AFC 

Successful anti-fraud efforts help reduce the AFDC e"or rate. 

ADEQUATE HEAll 

Ensuring that States expand their eligibilty under existing Medicaid policy for 

pregnant women and children 

Many barrers ext in implementing new Medicaid policies for pregnant women 

and children. 

Reducing infant mortality and morbidity . 

Prenatal and perinatal care programs can be improved by special management 

strategies. 

Ensuring that children have health insurance 

Detecting and pursuing available health care for children of absent parents could 

be greatly improved. 

EDUCATIONAL AN DEVELOPMENTAL OPPORTUES 

Exanding and managing Head Start effectively 

The Head Start expansion poses many management challenges. 

Head Start partcipants from dysfnctional families are more difcult to serve. 

Exanding the monitoring effort of Head' Start to ensure program quality 

Procedures and tools for monitoring the Head Start program are incomplete. 

Ensuring that children receive high quality child care 

State child care regulations vary considerably from State to State. 
STABLE LING ENVONMENT 

Identifyng potential administrative changes in the foster care system to control costs 

Administrative costs have rien dramatically, but most of the costs are actually for


child placement services.


Foster care maintenance payments are often made to ineligible children.


Improving the quality and availabilty of servces in the State child welfare system 

Administrative barrers cause excessive delays in freeing children for adoption. 

Placing minority children in adoptive homes often requires special practces. 

Improving access to treatment and support servces for drug-exposed and abandoned 

children 

Crack babies have a tremendous impact on the child welfare system. 

Many obstacles ext to placing boarder babies in adoptive homes, but some cities 

are successfl. 

iii 
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... ........... ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. .. . . . .. . . 

TABLE OF CONTENTS


EXECUIV SUMY 80 D..... 0 ..".0.0",. 

INODUCTION. . 

ISSUES . . . . . . . . . . . . . . . . . . . . . . 3


Adequate Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


Maxmizing family economic self-suffciency through child support. . . . . . . . . 3


Reducing error and fraud in AFDC ............................... 5


Adequate Health Care . . . . . . . . . . . 6


Ensuring that States expand their eligtbilty under existing Medicaid policy for


pregnant women and children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


Reducing infant mortality and morbidity. . 7


Ensuring that children have health' insurance . . . . . . . . . . . . . . . . . . . . . . . . 8


Educational & Developmental Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


Exanding and managing Head Start effectively


Exanding monitoring effort of Head Start to ensure program quality. . . .. 


Ensuring that children receive high quality child care


Stable Living Environment 

Identifyng potential administrative changes in the foster care system to control 

costs 

Improving the quality and availabilty of servces in the State child welfare 

system 

Improving access to treatment and support servces for drug-exposed and 

abandoned children 

ENDNOTES 
INTRODUCTION


PUROSE 

The purpose of this report is to consolidate recent Offce of Inspector General (DIG) 

findings on programs of the Department of Health and Human Servces (HHS) that 

protect the health and welfare of children. OIG reports generally examine a specific 

issue dealing with a specific program, but the range of subject matter the DIG has 

examined has allowed for coverage of broad Issues and the programs related to those 

issues. By consolidating the main points of these reports, we hope to provide a more 

comprehensive examination of children s issues and how the Department is dealing 

with those issues. 

BACKGROUN 

Many of today s children face significant hardships--broken familes, malnutrition, 

physical and emotional abuse, disease, and lack of developmental and educational 

opportunities. These hardships have been compounded by societal problems such as 

drugs, povert, homelessness, and AIS. No single solution exists for the problems 

that face children today. Children need adequate income, access to health care 

positive opportunities for development, and stable family environments. 

Programs of HHS touch on all these fundamental needs. Aid to Families with 

Dependent Children (AFDC) and Child Support Enforcement (CSE) help to ensure 

income security for familes. Medicaid provides health care to children. The Head 

Start Program provides educational and developmental activities during the formative 

pre-school years. The Foster Care and Adoption Assistance program works to ensure 

that vulnerable children live in stable environments. Numerous smaller programs 

address children s needs as well. 

The Secretary has a strong commitment to improving HHS programs for children as 

evidenced in his Program Directions, a departmental strategic plan for dealing with 

these issues now and in the near future. Almost all of the Program Directions involve 

children s programs either directly or indirectly. 

Some HHS programs have recently been expanded to provide more servces to 

children. By FY 1991, the Head Start program was projected to expand enrollment by 

an additional 150 000 children as well as to improve the quality of servce provided. 

The Omnibus Reconcilation Act (OBRA) of 1989 required all States to set a 

minimum Medicaid income eligibilty threshold at 133 percent of the Federal poverty 

level for both pregnant women and children below age six. OBRA 90 called for 

States to annually phase in coverage for all children up to age 19 in familes with 

incomes below 100 percent of povert.2 Child care legislation was enacted in 1990 

and regulations have been developed (although not yet finalized). 
Another step forward for children was the creadon of the Administration for Children 

and Familes (ACF), which consolidated the Family Support Administration. and the 

Office of Human Development Servces. . Now, many of the programs that provide 

servces to children are administered by one agency. The consolidation will facilitate 

coordination and cooperation among children s programs. 

