Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

DECISION

The Council of the Southern Mountains (CSM) appealed an October 19, 2004 determination of the Administration for Children and Families (ACF) to terminate federal funding for CSM's Head Start program under 42 U.S.C. § 9831 et seq. ACF found in reviews conducted in November 2003 and March-April 2004 that CSM had failed to correct numerous deficiencies first identified in an October 2002 review. In response to CSM's appeal, which also requested a hearing, ACF filed a motion for summary affirmance.

As explained in detail below, we grant ACF's motion because CSM has not raised a genuine dispute of material fact requiring an evidentiary hearing. We base our conclusion on the failure of CSM to raise a genuine dispute regarding ACF's determination that it was not in compliance with several Head Start performance standards in nine Head Start classrooms operated by the McDowell County Board of Education (BOE) under a collaboration agreement with CSM (collaboration classrooms). In particular, we find that CSM failed to raise a genuine dispute with respect to ACF's findings that, in each of these classrooms, it failed to individualize the program to meet each child's needs; use its disabilities service plan as a working document; observe and assess children on an ongoing basis; implement its child outcomes plan; have mechanisms in place for regular communication with staff; maintain files for each child documenting observations and assessments, individualized plans, and child outcomes data; implement procedures for ongoing monitoring of classrooms; and provide training to teachers on Head Start regulations, performance standards and child outcomes. These findings provide a basis for termination since they establish that CSM had uncorrected deficiencies in the areas of Early Childhood Development and Health Services and Program Design and Management. As a result of these deficiencies, children in the collaboration classrooms, which constituted a significant part of CSM's Head Start program, were not receiving services tailored to meet their particular needs as contemplated by the Head Start statute and regulations. The fact that ACF's initial deficiency findings involved both collaboration and non-collaboration classrooms and that the alleged deficiencies in the latter were corrected by the time of the follow-up review is immaterial since CSM received Head Start funding for the children in all of the classrooms and, thus, was responsible for complying with Head Start requirements in all of the classrooms.

In granting ACF's motion, we have also considered all of CSM's other arguments for reversing the termination but find them without merit.

Legal Background

Head Start is a national program that provides comprehensive child development services. 42 U.S.C. § 9831; 57 Fed. Reg. 46,718 (October 9, 1992). The program serves primarily low-income children, ages three to five, and their families. id. The Department of Health and Human Services (HHS), through ACF, awards grants to community-based organizations that assume responsibility for delivering Head Start services -- including education, nutrition, health, and social services -- to their communities. id.

To ensure that eligible children and their families receive high quality services responsive to their needs, Head Start grantees must comply with the Head Start Program Performance Standards codified in 45 C.F.R. Part 1304. Head Start Performance Standards (final rule), 61 Fed. Reg. 57,186 (Nov. 5, 1996). These performance standards cover the entire range of Head Start services and constitute the minimum requirements that a Head Start grantee must meet in three areas: Early Childhood Development and Health Services; Family and Community Partnerships; and Program Design and Management.

HHS is required to conduct a periodic review of each Head Start grantee at least once every three years. 42 U.S.C. § 9836a(c)(1)(A). If as a result of the review the "responsible HHS official" finds that a grantee has one or more "deficiencies," the official must "notify the grantee promptly, in writing, of the finding, identifying the deficiencies to be corrected and, with respect to each identified deficiency, . . . inform the grantee that it must correct the deficiency either immediately or pursuant to a Quality Improvement Plan." 45 C.F.R. § 1304.60(b).

A grantee's noncompliance with a program performance standard or other Head Start requirement constitutes a "deficiency" if it meets one of the definitions of that term in 45 C.F.R. § 1304.3(a)(6). The definitions in sections 1304.3(a)(6)(i) and 1304.3(a)(6)(iii) are relevant here. Sections 1304.3(a)(6)(i) provides that a deficiency includes:

An area or areas of performance in which an Early Head Start or Head Start grantee agency is not in compliance with State or Federal requirements, including but not limited to, the Head Start Act or one or more of the regulations under parts 1301, 1304, 1305, 1306 or 1308 of [title 45 C.F.R.] and which involves:

C) A failure to perform substantially the requirements related to Early Childhood Development and Health Services, Family and Community Partnerships, or Program Design and Management . . . . ¹

Section 1304.3(a)(6)(iii) provides that a deficiency can be "any other violation" of the Head Start Act or regulations which "the grantee has shown an unwillingness or inability to correct within the period specified by the responsible HHS official, of which the responsible HHS official has given the grantee written notice of [sic] pursuant to section 1304.61." Under this provision, a violation of the Head Start Act or regulations that does not constitute a deficiency under sections 1304.3(a)(6)(i) or (ii) is deemed to be a deficiency only after the grantee has demonstrated an inability or unwillingness to correct it within the time frame specified by the responsible HHS official.

