[Federal Register Volume 86, Number 191 (Wednesday, October 6, 2021)]
[Rules and Regulations]
[Pages 55509-55515]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19786]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 1304

RIN 0970-AC85


Flexibility for Head Start Designation Renewals in Certain 
Emergencies

AGENCY: Office of Head Start (OHS), Administration for Children and 
Families (ACF), Department of Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This rule adopts as final the provision to the Head Start 
Program Performance Standards (HSPPS) to establish parameters by which 
ACF may make designation renewal determinations during a federally 
declared major disaster, emergency, or public health emergency (PHE) 
and in the absence of all normally required data.

DATES: Effective October 6, 2021, the interim final rule published 
December 7, 2020, at 85 FR 78792, is adopted as final.

FOR FURTHER INFORMATION CONTACT: Colleen Rathgeb, Office of Head Start, 
at <a href="/cdn-cgi/l/email-protection#e6ae838782b592879492a683858a8d85c88f888089"><span class="__cf_email__" data-cfemail="450d2024211631243731052026292e266b2c2b232a">[email protected]</span></a> or 1-866-763-6481. Deaf and hearing impaired 
individuals may call the Federal Dual Party Relay Service at 1-800-877-
8339 between 8 a.m. and 7 p.m. Eastern Standard Time.

[[Page 55510]]


SUPPLEMENTARY INFORMATION:

Table of Contents

I. Statutory Authority
II. Executive Summary
III. Background
IV. Provisions of the Final Rule
V. Public Comments Analysis
VI. Regulatory Process Matters
    Regulatory Flexibility Act
    Unfunded Mandates Reform Act
    Treasury and General Government Appropriations Act of 1999
    Federalism Assessment Executive Order 13132
    Congressional Review
    Paperwork Reduction Act of 1995
    Regulatory Planning and Review Executive Order 12866 and 
Executive Order 13563
VII. Regulatory Impact Analysis
VIII. Tribal Consultation Statement

I. Statutory Authority

    ACF publishes this final rule under the authority granted to the 
Secretary of Health and Human Services (the Secretary) by sections 
641(a), which describes the Secretary's authority to designate a local 
public or private nonprofit agency as a Head Start agency; 641(c), 
which lays out the requirements for the system for designation renewal; 
and 644(c), which directs the Secretary to prescribe rules or 
regulations for Head Start agencies, of the Head Start Act, as amended 
by the Improving Head Start for School Readiness Act of 2007 (Pub. L. 
110-134).