While change is underway to improve servces for children, more improvements could 

be made. In the past few years, the DIG has released a number of reports 

recommending management or policy improvements in the programs of the 

'Department that serve children. Our recommendations were targeted at improving 

the quality of servces and program efficiency and effectiveness. Agency officials have 

implemented some of these recommendations. 

SCOPE 

This report has been organized into four broad issue areas that deal with the problems 

that some children face: income, health care, educational and developmental 

opportunities, and living environment. In each issue area, we identify how the 

Department is involved in dealing with specific aspects of these problems and the 

findings and major recommendations of DIG reviews. The following areas and 

programs are covered: Child Support Enforcement, Aid to Familes with Dependent 

Children, Medicaid, prenatal care, Head tart, child care, foster care, adoption, and 

drug-exposed children. 
ISSUES


ADEQUATE INCOME 

The Department of Health and Human Servces administers two priary programs 

that provide familes with income assistance and security--Child Support Enforcement 

and Aid to Familes with Dependent Children. Child support enforcement, in 

reinforcing the need for individual and parental responsibilty and as a method of 

offsetting the AFDC program, is a strong and important element of the Family 

Support Act of 1988. The CSE program provides grants to States to enforce 

obligations of absent parents to support their children by locating absent parents 

establishing paternity when necessary, and establishing and enforcing child support 

orders. All familes with an absent parent can receive servces from CSE, whether 

they receive AFC benefits or not. Since many single-parent familes live close to the 

poverty level, the regular payment of child support may be essential in avoiding 

welfare dependency. 

When child support is not paid or is not suffpient, AFC becomes the income source 

of last resort. More specifically, a family unit becomes eligible for AFDC when a 

dependent child, under 18 years of age, is deprived of parental support as the result of 

a parent s death, mental or physical incapacity, loss of employment, or most common 

absence from the home. With the passage of the Family Support Act of 1988, the 

AFDC philosophy shifted to assisting needy children and parents in moving from 

welfare dependency to self-suffciency. 

The Office of Inspector General conducts reviews of the CSE and AFC programs to 

ensure that eligible persons are receiving servces and benefits, and that the programs 

run efficiently and effectively. DIG studies have addressed the problem of lack of 

adequate income for children and familes from the perspective of (1) maxizng family economic self-sufficiency through child support and (2) reducing error and 

fraud in AFDC. 

axmizin fam ecnomic self-sufciency though chid support 

One of the main steps towards ensuring income security of children and familes is 

maxmize family economic self-sufficiency through child support paid by the absent 

parent, both for AFC familes and non-AFDC familes. Failure to pay child support 

can have devastating economic effects on the custodial parent and children. In many 

cases, welfare dependency is the only option.3 However, even though child support is 

a tremendous resource, approximately one-third of non-custodial parents do not pay 

child support and many others do not pay what the court has ordered them to pay. 

The crucial first step of child support enforcement is establishing paternity and the 

DIG examined effective paternity establishment practices. In addition, we have also 

found ways to increase child support collections through periodically and systematically 
reviewing absent parent earnings and through strengthening wage garnishment 

programs. 

spci set of prctes at th State an loal leel genUy res 

establihig patem, th fi stp in chi support 

Establishing paternity is the first step towards making certain that child support 

is paid. Different States have different approaches and practices for paternity 

establishment. However, some practices are more effective than others. 

DIG study found that successful paternity establishment is the result of the 

following practices: (1) soliciting support for the paternty establishment 

program, (2) clarifyng responsibilty for obtaining intake information, (3) 

promoting improved parental cooperation, (4) streamlining adjudication of 

paternity establishment, and (5) instituting effective case management 

controls.5 These practices can improve the rate of paternity establishment. 

Many opport er for imprved chi support collctns wih both AFDC 

and non-AFDC absen parents 

We found that while AFC absent parents may have little or no earnngs when

AFC eligibilty is initially established, their earnings generally increase over 

time. Accordingly, child support collections of AFC parents could be 

increased significantly if CSE agencies would systematically review the earnings 

of absent parents.6 In addition, we found that a logical, systematic review of 

non-AFDC child support cases would also substantially increase child support 

collections. Some of the non-AFC cases did at one time receive AFC 

benefits and some arrearages were incurred at that time. We estimated 

between $765 and $850 milion could be collected by targeting those parents 

currently earnng over $10 000, whose cases presumably represent AFC 

arrearages stil owed. The Federal savings represented by this range would be 

approximately $245 to $270 mil on. 

We recommended that the Offce of Child Support Enforcement (OCSE) 

annually match Social Security Administration (SSA) or Internal Revenue 

Servce (IRS) records, relying on data submitted by the States. The ACF 

agreed that there is a great deal of potential for increasing child support 

collections, but ACF did not concur with the recommendation since it goes 

beyond the review and modification requirements of the Family Support Act of 

1988. 

