To amend the Head Start Act to provide greater accountability for Head Start agencies.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Head Start Accountability Act of 
2005''.

SEC. 2. FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

    Section 638 of the Head Start Act (42 U.S.C. 9833) is amended by 
inserting ``for a period of 5 years'' after ``provide financial 
assistance to such agency''.

SEC. 3. DESIGNATION OF HEAD START AGENCIES.

    Subsections (a), (b), and (c) of section 641 of the Head Start Act 
(42 U.S.C. 9836) are amended to read as follows:
    ``(a) Designation.--
            ``(1) In general.--The Secretary is authorized to designate 
        as a Head Start agency any local public or private nonprofit or 
        for-profit agency, within a community, including a community-
        based organization, that--
                    ``(A) has power and authority to carry out the 
                purpose of this subchapter and perform the functions 
                set forth in section 642 within such community; and
                    ``(B) is determined by the Secretary (in 
                consultation with the chief executive officer of the 
                State involved, if the State expends non-Federal funds 
                to carry out Head Start programs) to be capable of 
                planning, conducting, administering, and evaluating, 
                either directly or by other arrangements, a Head Start 
                program.
            ``(2) Required goals for designation.--In order to be 
        eligible for designation as a Head Start agency, an entity 
        described in paragraph (1) shall establish program goals for 
        continuous improvement in all areas of program operations 
        (including early childhood development and health services), 
        program design and management, and family and community 
        partnerships.
            ``(3) Eligibility for subsequent designation.--In order to 
        be eligible for designation as a Head Start agency subsequent 
        to the initial designation made by the Secretary after the 
        effective date of the Head Start Accountability Act of 2005, a 
        Head Start agency shall demonstrate that such agency has met or 
        is making progress toward meeting such goals.
            ``(4) Local oversight board.--In order to be eligible for 
        designation as a Head Start agency, an entity described in 
        paragraph (1) shall establish a local oversight board that--
                    ``(A) is composed of volunteer individuals who 
                include (but are not limited to) a Head Start parent, a 
                representative of a school board, a child development 
                expert, a member of the business community, and other 
                volunteer individuals who are residents of the 
                community, including individuals who have an 
                understanding of the general principles of accounting, 
                law, business administration, and management;
                    ``(B) operates as a unit independent of staff 
                employed by such agency;
                    ``(C) actively participates in the development, 
                strategic planning, implementation, and evaluation of 
                the Head Start program for which it is established;
                    ``(D) provides oversight of such program to ensure 
                that such Head Start agency is delivering high quality 
                services to children and families in compliance with 
                all applicable standards in effect under this 
                subchapter and with the applicable performance measures 
                established by the Secretary under section 644;
                    ``(E) takes no action that may provide (and takes 
                appropriate action to prevent providing) any direct or 
                indirect financial benefit to any member of such board 
                or to any member of the staff of such agency;
                    ``(F) reviews and approves annually the operating 
                budget of such program;
                    ``(G) reviews and approves the bylaws applicable to 
                such program;
                    ``(H) reviews annually the human resources 
                (including administrative and management staff) 
                available to carry out such program and makes 
                recommendations regarding such resources to ensure the 
                effective operation of such program; and
                    ``(I) monitors staff implementation of any 
                corrective action necessary to comply with applicable 
                laws (including regulations) governing financial 
                statements and with all requirements applicable under 
                this subchapter.
    ``(b) Communities.--For purposes of this subchapter, a community 
may be a city, county, or multicity or multicounty unit within a State, 
an Indian reservation (including Indians in any off-reservation area 
designated by an appropriate tribal government in consultation with the 
Secretary), or a neighborhood or other area (irrespective of boundaries 
or political subdivisions) that provides a suitable organizational base 
and that possesses the commonality of interest needed to operate a Head 
Start program.
    ``(c) Priority in Designation.--In administering the provisions of 
this section, the Secretary shall, in consultation with the chief 
executive officer of the State involved, give priority in the 
designation (including a subsequent designation) of Head Start agencies 
to any high-performing Head Start agency or delegate agency that--
            ``(1) is receiving assistance under this subchapter;
            ``(2) meets or exceeds program and financial management 
        requirements, standards described in section 641A(a)(1), and 
        other requirements established by the Secretary;
            ``(3) has no unresolved programmatic deficiencies or areas 
        of noncompliance, and has not had findings of deficiencies 
        during the then most recent triennial review conducted under 
        section 641A(c); and
            ``(4) has taken the actions required by the Secretary under 
        section 647(c) to correct deficiencies.''.

SEC. 4. QUALITY STANDARDS; MONITORING OF HEAD START AGENCIES AND 
              PROGRAMS.