II. Executive Summary

    The Improving Head Start for School Readiness Act of 2007 (the 2007 
Reauthorization) of the Head Start Act (the Act) required ACF to 
establish a system for determining whether Head Start (including Early 
Head Start) grantees are delivering high-quality and comprehensive 
services to the children and families they serve. In 2011, ACF issued a 
regulation (76 FR 70009) to establish the Designation Renewal System 
(DRS) to meet this requirement. Under the DRS, all Head Start grants 
were transitioned from indefinite to 5-year grant periods, and any 
grant that meets one or more of seven specified conditions during the 
5-year project period is subject to an open competition for continued 
funding. Any Head Start grant that does not meet one of the seven DRS 
conditions becomes eligible for a new noncompetitive 5-year grant. The 
Act lays out the types of data that must be considered as part of these 
DRS determinations. Three of the seven conditions of the DRS were 
revised through a final rule published on August 28, 2020 (85 FR 
53189). Due to the ongoing 2019 Novel Coronavirus (COVID-19) pandemic, 
the ability of ACF to collect all data on grants required for making 
determinations under the DRS has been severely impaired. This issue is 
described further in the following paragraph. Furthermore, there may be 
major disasters, emergencies, or PHEs in the future that similarly 
impact ACF's ability to collect all information required for making DRS 
determinations.
    Therefore, ACF adopts as final the interim rule, published December 
7, 2020, at 85 FR 78792 that added a new section to the HSPPS 
regulation under Part 1304 Subpart B, Designation Renewal. This 
section, Sec.  1304.17, established parameters by which ACF may make a 
designation renewal determination when certain federally declared 
emergencies prevent collection of all normally required data. As with 
COVID-19, a major disaster or emergency declared by the President under 
section 401 or 501 of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5170 and 5191) or another PHE 
declared by the Secretary under section 319 of the Public Health 
Service Act (42 U.S.C. 247d) may necessitate extended, unanticipated 
program closures or temporary shifts to different program models or 
service delivery mechanisms, which can make certain monitoring or data 
collection activities unsafe, impossible, and/or invalid. In these 
situations, ACF may lack certain required data to make designation 
renewal determinations. In cases where a grantee's 5-year grant is 
ending and all required data are not available due to the impacts of a 
federally declared disaster or emergency, Sec.  1304.17 allows ACF to 
still determine if an open competition is required, or if the grant may 
be renewed noncompetitively based on the conditions for which ACF has 
data. Without Sec.  1304.17, ACF would not be able to make DRS 
determinations, which could result in the loss of critical Head Start 
services in impacted communities.
    In response to the ongoing COVID-19 PHE, ACF has established 
through the interim final rule a process by which ACF will meet the 
requirements of the Act to make designation renewal determinations 
while ensuring the safety of Head Start program staff, children, and 
families. As Head Start grants approach the end of their 5-year grant 
periods during the ongoing COVID-19 pandemic, ACF must make a 
determination under the DRS for these grantees to either receive a new 
5-year grant noncompetitively or to require an open competition. 
Extended program closures for in-person Head Start services due to the 
PHE have made, and continue to make, it impossible for ACF to collect 
certain data elements relevant to the seven DRS conditions and required 
as part of designation renewal determinations. In the absence of a DRS 
determination, these communities could be left without any Head Start 
services during a particularly challenging time for the children and 
families Head Start programs serve. To ensure children and families do 
not lose access to Head Start services during a federally declared 
disaster or emergency, now and in the future, this final rule is needed 
to establish the process by which DRS determinations will be made under 
these circumstances.
    Ensuring the health and safety of Head Start staff, children, and 
families is of utmost importance. This final rule directly supports 
that goal, while finalizing a process for ACF to meet the requirements 
of the Act to make designation renewal determinations during the COVID-
19 pandemic and certain other federally declared disasters or 
emergencies. Due to the ongoing PHE, ACF found good cause to waive 
notice and comment rulemaking and instead publish an IFR effective upon 
publication. It would have been contrary to the public interest to 
delay the flexibility to make DRS determinations with the data 
available and to ensure the continuity of critical Head Start services 
in impacted communities. This final rule considers and responds to 
public comments received on the IFR.

III. Background

    Since its inception in 1965, Head Start has been a leader in 
helping children from low-income families reach kindergarten more 
prepared to succeed in school. Through the 2007 Reauthorization, 
Congress required HHS to ensure these children receive the highest 
quality services possible. In support of that requirement, the 2007 
Reauthorization directed the Secretary to establish the DRS to (1) 
identify Head Start grantees delivering a high-quality and 
comprehensive Head Start program that could receive funding 
noncompetitively for a 5-year period, and grantees not delivering a 
high-quality and comprehensive Head Start program that will be required 
to compete for continued funding, and (2) transition all grants from 
indefinite grants to 5-year grant periods. Congress required that 
decisions about which grantees would have to compete be based on budget 
and fiscal management data (including annual audits), program 
monitoring reviews, classroom quality--and in particular teacher-child 
interactions--as measured by a valid