A specific group of non-AFDC parents that we examined was Federal 

employees. We identified more than 65 000 absent parents who work for the 

Federal Government and who may owe as much as $284 milion in past due 

child support. We estimated that current annual child support payments could 

be increased conservatively by $46.6 milion. We recommended that States 

implement immediate wage withholding. The OCSE agreed with the 
recommendation and States were to implement this requirement by November 

1990. 

Ineectie garnhm syst ha chi suport collns. 

Although wage withholding is an effective method of increasing child support 

collections, employers encounter problems with garnishment systems. We 

found that Federal and non-Federal employers had systems for processing child 

support garnishments in compliance with Federal regulations, but that the 

employers encountered impediments to timely and effcient processing of child 

support garnishments. These impediments include lack of detailed guidance 

regarding State and Federal laws for child support garnishments, lack of 

standardized forms for court orders, State and court requests for data that 

require departures from their normal pay and disbursement cycles, and lack of 

electronic funds transfer capabilty. by State withholding agencies and other 

collection authorities. We determined that only one Federal and one nonFederal employer in our sample collected fees to cover costs of processing child 

support garnishments.


We proposed that ACF direct State CSE agencies to establish an electronic 

fund transfer system that has the capabilty of expediting the payment process. 

The ACF has moved forward with the Electronic Funds Transfer Pilot Program 

which will transfer funds electronically to provide a seamless flow of collections 

and information from the employer to the child support agency. 

Problemati cash managem prcties weak th chi support pram. 

Some of the cash management practices in the State CSE programs are 

problematic. In some CSE programs (1) interest and other income is not offset 

against child support expenditures, (2) controls are not adequate for handling 

unidentified payments, (3) collections are deposited untimely and/or in noninterest bearing accounts, and (4) un distributable/unidentified IV-D collections 

are not adequately allocated between the Federal and State Government to 

distribute the applicable Federal share. We recommended that OCSE work 

with the States to improve cash management practices. As a result, OCSE 

distributed a nationwide bulletin requesting that each State review the totality 

of their operations for weaknesses in internal control over handling 

collections. 

Reducing error and fraud in AFC 

Limited resources at the State and Federal levels force the AFDC program to avoid 

payment errors as well as ensure that benefits go to those familes who are truly 

eligible. Error control and fraud control are crucial components of the AFDC system; 

l:lt is why the DIG has focused on those areas. 
Succes ant-frud efort help rede th AFDC enr rate 

We identified three reasons some States are more successful than others in 

reducing AFC payment errors and determned those factors that prevent most 

States from meeting their AFDC error rate reduction goals. First, the threat of 

fiscal disallowances compels States to emphasize AFC error rate reduction. 

Second, States successful in error reduction have fostered the attitude that 

every person in the AFDC network statewide is important and accountable for 

assuring accurate benefit payments.u Third, pre-entitlement fraud screening, 

as used in the California Welfare Fraud Early Detection and Prevention 

program, has been effective at reducing AFDC fraud. This program 

investigates irregularities in applications quickly and effciently, disallowing 

applicants who provide misinformation on their application. On the other 

hand, most traditional law enforcement approaches to reduce AFC fraud 

have been ineffective. As a result of the DIG study, ACF revised regulations 

effective October 1989 to require that States implement a pre-eligibilty fraud 

detection and prevention system as a condition of State plan approval.12 

ADEQUATE HEATH 

Medicaid is the major HHS program that helps finance health care for children when 

they are not covered by private insurance. It provides grants to States for medical 

care for low-income persons, the majority of which are children and familes. Each 

State administers its own Medicaid program, setting eligibilty and coverage standards 

within broad Federal guidelines. Within Medicaid, the Early and Periodic Screening, 

Diagnosis and Treatment (EPSDT) program is specifcally for children and is designed 

to assure the availability and accessibilty of required health care servces as well as 

help children use servces effectively. 

Other programs within the Department focus on delivering health care servces to 

children and mothers. These programs include the Maternal and Child Health Care 

Block Grant and the Community and Migrant Health Centers. Additionally, a special 

initiative, the Comprehensive Perinatal Care Program, has provided funding to 

community and migrant hea th centers, specifically for periatal care. 

In addition to the specific programs that provide health care, the CSE program is 

required by statute to assure that children of-absent parents are covered by the absent 

parent s health insurance. This requirement has the potential to be the deciding factor 

in whether a child receives health care. 

The DIG reviews whether the health programs are ensuring that their servces are 

accessible to eligible children and familes, run in an effective manner, and utilzed 

appropriately. Recent DIG work has examined Medicaid expansions to ensure that 

States effectively expand their eligibility for pregnant women. Studies have assessed 

managing and implementing infant mortality programs. The DIG has also reviewed 
the CSE program s compliance with the requirement that children be covered by their 

absent parent s health insurance. 

