Gov't Says Head Start Made Millions in Improper Payments

By Kaitlynn Riely | July 7, 2008 | 8:24 PM EDT

( - A House Appropriations subcommittee has proposed $7.1 billion in funding for the Head Start program for Fiscal Year 2009, even though the program has made over $400 million in improper payments since 2005, according to government audits.

The House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies released a budget markup last Thursday that provides $7.1 billion for Head Start, $93 million more than President Bush's request.

But according to the Government Accountability Office (GAO), the Head Start program, under the auspices of the U.S. Department of Health and Human Services (HHS), has made millions of dollars in improper payments over the past few years.

Head Start provides child development services to low-income, preschool children, with the aim of better preparing them with the skills they need to be successful in school.

The 2008 report, released in January, estimated that improper payments to Head Start programs totaled $88 million for Fiscal Year (FY) 2007, $210 million in 2006 and $109 million in 2005.

The HHS, which is required to conduct audits each year, lists Head Start as one of seven programs deemed "risk-susceptible" because of improper payments. Other programs on the list include Medicare and Medicaid.

Head Start's improper payments seem minor compared to the Medicaid program, which made improper payments of $12.9 billion in FY 2007, the GAO said.

The HHS defines improper payments to mean payment for an enrolled child from a family whose income exceeds the allowable limit -- meaning in excess of the 10 percent program allowance for families above the income limit.

Auditors deemed children ineligible if their files did not contain a signed statement that the child was eligible to participate or if the file contained documentation that the child was not Head Start eligible.

In an attempt to lower the amount of improper payments made each year, the HHS issued a memorandum after FY 2006 to remind Head Start grantees about the government's documentation requirements, and HHS regional offices are providing increased oversight of the documentation.

These actions, the report said, resulted in the Head Start error rate decreasing from $210 million in FY 2006 to $88 million in 2007.

Cybercast News Service asked a panel of Head Start administrators on a conference call June 19 to explain the improper payments. Ron Herndon, director of the Albina Head Start program in Portland, Ore., said he was not familiar with the report's definition of improper payments.

Sometimes misclassifications occur and make it appear that money is being spent improperly, said Julius Bennett, director of the East Side House Settlement Head Start in New York City.

"How expenditures are classified by the auditor, sometimes it causes expenses to look like they have been spent improperly when there has been justification for the expenses," he said.

Carla Lewis, assistant director of the financial management and assurance team at the GAO, said the congressional watchdog compiled its information from the White House Office of Management and Budget (OMB), which gets its information from the government department audits.

The OMB reviewed the documentation and did not mention any disagreements with what was reported.

"There is no need to contest it because this is what they are reporting in the first place," Lewis said.

Herndon, who is also chairman of the board of the National Head Start Association, said Thursday that Head Start programs nationwide are facing a funding crisis that cannot be ended by the funding increases currently proposed by either President Bush or Congress.

Based on the proposed 2009 budget, Herndon said, Head Start programs across the country will need to cut 14,000 child enrollment slots.

The action Head Start needs, Herndon said, is for funding to be increased by $832 million in FY 2009 to expand enrollment, and for funding to annually rise by $360 million above the previous year's funding for FY 2010 through 2013.

Herndon cited a decline in federal support since 2002 as the reason many Head Start programs had to scale back services in 2006 and 2007. In 2002, $6.54 billion was allocated to Head Start.

"If federal support for Head Start had kept pace with inflation over this period, it would have risen from $6.54 billion in 2002 to $7.77 billion in FY 2008," Herndon said. The National Head Start Association (NHSA) is "optimistic they can work with a new president and a new Congress to get funding back on track," he said.

According to the NHSA, almost 1.1 million children and pregnant women were enrolled in Head Start and Early Head Start programs during 2006-2007.

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