[[Page 55511]]

and reliable research-based observational instrument, and other program 
information.
    In 2011, HHS published a final rule to establish the DRS that 
included seven conditions. Grants that met one or more of the seven 
conditions would have their funding subject to an open competition for 
the next 5-year grant period. Grantees that did not meet a condition 
became eligible to receive a new noncompetitive 5-year grant. Following 
the transition of all grants from indefinite to 5-year project periods 
and considering available data and research, a 2020 final rule \1\ 
revised the DRS and made changes to three of the seven DRS conditions. 
Effective November 9, 2020, Head Start grants that meet one or more of 
the following seven conditions under the DRS are subject to an open 
competition: (1) Two or more deficiencies under section 641A(c)(1)(A), 
(C), or (D) of the Act; (2) failure to establish, use, and analyze 
children's progress on agency-established school readiness goals; (3) 
scores below competitive thresholds in any of the three domains of the 
Classroom Assessment Scoring System: Pre-K (CLASS); (4) revocation of a 
license to operate a center or program; (5) suspension from the 
program; (6) debarment from receiving federal or state funds or 
disqualification from the Child and Adult Care Food Program (CACFP); 
and/or (7) either an audit finding of being at risk for failing to 
continue as a ``going concern,'' or two or more audit findings of 
material weakness or questioned costs associated with its Head Start 
funds in audit reports submitted to the Federal Audit Clearinghouse (in 
accordance with section 647 of the Act) for a financial period within 
the current project period.
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    \1\ https://www.federalregister.gov/documents/2020/08/28/2020-17746/head-start-designation-renewal-system.
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    The notice and comment process for the 2020 final rule predated the 
COVID-19 pandemic. In the 2019 notice of proposed rulemaking on the 
DRS, HHS did not propose any flexibilities within the DRS to make 
designation renewal determinations in the absence of certain data 
related to the seven conditions due to a federally declared major 
disaster, emergency, or PHE. Therefore, these flexibilities could not 
be included in the DRS final rule that was published on August 28, 
2020.

IV. Provisions of the Final Rule

    All Head Start grants now operate on a 5-year project period. As a 
cohort of Head Start grants conclude their 5-year grant period, ACF 
must make a determination whether grants may be renewed 
noncompetitively or if they will be subject to an open competition. The 
Act requires ACF to consider a number of factors in making a 
designation renewal determination. As described previously, a federally 
declared major disaster or emergency or PHE can make it unsafe or 
impossible to collect some of these required data on grants. In 
particular with the COVID-19 pandemic, ACF has been, and continues to 
be, unable to collect data from a valid, reliable, research-based, 
observational measure of classroom quality as required by the Act. The 
reasons for this are further elaborated in the following paragraph. It 
is possible that future disasters or emergencies could also preclude 
ACF from collecting other required data elements necessary for DRS 
determinations.
    ACF meets the requirement in the Act to use a valid, reliable, 
research-based, observational measure of classroom quality as part of 
DRS determinations through the administration of the CLASS. The CLASS 
measures the quality of teacher-child interactions on a 7-point scale 
in three areas or domains: Emotional Support, Classroom Organization, 
and Instructional Support. As part of the established ACF monitoring 
process for Head Start grantees, trained reviewers administer the CLASS 
on-site in a sample of Head Start classrooms for each grant. The scores 
for each classroom within a grant are then averaged to create grant-
level scores. If a grant receives an average CLASS score below the 
following competitive thresholds for any of the three CLASS domains, 
the grant is designated for competition under the DRS: a 5 for 
Emotional Support, 5 for Classroom Organization, and 2.3 for 
Instructional Support.\2\ Each year, ACF schedules a subset of Head 
Start grantees for CLASS reviews, depending on where in the 5-year 
project period each grant is. The completion of these CLASS reviews 
within a certain window of time is critical to ensure ACF can complete 
the necessary subsequent steps for each grant, to determine and notify 
the grantee of their status as either competitive or noncompetitive 
under the DRS with sufficient time prior to the end of their current 5-
year project period to run the necessary competitive processes.
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    \2\ As promulgated in the DRS final rule published on August 28, 
2020, the competitive threshold for the instructional support domain 
is 2.3 for CLASS reviews conducted up through July 31, 2025, and 
then this threshold increases to 2.5 for CLASS reviews conducted on 
or after August 1, 2025.
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    In March 2020, ACF made the decision to temporarily suspend the 
administration of CLASS reviews in Head Start classrooms due to the 
COVID-19 PHE. At that time, ACF was concerned about jeopardizing the 
health and safety of Head Start children and staff by sending outside 
observers into Head Start classrooms to conduct CLASS reviews. Most 
Head Start classrooms across the country closed for some time due to 
increased health and safety concerns amid the spread of COVID-19. More 
than 90 percent of programs closed in spring 2020. Due to the evolving 
nature of the COVID-19 pandemic, ACF was uncertain about the ability to 
resume CLASS reviews during the 2020-2021 program year. Therefore, in 
an information memorandum directed to Head Start and Early Head Start 
grantees published on September 24, 2020, ACF announced the decision to 
suspend all CLASS reviews for the 2020-2021 program year.\3\
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    \3\ https://eclkc.ohs.acf.hhs.gov/policy/im/acf-im-hs-20-05.
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    There are multiple factors that informed this decision. First, as 
the impacts of the COVID-19 pandemic vary significantly in different 
parts of the country, Head Start programs must make locally determined 
decisions regarding whether they can safely operate in-person services 
for children and families. Programs that do not operate in-person 
services for a period of time are, instead, providing some type of 
remote or virtual services for enrolled children and families. The 
CLASS tool was not originally designed to conduct observations of 
virtual interactions between teachers and children, and the research on 
such use of the tool is very limited. Therefore, if a program is closed 
for in-person services for an extended period due to the pandemic, and 
even if the program is providing virtual services, ACF cannot conduct 
CLASS reviews of virtual teaching for monitoring and oversight purposes 
with those programs.
    Second, as previously mentioned, for Head Start programs that are 
providing in-person services to children and families during part or 
all of the 2020-2021 program year, ACF is not able to send additional 
outside individuals into classrooms to conduct CLASS observations 
without increasing the risk of exposing Head Start children and staff 
to the virus. This is consistent with best practice guidance from the 
Centers for Disease Control and Prevention on safely providing child 
care in group settings during the COVID-19 pandemic.\4\
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    \4\ https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/guidance-for-childcare.html#open.