Enurg that States exand their eligibilty under extig Medcad policy for

pregnant women and chidren 

Lack of adequate health care for women and children prompted Congress to enact 

significant Medicaid eligibilty expansions in recent years. The Omnibus Reconcilation 

Act (OBRA) of 1986 enabled States to expand eligibilty for women to receive 

Medicaid-covered prenatal care.13 However, we have found problems with these 

. expansions. 

Many barr ext in impleg ne Medaid poli for pregnt wome 

and chilen.


We found that problems exist in implementing the new Medicaid expansions. 

First, some States are not aggessively enrolling pregnant women in Medicaid 

and do little or no outreach. Next, women are not completing the 

cumbersome application process due to lengthy, complex forms and multiple 

application sites and appointments. Lastly, States have diffculty recruiting 

prenatal care providers because many providers do not accept Medicaid 

patients. This shortage of obstetricians limits States' capacity to deliver 

adequate and timely prenatal care. 

To address these problems, we recommended that HCF A develop a 

comprehensive outreach strategy, simplify and streamline the application 

process, and develop incentives to increase provider participation. 

Reducig inant mortty and morbidity 

In 1990, the United States ranked 21st . among industrialized countries in infant 

mortality-- 1 deaths per 1000 live births. Although the infant mortality rates in the 

United States have decreased during the past decade, the rate of decline has slowed in 

recent years. Infant mortality rates among certain ethnic groups and in certain urban 

and rural geographic area remain highP Federal, State, and local programs exist to 

help reduce the infant mortality rate. DIG studies have examined some of these 

programs. 

Prenatal and petal care programs can be improved by specil management 

strateg. 

The Comprehensive Perinatal Care Program (CPCP) provides supplemental 

funds for enhancing perinatal care systems in community and migrant health 

centers to improve the pregnancy outcomes and health status of women and 

infants served by these centers. We found that the goals and objectives set 

forth in CPCP grant proposals approved by the Public Health Servce (PHS) 
have been in accord with the intended purposes of the program. However, we 

also found that many areas of the country with high rates of infant mortality have not been receivg CPCP funds. In response to our report, PHS revised 

the grant approval process to require CPCP grantees to submit both a budget 

and a narrative report detailng the specific uses of the funds. In addition, PHS 

reexamined its approach for allocating CPCP funds to assure that these limited 

funds are targeted to areas of highest need.


On the local level through an in-depth review of the Boston Healthy Baby 

Program, important insights we gained into how infant mortality programs can 

be managed to achieve the best results include (1) using vital statistics data to 

target geographical areas where. high risk women reside and developing 

aggressive outreach networks in those target areas using various neighborhood 

resources; (2) using a standardized screening process to identify women at high 

risk within the target area and developing program guidelines for triage 

purposes; (3) ensuring that contact with program staff occurs at time of 

screening; (4) placing first level priority on funding for clinical servces that are 

stable and adequate to meet demand and developing formal liages between 

prenatal care sites and hospitals to enhance continuity of care for each case; 

and (5) providing educational and social servces to high risk women beginning 

in the first trimester and using multidisciplinary staff to design servce plans 

based on individual client needs. . These implementation strategies can 

contribute significantly to the success of Federal, State, and local efforts to 

lower the incidence of inant mortality. 

Enurg that chidren have heath inurance 

Children must have health insurance to receive adequate health care. However, the 

National Commission on Children estimates that 8.3 milion children do not have 

health insurance; one-half of these children live below the povert line. Medicaid 

covers only an estimated 59 percent of. poor children.20 Some children lack coverage 

because the parents' employers do not provide health insurance. 21 However, many 

children belong to familes in which an absent parent may be eligible for health 

insurance through an employer that could provide coverage for the employee 

children. Although required by law, this does not always happen. As a result, the 

children may remain uninsured, or, if eligible, they may receive Medicaid, thus making 

Medicaid the primary payer. We have examined this issue of absent parent liabilty in 

depth and found significant room for improvement. 

Detectig and purg availble health care for chilen of absent parents coul be greatly improved 

To ensure health coverage for children, the DIG found that State CSE agencies 

should petition for including medical support as part of all child support orders. 

This would allow State Medicaid programs to avoid expenditures for medical 

servces for the children of these covered absent parents and could result in 
Medicaid program savings of $33 milion annually.22 23 We then determined 

that, as of June 1, 1990, only 46 percent of State CSE programs had criteria 

developed by State Chid Support Enforcement agencies to target cases with 

high potential for medicai support and to identify the most effective criteria and 

practices, as Federal regulations require. Further, we found that less than half 

of the 54 States can modify existing court orders for the sole purpose of 

including medical support. 

We recommended that ACF enforce current regulations regarding targeting 

medical support and place additional emphasis on its importance. As a result 

the requirement for States to develop criteria is now being audited for 

substantial compliance, and the review of targeting criteria is now included in 

the Program Results Audit Guide. The ACF has also since issued regulations 

that state that the availabilty of reasonably priced insurance must be treated as 

adequate grounds for petitioning for modification of the support order. 