If the responsible HHS official determines that a grantee has one or more deficiencies as defined in section 1304.3(a)(6)--

he or she will notify the grantee promptly, in writing, of the finding, identifying the deficiencies to be corrected and, with respect to each identified deficiency, will inform the grantee that it must correct the deficiency either immediately or pursuant to a Quality Improvement Plan.

45 C.F.R. § 1304.60(b). ²

If the responsible HHS official permits the grantee to correct a deficiency pursuant to a Quality Improvement Plan (QIP), the grantee must submit a QIP that specifies, for each identified deficiency, "the actions that the grantee will take to correct the deficiency and the time frame within which it will be corrected." 45 C.F.R. § 1304.60(c). The QIP must be approved by the responsible HHS official. See 45 C.F.R. § 1304.60(d). The period for correcting deficiencies under an approved QIP may not exceed one year from the date the grantee is notified of them. 42 U.S.C. § 9836A(d)(2)(A); 45 C.F.R. § 1304.60(c). The requirement that deficiencies be corrected within one year ensures that families receive the full benefits of the Head Start program and that grantees have sufficient incentive to take prompt action to improve their programs. Target Area Programs for Child Development, Inc., DAB No. 1615 (1997).

If a grantee with an approved QIP fails to correct its deficiencies within the timeframe specified in the QIP, then ACF may terminate funding. 45 C.F.R. § 1304.60(f); First State Community Action Agency, DAB No. 1877, at 9 (2003). Section 1303.14(b)(4) authorizes ACF to terminate funding if a grantee "has failed to timely correct one or more deficiencies as defined in 45 C.F.R. Part 1304." This is one of nine grounds for termination set out in section 1303.14(b), which states that "[f]inancial assistance may be terminated for any or all of [these] reasons." ACF's October 19, 2004 letter notified CSM that ACF was terminating its grant based on sections 1303.14(b)(4), (b)(7), and (b)(9). Section 1303.14(b)(7) authorizes termination if a grantee "has failed to comply with the requirements of the Head Start Act." Section 1303.14(b)(9) authorizes termination if a grantee "fails to abide by any other terms and conditions of its [grant] award . . . or any other applicable laws, regulations, or other applicable Federal or State requirements or policies."

The responsible HHS official initiates a termination action by issuing a notice of termination that sets forth, among other things, the legal basis for termination, the factual findings on which the termination is based, and citations to appropriate legal authority. 45 C.F.R. § 1303.14(c). The grantee may appeal the termination action to the Board, which is authorized to conduct a hearing on the matter on behalf of the Secretary. 45 C.F.R. § 1303.14; Mansfield-Richland-Morrow Total Operation Against Poverty, Inc., DAB No. 1671 (1998). A grantee's appeal must, among other things: "[s]pecifically identify what factual findings are disputed"; "identify any legal issues raised, including relevant citations"; and "include . . . each document the grantee believes is relevant and supportive of its position." 45 C.F.R. § 1303.14(d)(2)-(4).

In its motion for summary affirmance, ACF sets forth the standard for granting summary judgment. Summary judgment is appropriate when there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. Union Township Community Action Organization, DAB No. 1976, at 6. The party moving for summary judgment bears the initial burden of showing the basis for its motion and identifying the portions of the record that it believes demonstrate the absence of a genuine factual dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If a moving party carries its initial burden, the non-moving party must "come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)). ³ To defeat an adequately supported summary judgment motion, the non-moving party may not rely on general denials in its pleadings or briefs, but must furnish evidence of a genuine dispute concerning a material fact--a fact that, if proven, would affect the outcome of the case under governing law. id. at 586, n.11; Celotex, 477 U.S. at 322. In deciding a summary judgment motion, a tribunal must view the entire record in the light most favorable to the non-moving party, drawing all reasonable inferences from the evidence in that party's favor. Union Township Community Action Organization.