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[[Page 55512]]

    Finally, due to the fact that some programs are operating virtual 
services for part or all of their enrollment, and this has fluctuated 
throughout the program year, there remains a lot of uncertainty for ACF 
around the availability of a sufficient sample size for CLASS 
observations for any given grantee.
    While ACF strongly believes it is still important to promote high-
quality learning environments for all children served in Head Start, 
the health and safety of children and staff during this PHE are also 
paramount considerations for ACF. Therefore, ACF has made the 
determination that a valid and reliable observational instrument that 
assesses classroom quality as required by the Act does not exist during 
the current PHE, so ACF cannot fulfill this requirement during this 
time. This final rule provides ACF the flexibility to proceed with DRS 
determinations in the absence of CLASS data that is the result of the 
ongoing PHE. This final rule also provides this flexibility for a 
federally declared major disaster, emergency, or PHE in the future, 
which could also impact the administration of CLASS or the collection 
of other data elements necessary for making DRS determinations. The 
flexibility will allow ACF to ensure the continuity of critical Head 
Start services for the nation's most vulnerable children and families. 
As stated previously, ensuring high-quality classroom learning 
environments for enrolled children is still an important priority for 
ACF. ACF offers a wealth of training and technical assistance (TTA) 
resources to promote quality improvement in classroom learning 
environments and teacher-child interactions, including materials on the 
Early Childhood Learning Knowledge Center website, interactive webinars 
and learning modules, and online opportunities for grantees to share 
and learn about best practices with other grantees. ACF also funds a 
regional TTA system, which includes individualized support from 
regional specialists for grantees on an as-needed basis and at the 
discretion of each ACF region.
    In summary, the provision established in Sec.  1304.17 allows ACF 
to make designation renewal decisions with the data available when the 
determination must be made in order to ensure the continuity of Head 
Start services, even if certain federally declared emergencies or 
disasters preclude ACF from collecting all of the data required in the 
Head Start Act. This flexibility ensures the safety of Head Start 
staff, children, and families and the continuity of Head Start 
services.