Additionally, a loophole exists for some absent parents due to the Employee 

Retirement Income Security Act of 1974 (ERISA). Because self-insurers are 

exempt under ERISA from State regulation of insurance, ERISA prevents 

States from assuring that many AFC dependent children are covered under 

their absent parents' group health insurance plans. The pool of self-insurers 

has grown considerably since passage of ERISA, increasing the signficance of 

this gap in coverage. In 1985, almost half of firms with 100 employees or more 

were self-insured, doubling the figure from four years earlier. As more and 

more businesses self-insure, the exposure for the Medicaid program in fiancing health care for employees and their children grows. We recommended that 

HCFA and ACF address ERISA preemption problems when drafting a 

legislative proposal to require States to prohibit discrimination in insurance 

plans on the basis of residence. 

EDUCATIONAL AN DEVLOPMENTAL OPPORTUNIES 

HHS funds programs that provide developmental and educational activities for 

children that might not have them otherwse. Foremost of these programs is Head 

Start, providing comprehensive educational, nutritional, social, health and other 

services primarily to low income preschool children and their familes. It has recently 

been expanded to include many more children and to strengthen the program. 

HHS funds a number of child care programs. The major new program resulted from 

the passage of the Child Care and Development Block Grant Act of 1990. This block 

grant will provide financial assistance to low-income familes to help them find and pay 

for quality child care. It will also improve the quality and increase the supply of child 

care available to all families.26 Other child care programs include At-Risk Child


Care, JOBS Child Care, Transitional Child Care, and many smaller programs such as 

Comprehensive Child Development Centers, Child Care Licensing Grants, Dependent 
Care Grants, Temporary Child Care and Crisis Nurseries, and Child Development 

Scholarships. 

As with all HHS programs, the Inspector General has oversight authority of the Head 

Start program. The OIG conducts reviews of the Head Start program to ensure that 

it provides quality servces to eligible children and monitors the effectiveness and 

efficiency of its management. To that end, we have examined the program 

responsiveness to familes with many problems, its management and monitoring, and 

its capacity for expansion. Additionally, with the growing number of child care 

initiatives and concern over the quality and safety of care, we have also examined 

enforcing State child care regulations. 

Exanding and managig Head Sta effecely 

Because of the recognized need for educational and developmental activities, Congress 

increased funding for the Head Start program from $1.24 bilion in FY 1989 to $1.95 

bilion in FY 1991. Total enrollment was expected to increase from 451,000 chidren 

to nearly 600 000 children.27 In recent years, Head Start staff have expressed 

concern over the growing number of multiproblem familes enrollng in the program. 

Because of the severe nature of the problems in some of the famies, they are unable 

to benefit fully from the Head Start program.28 Both the rapid expansion and the 

participants from dysfunctional familes pbse management challenges for the Head 

Start program, and we examined these areas to assist ACF in meeting these 

challenges. 

Th Head Start exnsn poes many managem chaUeges. 

We assessed the Head Start system s capacity to successfully manage the rapid 

enrollment expansion and found that it presents problems. First, grantees are meeting enrollment expansion goals but are experiencing problems in obtaining 

suitable space. They believe that more lead time for expansion implementation 

will help resolve this problem. Additionally, grantees express more optimism than Federal staff that enrollment expansion wil improve the quality of 

servces. Both regional and headquarters Head Start staff claim a serious lack 

of resources to assist and assess grantees in upcoming expansions, as well as a 

lack of timely information on grantee enrollment progress. 

In response to the study, ACF added 13 additional staff members to 

headquarters in FY 1991, and more staff will be added in the regional offices if 

the budget permits. The ACF also stated that every effort will be made to 

provide more lead time to grantees, and to track expansion progress, a data 

collection system is being considered. 

As an additional check on the management capacity of Head Start grantees, we 

analyzed the results of over 1 200 nonfederal audits of individual grantees 

conducted in the three y ars prior to the expansion. As a result, we were able 
to alert the Head Start program to problems of accountabilty, grants 

management, and cash management. We recommended that the ACF 

reevaluate all important aspects of financial management and accountabilty, 

inc1uding technical assistance, monitoring, financial reporting, trackig audit 

reports, and audit resolution. We also recommended financial management 

capabilty reviews for new grantees and traini g and oversight to correct 

persistent deficiencies.


Hea Start partpant frm dysftinal fami are more di to sere. 

For many reasons Head Start participants from dysfunctional familes are more 

difficult to serve. Dysfunctional. familes face serious physical, mental, and 

social problems. These comprehensive needs of dysfunctional familes create 

special challenges for Head Start grantees, but almost all grantees believe that 

Head Start is the best program for children from dysfunctional families despite 

additional demands placed on staff. Income guidelines, performance standards 

and lack of resources limit grantees' abilty to serve some of the children from 

dysfunctional familes who are not eligible for Federal "safety net" programs. 

We recommended that Head Start revise its enrollment criteria to provide 

greater flexibilty to enroll children from dysfunctional familes and use its 

discretionary grant authority to develop ways of providing better access to 

community resources and to develop and test new and better approaches for 

Head Start grantees to assist dysfunctional familes. 