    (a) Quality Standards.--Section 641A(a) of the Head Start Act (42 
U.S.C. 9836a(a)) is amended--
            (1) in paragraph (1) by amending subparagraph (C) to read 
        as follows:
                    ``(C) administrative and financial management 
                standards, including internal controls necessary to 
                safeguard Federal funds;'', and
            (2) by adding at the end the following:
            ``(4) Evaluations and corrective actions for delegate 
        agencies.--
                    ``(A) Procedures.--Each Head Start agency shall 
                establish procedures relating to its delegate agencies, 
                including--
                            ``(i) procedures for evaluating delegate 
                        agencies;
                            ``(ii) procedures for terminating financial 
                        assistance otherwise provided to delegate 
                        agencies; and
                            ``(iii) procedures for appealing a 
                        financial assistance termination decision 
                        relating to a delegate agency.
                    ``(B) Evaluations.--Each Head Start agency--
                            ``(i) shall evaluate its delegate agencies 
                        using the procedures established pursuant to 
                        this section; and
                            ``(ii) shall inform such delegate agencies 
                        of the deficiencies identified through the 
                        evaluation that are required to be corrected.
                    ``(C) Remedies to ensure corrective actions.--If a 
                Head Start agency identifies a deficiency for a 
                delegate agency through the evaluation, such Head Start 
                agency may--
                            ``(i) initiate procedures to terminate the 
                        designation of such delegate agency unless such 
                        delegate agency corrects the deficiency;
                            ``(ii) conduct monitoring visits, as needed 
                        and without notice, to such delegate agency 
                        until either such deficiency is corrected or 
                        such Head Start agency terminates the financial 
                        assistance otherwise provided to such delegate 
                        agency; and
                            ``(iii) release funds to such delegate 
                        agency only as reimbursements until either such 
                        deficiency is corrected by such delegate agency 
                        or such Head Start agency terminates financial 
                        assistance otherwise provided such delegate 
                        agency.
                    ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed to modify or supersede the 
                responsibilities of the Secretary with respect to Head 
                Start agencies or delegate agencies that receive 
                financial assistance under this subchapter.''.
    (b) Corrective Action; Termination.--Section 641A(d) of the Head 
Start Act (42 U.S.C. 9836a(d)) is amended--
            (1) in paragraph (1)(B)(ii)--
                    (A) by striking ``90'' and inserting ``60'', and
                    (B) by striking ``90-day'' and inserting ``60-
                day'', and
            (2) in paragraph (2)--
                    (A) in subparagraph (A) by striking ``90-day'' and 
                inserting ``60-day'', and
                    (B) by amending subparagraph (B) to read as 
                follows:
                    ``(B) Secretarial responsibility.--The Secretary 
                shall--
                            ``(i) not later than 30 days after 
                        receiving from a Head Start agency a proposed 
                        quality improvement plan for corrective action 
                        pursuant to subparagraph (A), either approve 
                        such plan or specify the reasons why such plan 
                        cannot be approved; and
                            ``(ii) not later than 60 days after 
                        approving a quality improvement plan under this 
                        subparagraph, conduct an on-site review to 
                        certify that all deficiencies of such Head 
                        Start agency, and of all Head Start programs 
                        operated by such Head Start agency, have been 
                        corrected in accordance with the standards 
                        established under this subchapter and with the 
                        results-based performance measures developed by 
                        the Secretary under subsection (b).''.

SEC. 5. APPEALS, NOTICE, AND HEARING.

    (a) Procedures.--Paragraphs (2) and (3) of section 646(a) of the 
Head Start Act (42 U.S.C. 9841(a)) are amended to read as follows:
    ``(2) except in emergency situations, a recipient of financial 
assistance under this subchapter shall receive written notice not less 
than 30 days before such assistance is suspended, terminated, or 
reduced;
    ``(3) such recipient shall be provided an opportunity for full and 
fair hearing, including an opportunity to show cause why the action 
described in such notice should not be taken; and''.
    (b) Limitation on Use of Funds.--Section 646 of the Head Start Act 
(42 U.S.C. 9841) is amended by adding at the end the following:
    ``(f) A recipient of financial assistance under this subchapter may 
not use such assistance for the purpose of appealing any decision made 
by the Secretary under this subchapter.''.

SEC. 6. AUDITS.

    Section 647 of the Head Start Act (42 U.S.C. 9842) is amended by 
adding at the end the following:
    ``(c)(1) Not later that 60 days after the end of each fiscal year, 
each Head Start agency shall submit to the Secretary an independent 
financial audit of the Head Start program carried out with financial 
assistance provided under this subchapter. Such audit shall be carried 
out by a certified public accountant selected through a competitive 
process from among qualified certified accountants by the local 
oversight board established in accordance with section 641(a) by such 
agency, except that no accountant may perform audits of such program 
for a period exceeding 2 consecutive fiscal years.
    ``(2) Not later than 60 days after receiving such audit, the 
Secretary shall provide to such agency, and to the chief executive 
officer of the State in which such program is operated, a notice 
identifying the actions such agency is required to take to correct all 
deficiencies identified in such audit.
    ``(d) Each recipient of financial assistance under this subchapter 
shall--
            ``(1) maintain, and annually submit to the Secretary, a 
        complete accounting of its administrative expenses (including a 
        detailed statement identifying the amount of financial 
        assistance provided under this subchapter used to pay expenses 
        for salaries and compensation and the amount (if any) of other 
        funds used to pay such expenses); and
            ``(2) provide such additional documentation as the 
        Secretary may require.''.

SEC. 7. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect on 
the 1st day of the 1st fiscal year beginning after the date of the 
enactment of this Act.

Summary: Head Start Accountability Act of 2005 - Amends the Head Start Act to require additional accountability measures for Head Start agencies, including: (1) agency designation period limits; (2) redesignation priorities; (3) local oversight boards; (4) administrative and financial management standards; (5) delegate agency evaluations and corrective actions; (6) shorter deadlines for agency corrective actions; (7) revised notice and hearing procedures for assistance suspensions, terminations, or reductions; and (8) annual audits. Prohibits recipients from using Head Start assistance to appeal any decision of the Secretary of Health and Human Services under the Act.