V. Public Comments Analysis

    We received five (5) unique comments on the IFR. Commenters 
included four individuals and one for-profit organization that 
developed, published, and owns the copyright to the CLASS instrument. 
Given the very small number of comments received on the IFR and no 
comments recommending changes to the specific provisions, this final 
rule retains the exact regulatory language from the IFR.
    Comment: Four commenters expressed support for the continuation of 
education services during a PHE or disaster such as the COVID-19 
pandemic, and a few specifically supported the flexibility provided to 
the Head Start program as described in the IFR.
    Response: OHS appreciates these comments and agrees with the 
commenters regarding the importance of continuing Head Start services 
during a disaster or PHE. We did not make any changes to the final rule 
in response to these comments.
    Comment: One commenter was supportive of the flexibility provided 
to the Head Start program in the IFR and agreed with our assessment 
that the CLASS tool was not designed to assess virtual interactions 
between teachers and children. However, the commenter suggested CLASS 
reviews can be conducted remotely for classrooms operating in-person, 
but noted that research to examine virtual applications of CLASS is 
ongoing to ensure valid and reliable scores from such observations. The 
commenter also noted that there is no relationship between the number 
of children in a classroom and ratings on the CLASS instrument, so 
scores during the COVID-19 pandemic would not be expected to be 
systematically different from scores at other times when program 
learning environments are more typical in structure and delivery. The 
commenter also pointed out that some states are continuing to require 
CLASS reviews as part of state oversight and accountability efforts 
during the pandemic. The commenter encouraged OHS to resume CLASS 
observations as soon as it is possible to do so safely, even if just in 
a professional development capacity, to support teachers and children 
as they return for in-person learning.
    Response: OHS appreciates the commenter's thoughtful analysis of 
the application of the CLASS tool during a disaster or PHE, including 
promising possibilities as well as limitations of the tool. OHS 
appreciates the commenter's point that the number of children in a 
classroom at any given time does not impact the validity or reliability 
of scores from CLASS observations. OHS will remove that piece of the 
rationale for suspension of CLASS reviews described in the preamble of 
this final rule. However, as described in the IFR, a more salient 
reason for our decision to suspend CLASS reviews was because individual 
Head Start classrooms have had to transition from in-person to virtual 
services--and vice versa--at various points throughout the program 
year, in order to respond to the changing nature of the pandemic as 
well as guidance from federal, state, and local officials on best 
practices for delivery of education services during this time. OHS 
monitoring requires a certain number of classrooms within a program be 
part of the observations. OHS uses a documented and rigorous 
methodology to randomly select which classrooms within a program are 
part of these observations for monitoring purposes. As noted in the 
IFR, in many cases a sufficient sample size of a grantee's classrooms 
operating in-person services at any given time may not have been 
possible to obtain during the 2020-2021 program year.
    Finally, OHS appreciates the comments regarding resumption of CLASS 
reviews and potential unintended consequences around alignment with 
state requirements related to CLASS. OHS will carefully consider these 
points when determining the best time for resuming CLASS reviews of 
Head Start programs. The continued health and safety of Head Start 
staff, children, and families continues to be of paramount concern to 
OHS. This comment did not recommend any changes to the provision, and 
we did not make any changes to the final rule in response to this 
comment.

VI. Regulatory Process Matters

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (see 5 U.S.C. 605(b) as 
amended by the Small Business Regulatory Enforcement Fairness Act) 
requires federal agencies to determine, to the extent feasible, a 
rule's impact on small entities, explore regulatory options for 
reducing any significant impact on a substantial number of such 
entities, and explain their regulatory approach. The term ``small 
entities,'' as defined in the RFA, comprises small businesses, not-for-
profit organizations that are independently owned and operated and are 
not dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000. Under this definition, some Head Start 
grantees may be small entities. HHS considers a