Exanding monitorig effort of Head Sta to ensure progr quaty 

Program monitoring is essential for a successful Head Start program. Section 651 of 

the Head Start Act requires ACF to perform periodic evaluations and cost analyses to 

measure program impact as well as Head Start agencies' abilty to perform grant 

activities. 

Procedes and tools for monirig the Head Start prom are inomplete. 

We found that monitoring the Head Start program is dificult because ACF has 

not established or implemented procedures necessary to measure performance 

of Head Start agencies. Although performance standards have been 

established, ACF has not developed the needed criteria to determne the extent 

of an agency s compliance with these standards. Also, ACF has not formalized 

procedures needed to effectively manage high risk agencies in its program 

instructions. Because of this, we recommended that ACF establish and 

implement improved procedures to assure that the extent of an agency 

compliance with the performance standards is determined and used as a basis 

for establishing uniform ratings for agencies.33 ACF agreed with our 

recommendation and plans to continue to make improvements in the Head 

Start monitoring system which is ACF's most important mechanism for assuring 

program compliance. 
Monitoring is also diffcult because the data maintained on the management 

information systems utilized in the Head Start program is incomplete. The 

incomplete data raise concerns as to their accuracy and usefulness to program 

offcials for evaluating program performance, analyzing operating costs, and 

assisting in making decisions about program administration.34 As a result 

ACF currently has underway several efforts which will improve inormation 

systems. 

The statute requires every Head Start grantee to conduct an annual selfassessment of its program, but the regulations do not provide guidance on how 

self-assessment should be done. Despite the lack of guidance, we found that 

virtually all grantees are conducting self-assessment annually, as required. 

Nearly all grantees use the Self Assessment Validation Instrument (SA VI) for 

conducting self-assessment, but many have concerns about its length 

complexity, and comprehensiveness. 

Ensurg that chidren recive high quaty chid cae 

As a result of the changing demographics of the work force, more children are placed 

in day care, and they should receive high quality care that provides developmental 

opportunities. To that end, the hild Care and Development Block Grant (P.L. 101­

508) was enacted on November 5, 1990. 'States are required to use at least 20 percent 

of the block grants funds to improve the quality of child care provided. Areas where 

States may use the funds are monitoring and complyig with State and local licensing 

and regulatory requirements.36 We examined current State regulatory enforcement 

efforts in child care as well as effective State enforcement practices. 

State chi care r ti1l vary consbly frm State to State. 

Regulations regarding child care arrangements varied significantly among the 

States. Many tyes of settings were not regulated. Even when a setting was 

regulated, the nature and force of the regulations varied in such areas as health 

and safety requirements, child care staff requirements and staff-to-child ratios. 

Enforcing the regulations that did exist was just as problematic; inspections 

were time consuming and legal sanctions were diffcult to enforce, even in cases 

of imminent danger. 

We also identified effective practices which States should consider adopting to 

improve their enforcement of existing regulations. These practices included 

administrative closures, consent agreements, investigative protocols, inspection 

review techniques, monetary incentives and penalties, and training and technical 

assistance for providers.

STABLE LWNG ENVONMENT 

Many HHS programs seek to promote family preservation and to protect vulnerable 

children living in unstable envionments. Title E of the Social Security Act or 

Foster Care and Adoption Assistance reimburses States for the cost of maintenance 

payments and administrative costs associated with running the program. In the 

adoption assistance portion of Title N-E, HHS reimburses States for administrative 

costs incurred in running the program and for adoption subsidies to familes who 

adopt special needs children. The Title N;.BChild Welfare Servces Program funds 

servces designed to protect and promote children s welfare, prevent abuse and 

neglect, promote family preservation, and place children in suitable adoptive homes 

when family preservation is not possible. The Title XX Social Servces Block Grant is 

another major source of funding for social servces that can help create a stable 

environment for children. 

The DIG has focused on the effectiveness, efficiency, and quality of foster care and 

child welfare servces. But. we have explored the human aspect as well. One specific population that we have examined is the drug-exposed infant. 

Identig potential administrtie changes in the foster cae sytem to control costs 

Growing congressional and departmental concern exists over the rapid rate of cost 

escalation in the foster care program. Before any changes can be made to provide 

expanded or new servces to children, costs must be brought under control in the 

current program. Two areas of foster care show great potential for cost savigs-­

administrative costs and unallowable maintenance payments--and we have examined 

these areas in detail. 

Admistratie costs have rien dfa11tiall, but mot of th costs are actull for 

chil placemt seres. 

Foster care administrative costs rose from $143 milion in FY 85 to $400 milion 

in FY 88. Two primary reasons have caused the administrative costs to 

increase: (1) the expanded definition of allowable activities under Title 

L. 96-272 and (2) a broad interpretation of that definition by the 

Departmental Appeals Board (DAB). The DAB ruled that Federal Financial 

Participation (FFP) was allowable for preplacement and other costs incurred 

for children not yet determined to be eligible for foster care maintenance 

payments. Only 20 percent of these administrative costs, however, relate to 

administering the foster care program. The other 80 percent of the 

administrative costs are actually child placement servces, allowed under P. 