[[Page 55513]]

rule to have a significant impact on a substantial number of small 
entities if it has at least a 3 percent impact on revenue on at least 5 
percent of small entities. However, the Secretary certifies, under 5 
U.S.C. 605(b), as enacted by the RFA (Pub. L. 96-354), that this rule 
will not have a significant impact on a substantial number of small 
entities. During a major disaster or emergency or PHE--such as COVID-
19--in which ACF is not able to collect all data elements required for 
DRS determinations and must exercise the flexibility set forth in Sec.  
1304.17 of the HSPPS, ACF expects there to be fewer grantees in 
competition for the relevant competition cycles. Therefore, ACF does 
not expect there to be a significant impact on a substantial number of 
small entities.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA; see 2 U.S.C. 1501 
et seq.) was enacted to avoid imposing unfunded federal mandates on 
state, local, and tribal governments, or on the private sector. Section 
202 of UMRA requires that agencies assess anticipated costs and 
benefits before issuing any rule whose mandates require spending in any 
1 year of $100 million in 1995 dollars, updated annually for inflation. 
In 2021, that threshold is approximately $158 million. This rule does 
not contain mandates that will impose spending costs on state, local, 
or tribal governments in the aggregate, or on the private sector, in 
excess of the threshold.

Treasury and General Government Appropriations Act of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires federal agencies to determine whether a policy or 
regulation may negatively affect family well-being. If the agency 
determines a policy or regulation negatively affects family well-being, 
then the agency must prepare an impact assessment addressing seven 
criteria specified in the law. ACF believes it is not necessary to 
prepare a family policymaking assessment (see Pub. L. 105-277) because 
the action it takes in this final rule will not have any impact on the 
autonomy or integrity of the family as an institution.

Federalism Assessment Executive Order 13132

    Executive Order 13132 requires federal agencies to consult with 
state and local government officials if they develop regulatory 
policies with federalism implications. Federalism is rooted in the 
belief that issues that are not national in scope or significance are 
most appropriately addressed by the level of government close to the 
people. This rule will not have substantial direct impact on the 
states, on the relationship between the federal government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, it is determined that this action does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

Congressional Review

    The Congressional Review Act (CRA) allows Congress to review major 
rules issued by federal agencies before the rules take effect (see 5 
U.S.C. 802(a)). The CRA defines a ``major rule'' as one that has 
resulted, or is likely to result, in (1) an annual effect on the 
economy of $100 million or more; (2) a major increase in costs or 
prices for consumers; individual industries; federal, state, or local 
government agencies; or geographic regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, or 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets 
(see 5 U.S.C. Chapter 8). Based on our estimates of the impact of this 
rule, the Office of Information and Regulatory Affairs (OIRA) in the 
Office of Management and Budget (OMB) has designated this rule as `not 
major' under the CRA.

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) seeks to 
minimize government-imposed burden from information collections on the 
public. In keeping with the notion that government information is a 
valuable asset, it also is intended to improve the practical utility, 
quality, and clarity of information collected, maintained, and 
disclosed.
    The Paperwork Reduction Act defines ``information'' as any 
statement or estimate of fact or opinion, regardless of form or format, 
whether numerical, graphic, or narrative form, and whether oral or 
maintained on paper, electronic, or other media (5 CFR 1320.3(h)). This 
includes requests for information to be sent to the government, such as 
forms, written reports and surveys, recordkeeping requirements, and 
third-party or public disclosures (5 CFR 1320.3(c)). This action does 
not include any new information collection requirements or changes to 
existing information collection requirements.

Regulatory Planning and Review Executive Order 12866 and Executive 
Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 is supplemental to, and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in, Executive Order 12866, emphasizing the importance of quantifying 
both costs and benefits, of reducing costs, of harmonizing rules, and 
of promoting flexibility. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action that is likely to 
result in a rule (1) having an annual effect on the economy of $100 
million or more in any 1 year, or adversely and materially affecting a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating a serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order. A regulatory impact analysis must be prepared 
for major rules with economically significant effects ($100 million or 
more in any 1 year), and an ``economically significant'' regulatory 
action is subject to review by the Office of Management and Budget. ACF 
does not anticipate that this rulemaking is likely to have an impact of 
$100 million or more in any one year, and therefore this rule does not 
meet the definition of ``economically significant'' under Executive 
Order 12866. Executive Order 12866 provides that OIRA will review all 
significant rules. OIRA has determined that this final rule is 
significant and was accordingly reviewed by OMB.