96-272. Thus, relative to foster care, the term "administrative costs" is a 

misnomer because it includes activities related to the delivery of social servces. 

The States' practices for maxmizing Federal reimbursement have resulted in 

significant increases in Title 
 costs. This trend is expected to continue as 

more States become sophisticated in capturing additional costs. We 
recommended that legislative action be taken to limit Federal participation. 

FY 1991, Congress enacted requirements to States to separately report 

placement costs but did not enact cost containment provisions.3 

Foste carl! mainnce pa are oft ma to ingile chien

Under Title IV- , FF is allowed for foster care maintenance payments to a 

child when certain conditions are met. We found in New York that 67 percent 

of maintenance payments--$141.3 milion ($70.6 milion Federal share )--were 

unallowable for FFP. Further, DIG estimated that at least $61.4 millon ($30. 

milion Federal share) of claimed administrative costs associated with ineligible 

maintenance payments were also unallowable for FFP.40 In the District of 

Columbia, we found that 76 percent of claimed foster care maintenance 

payments--$l1.8 million ($5.9 millon Federal share) was iieligible for FF. 

We attributed this extremely high rate of ineligibilty to a widespread disregard 

of Federal regulations and the District of Columbia s Departent of Human 

Servces' own policies and procedures. We recommend that the States 

reimburse the Federal Government for these unallowable foster care 

maintenance costS. 

Improvig the qualty and avaabilty of servce in the State chid welfare sytem 

To fully protect children in families that have problems, the servces provided by the 

child welfare system must be improved. When a child cannot be returned to his or 

her original home, then proceedings begin for adoption. Waiting to be adopted can 

be difficult for children, but the adopti(m process can be improved to make it easier 

for the children, the courts, and the child welfare system. We have identified some 

problems in the foster care and adoption system. 

Admistratie barr cause exese delas in freeg chien for adptin. 

Administrative barrers in the child welfare system cause the most excessive 

delays in freeing children for adoption. Under P.L 96-272, a State cannot 

obtain Federal foster care funds for a child unless reasonable efforts to 

maintain the child in the family were made. Continued Federal funding is 

contingent upon a State making re.asonable efforts to reunite familes. The 

specific definitions of "reasonable efforts to maintain and to reunite" are left to 

the State. The primary barrier to implementing permanent plans of adoption 

was the inability of the child welfare agencies to meet the "reasonable efforts 

standard to the satisfaction of State courts in a timely manner. Also, long-term 

planning is often made after the child has been in care for considerable 

periods, and limited management commitment and lack of staff and servces 

playa significant role in the failure to make "reasonable efforts. 

Many barrers and delays also arise from the legal and judicial systems. Case 

records do not contain legally acceptable documentation of the "reasonable 
hospital delivery, perinatal care, and foster care to just these 8 974 children 

through age 5 will cost approximately $500 milion. Additional interventions 

cost considerably more. For example, Florida estimates an annual cost of over 

$40 000 per child to get crack babies ready for school. Even costs after age 5 

will be substantial because special education, residential treatment, juvenile 

detention, etc. are all costly. 

Not only is care for crack babies costly, but crack baby cases also are more 

time consuming and more complex than the average child welfare case 

requiring extensive tracking and follow-up, interagency coordination, and 

professional case management. Fift to 75 percent of identified crack babies go 

home with their mother or relative, and an estimated 30 to 50 percent go into 

foster care. Many children may be left with their natural parents because no 

foster placements are available. 

In response to our report, ACF co-sponsored a national conference with the 

Maternal and Child Health Bureau in PHS on prenatal substance abuse 

exposure and is developing educational material for child welfare workers. The 

PHS is conducting a national evaluation of the different approaches utiled to 

reduce drug abuse. The Offce of Substance Abuse Prevention and the Office 

Maternal and Child Health are jointly funding demonstration grant projects that 

focus on prevention, education, and treatment of pregnant and postpartum 

women and their infants. The National Institute on Drug Abuse has funded 

treatment research demonstration projects which include intensive prenatal 

outreach, drug treatment for women, and developmental assessment and followup for the prenatally drug expo ed infants. 

Many obstacle ext to placig board babie in adptie home, but some 

are suces 

Boarder babies, infants who remain in the hospital even though medically ready 

for discharge, usually have serious medical problems which are often due 

fetal exposure to drugs. Babies also stay in the hospital due to questions about 

the parents' abilty to care for the babies and lack of care alternatives. A 

number of complex legal obstacles to placement of these babies also exist, such 

a establishing legal abandonment and terminating parental rights. Some of the 

12 cities visited have been successful in making timely placements. Their 

successes have resulted in significant decreases in hospital overstays and the 

number of boarder babies. 
, 

, 

ENDNOTES


1. Omnibus Reconcilation Act of 1989, Public Law 101-239. 

2. Omnibus Reconcilation Act of 1990, Public Law 101-964. 

3. National Commission on Children, "Beyond Rhetoric: A New American Agenda 

for Children and Familes " 1991, p. 99. 