[[Page 55514]]

VII. Regulatory Impact Analysis

Need for Regulatory Action

    This regulatory action is necessary to provide ACF the flexibility 
to make determinations under the Head Start DRS, even in the absence of 
all required data, if this lack of data is due to a major disaster or 
emergency or PHE. The ongoing PHE due to COVD-19 has prevented ACF from 
conducting onsite observations of grantees with the CLASS tool (an 
observational measure of the quality teacher-child interactions in the 
classroom), which is required by regulation. Data from these 
observations provide one piece of information for determining whether a 
Head Start grant can be renewed noncompetitively or must compete with 
other potential applicants for continued funding. Several grants (60) 
whose 5-year project periods are ending in fiscal year (FY) 2022 would 
typically have their CLASS reviews completed by ACF as part of the 
federal monitoring process sometime during FY 2020 or FY 2021.
    However, due to the PHE, ACF has not conducted CLASS reviews since 
March 2020 and has decided not to conduct any future CLASS reviews 
until at least the fall of 2021. So these 60 grants whose 5-year 
project periods are nearing completion do not yet have CLASS data as 
part of federal monitoring. Without this regulatory action, CLASS 
reviews for these 60 grants would have to be conducted in the fall of 
2021, and several other decisions must be made by ACF after the CLASS 
reviews are completed but before funding can be renewed either 
competitive or noncompetitively. Therefore, having to conduct CLASS 
reviews for these grants so late in their project periods creates a 
strong risk of the project periods expiring before ACF can complete the 
grant renewal process for these 60 grants. This puts the Head Start 
services for enrolled children and families at great risk in the 
impacted service areas.