4. National Commission on Children, p. 97. 

5. Office of Inspector General Effective Paternity Establishment " OAI-06-89-00910 

January 1990. 

6. Office of Inspector General Follow Up of AFDC Absent Parents " OEI-05-89­

01270, August 1991. 

7. Office of Inspector General Child Support Enforcement of Non-AFC Clients 

OAI-05-88-00340, June 1989. 

8. Office of Inspector General Improvements in CSE Collection Process Could 

Generate Milions " A- 12-89-00154, October 1989. 

9. Office of Inspector General Garnishment Orders for Child Support " A- 12-91­

00016, June 1991. 

10. Office of Inspector General Cash Management by State Child Support 

Agencies " A- 12-91-000l8, July 1991. 

11. Office of Inspector General Errors Resulting in Overpayment in the AFDC 

Program " OAI-04-86-00024, June 1987. 

12. Office of Inspector General State Investigation of Fraud in the AFDC Program 

OAI-04-86-00066, November 1987. 

13. Omnibus Reconcilation Act of 1986,. Public Law 99-509. 

14. Office of Inspector General Access to Medicaid-Covered Prenatal Care: 

Management Advisory Report " OEI-06-90-00162, October 1990. 

15. Office of Inspector General Medicaid Exansions for Prenatal Care: State and 

Local Implementation " OEI-06-90-00l60, February 1992. 

16. National Commission on Children, p. 119. 

17. Office of Inspector General Comprehensive Perinatal Care Program " OEI-Ol90-00460, November 1990, p. 1. 
, 

, 

18. "Comprehensive Periatal Care Program. 

19. Office of Inspector General, ' 'Lcal Management and Implementation Strategies 

to Reduce Infant Mortality: A Management Advisory Report " OAI-01-88-01420, July 

1989. 

20. National Commission on Children, p. 136. 

21. National Commission on Children, p. 135. 

22. Offke of Inspector General Child Support Enforcement and Absent Parent 

Medical Liabilty," OAI-07-86-00045, Septem er 1987. 

23. Offke of Inspector General Coordination of Third Part Liabilty Information 

between CSE and Medicaid " OAI-07-880086, December 1989. 

24. Offke of Inspector General State Child Support Enforcement Criteria for 

Targeting Medical Support " OEI-07-90-00120, August 1991. 

25. Office of Inspector General Effect of ERISA on State Insurance Laws " OEI- 12­

91-01420, September 1991. 

26. Child Care and Development Block Grant Act of 1990, Public Law 101-508. 

27. Office of Inspector General Readiness to Exand Head Start Enrollment " OEI02-91-00741, August 1991, p. 1. 

28. Office of Inspector General Dysfunctional Familes in the Head Start Program OAI-09-89-01000, November 1989, p. 2. 

29. "Readiness to Exand Head Start Enrollment. 

30. Offke of Inspector General Head Staff: Summariation of Grantee Audit 

Problems " A-07-91-00425, January 1992. 

31. "Dysfunctional Familes in the Head Start Program. 

32. Head Start Act, Public Law 97- , as amended by P.L 101- 120 and P.L. 101-501. 

33. Office of Inspector General Head Start Performance Evaluation and High Risk 

Determinations " A-04-90-00009, February 1991. 

34. Offke of Inspector General Opportunities for Improved Management Efficiency 

of the Head Start Program, Automated Management Information Systems " A-04-90­

00012, February 1991. 

35. Office of Inspector General Head Start Self-Assessment " OEI-04-89-00790 

February 1991. 
, 

36. Child Care and Development Block Grant, Public. Law 101-508. 

37. Office of Inspector General, "Enforcing Child Care Regulations " OEI-03-89­

00700, February 1990. 

38. Office of Inspector General Effective Practices in Enforcing Child Care 

Regulations " OEI-03-89-00701, February 1990. 

39. . Office of Inspector General Opportunities for Cost Containment by Modifyng 

Federal Reimbursement to States for Administrative Costs Under the Foster Care 

Program," OAI-05-87-0012, October 1987. 

40. Office of Inspector General Review of Foster Care Maintenance Payments 

Claimed Under 'ritle IV- E of the Social Security Act: New York " A-02-87-020l6 

June 1990. 

41. Office of Inspector General Review of Foster Care Maintenance Payments 

Claimed Under Title IV-E of the Social Security Act: District of Columbia " A-03-88­

00551, August 1990. 

42. Office of Inspector General Barrers to Freeing Children for Adoption,' OEI-06­

89-01640, February 1991. 

43. Office of Inspector General Minority Adoptions " OAI-02-88-00640, June 1988. 

44. Office of Inspector General Crack Babies " OEI-03-89-01540, June 1990, p. 1. 

45. "Crack Babies. 

46. Office of Inspector General Boarder Babies: A Management Advisory Report," 

OEI-03-89-01541, June 1990.