Cost Savings Analysis

    There are approximately 2,200 grants in Head Start. Absent this 
final rule, it is estimated that 60 grants (or 3 percent) of all Head 
Start grants will require CLASS reviews to be conducted in FY 2022 for 
renewal determinations that must also be made in FY 2022. CLASS reviews 
would need to be conducted to acquire the necessary data to make 
renewal determinations as described in the Head Start Act and the 
HSPPS. Typically, CLASS reviews cost about $8,500 per grant to the 
federal government. This primarily includes the cost of travel, 
lodging, and wages for CLASS reviewers. The total baseline cost of the 
60 CLASS reviews in FY 2022 is estimated at $510,000.
    Across all Head Start grants, ACF estimates that approximately 13 
percent of grants meet the CLASS condition of the DRS and are, 
therefore, required to compete for continued funding. If ACF applies 
this percentage to the 60 grants lacking CLASS data due to the COVID-19 
pandemic, this results in an estimate of approximately 8 of these 60 
grants that would be required to compete for continued funding due to 
low CLASS scores if they did have CLASS data available.
    The cost for competition associated with completing a competitive 
application is estimated at $3,097 per applicant. This assumption 
includes 60 hours per competitive application at a cost of 
approximately $51.62 per hour in staff time (ACF multiplies an hourly 
wage of approximately $25.81 by two to account for fringe benefits). 
Applications would likely be completed by a combination of the Head 
Start assistant director and other managers in an early childhood 
program (i.e., child development manager or family and community 
partnership manager). The average hourly wage for these positions is 
based on the U.S. Bureau of Labor Statistics Job Code 11-9031. ACF 
multiplies $3,097 per applicant by 16 to account for the eight 
incumbent grantees applying for funds as well as eight nonincumbent 
applicants for those service areas. This results in a baseline 
estimated cost of $49,552 for these eight grantees to complete 
competitive applications in FY 2022 if they did in fact have to 
compete, as well as eight additional applicants. The total baseline 
cost for conducting CLASS reviews for these 60 grants and for 
competition associated with eight of these 60 grants is $559,552. With 
this final rule, these baseline costs would not apply and are therefore 
cost savings in this analysis.
    With this final rule, those eight grantees that would have been 
required to compete in FY 2022 would instead need to complete an annual 
grant application for a new annual award. ACF assumes it takes 
approximately 33 hours of staff time to complete a noncompetitive 
application. Using the same assumptions as above for hourly wage, ACF 
estimates it costs approximately $1,703 per grant to complete a 
noncompetitive application. ACF multiplies this by eight grants, which 
results in a total cost of approximately $13,624 for these grantees to 
complete a noncompetitive continuation application in FY 2022. Taking 
this cost into account, the total cost savings associated with this 
final rule is approximately $545,928. This includes cost savings to 
those entities that are not existing Head Start grantees as there would 
be no funding opportunity to which they would submit a competitive 
application.
    A qualitative opportunity cost for this new rule is fewer 
opportunities for entities that are not existing Head Start grantees to 
be able to compete and potentially grow as an early childhood provider 
in their community, for the eight communities where grants were not 
designated for competition due to potentially low CLASS scores. There 
is also the qualitative cost of children continuing to be served by 
grantees who may be providing lower-quality classroom learning 
environments that would have led to competition. However, ACF believes 
there is an added benefit of existing grantees still receiving DRS 
determinations in a timely manner and not experiencing undue stress 
around the status of their grant, particularly in the midst of COVID-
19, when continuity of Head Start services for children and families is 
critically important. Additionally, these grantees would be able to 
continue to access and receive support from OHS through OHS's extensive 
TTA system, to facilitate continued quality improvement in classroom 
quality care and service provision for children and families.
    ACF does not believe there will be a significant economic impact 
from this regulatory action since the flexibility in this final rule 
will only be exercised when necessary. A federally declared major 
disaster, emergency, or PHE that limits the ability of ACF to collect 
all data necessary to assess programs for DRS determinations, such as 
the COVID-19 PHE, are rare and, therefore, ACF anticipates this 
flexibility will rarely be exercised. ACF also anticipates that this 
flexibility will be exercised in the future during more localized 
disasters that affect a very small subset of grantees.
    This RIA analyzes a 1-year time horizon covering FY 2022. In the 
coming years, ACF anticipates very few grants being impacted by the 
provision in this final rule. However, ACF also recognizes it is 
difficult to predict future potential emergencies or disasters during 
which ACF may need to again exercise the flexibility laid out in this 
regulatory provision, resulting in uncertainty around potential costs 
and cost savings.

VIII. Tribal Consultation Statement

    ACF conducts an average of five tribal consultations each year for 
those tribes operating Head Start and Early Head

[[Page 55515]]

Start. The consultations are held in four geographic areas across the 
country: Southwest, Northwest, Midwest (Northern and Southern), and 
Eastern. The consultations are often held in conjunction with other 
tribal meetings or conferences, to ensure the opportunity for most of 
the 150 tribes that operate Head Start and Early Head Start programs to 
be able to attend and voice their concerns about issues regarding 
service delivery. ACF completes a report after each consultation and 
then compiles a final report that summarizes the consultations and 
submits the report to the Secretary at the end of the year.

List of Subjects in 45 CFR Part 1304

    Designation Renewal System, Classroom Assessment Scoring System 
(CLASS), COVID-19, Education of disadvantaged, Grant programs--social 
programs, Head Start, Monitoring.

0
Therefore, for the reasons discussed in the preamble, ACF adopts as 
final the interim rule that amended 45 CFR part 1304 on December 7, 
2020 at 85 FR 78792.

    Dated: September 2, 2021.
JooYeun Chang,
Acting Assistant Secretary for Children and Families.
Xavier Becerra,
Secretary.
[FR Doc. 2021-19786 Filed 10-5-21; 8:45 am]
BILLING CODE 4184-01-P


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