Factual and Procedural Background

CSM has provided Head Start services in McDowell County, West Virginia since 1965. On December 11, 2001, CSM entered into a "Collaboration Agreement" with the McDowell County Board of Education. CSM Ex. 74, Att. E. The agreement contains the following description of the collaboration:

This collaboration is a center-based wrap-around model, which is located in designated McDowell County School System elementary school buildings. In this model, the McDowell County School System will provide early childhood educational services utilizing pre school curricula with high quality standards. The Council of the Southern Mountains Head Start will provide necessary early childhood health, family and community partnerships, disabilities and program design and management services to fully meet their performance standards for dually enrolled children. The collaboration model will . . . serve not less than 60 Head Start eligible children and families. The McDowell County Schools classroom staff will be employees of the McDowell County Board of Education. All Head Start staff will be employees of The Council of the Southern Mountains' Head Start Program.

id. at 1. It is not disputed that during the time period relevant to this appeal, nine of CSM's 23 Head Start classrooms operated under the collaboration agreement. CSM Ex. 5, at 1. Of the 320 children CSM was funded to serve, 80 to 87 (25% to 27%) were in collaboration classrooms. CSM Appeal Br. at 2; CSM Ex. 1, at 2. ⁴

From October 21 through 25, 2002, ACF conducted an on-site review of CSM's Head Start program. By letter dated February 13, 2003, ACF notified CSM that, as a result of this review, it had determined that CSM had failed to perform substantially the requirements related to Early Childhood Development and Health Services and the requirements related to Program Design and Management, as described in the report accompanying the notice (referred to by ACF as the "2003 Head Start Review Report"). ACF stated that the "non-compliance items" in these areas "are of such significance that we have determined that a deficiency exists in your Head Start program as defined in 45 CFR 1304.3(a)(6)(i)(C)." CSM Ex. 2, at 2 (unnumbered). ACF further stated that CSM was therefore required to develop a QIP "to correct the deficiencies that we have identified in this report" and that failure to correct the deficiencies within 180 days from CSM's receipt of the notice would result in issuance of a notice of termination. ⁵ id. at 4 (unnumbered). The 2003 Review Report identified deficiencies in the areas of Child Development and Health Services (including Prevention and Early Intervention; Individualization; Disabilities Services; and Curriculum and Assessment) and Program Design and Management (including Planning; Communication; Record-keeping and Reporting; Ongoing Monitoring; Self-Assessment; Human Resources; Fiscal Management; Eligibility, Recruitment, Selection, Enrollment and Attendance; and Facilities, Materials, Equipment and Transportation). CSM Ex. 1.CSM submitted a QIP that ACF approved on July 23, 2003. ACF Br. dated 1/25/05, at 6, citing CSM Ex. 3. ⁶ ACF conducted a follow-up on-site review from November 16 through 20, 2003, and from March 29 through April 2, 2004. On July 2, 2004, ACF notified CSM that it was terminating CSM's Head Start grant. Docket No. A-04-142, CSM Motion to Dismiss or Remand, dated 8/5/04, Ex. A. ACF enclosed with this notice its report on the follow-up review (referred to by ACF as the "2004 Head Start Follow-Up Report"). CSM Ex. 1. The 2004 Follow-Up Report found noncompliance in some of the same areas as in 2003: individualization, disabilities services, and curriculum and assessment under the heading "Child Development and Health Services;" and planning, communication, record-keeping and reporting, ongoing monitoring, human resources, and fiscal management under the heading "Program Design and Management." The 2004 Follow-Up Report found specifically that CSM had failed to correct its noncompliance in these areas with respect to the collaboration classrooms.

On August 5, 2004, in response to ACF's July 2 letter, CSM filed a notice of appeal of the termination and a motion to dismiss or remand, alleging that the letter did not comply with the notice requirements in 45 C.F.R. § 1303.14. The Board agreed with some of CSM's allegations of inadequate notice, and on August 13, 2004, remanded the case to ACF. Docket No. A-04-142, Ruling on Motion to Dismiss or Remand. ⁷ ACF issued a replacement termination notice dated October 19, 2004, enclosing new copies of both the 2003 Review Report and the 2004 Follow-Up Report. ⁸ CSM Exs. 5-7. In the October 19, 2004 notice, ACF notified CSM that it had determined that CSM failed to correct "nine deficiencies identified in the 2003 Head Start Review Report within the time period specified in CSM's approved QIP . . . ." CSM Ex. 5, at 3. ACF stated that "the nine deficiencies that remained uncorrected related to Individualization, Disabilities Services, Curriculum and Assessment, Planning, Communication, Record-keeping and Reporting, Ongoing Monitoring, Human Resources and Fiscal Management, and involved failures to perform substantially the requirements related to Early Childhood Development and Health Services and Program Design and Management . . . ." CSM Ex. 5, at 3. ACF further stated that termination was warranted under 45 C.F.R. §§ 1303.14(b)(4), (b)(7) and (b)(9).

CSM timely filed an appeal with 46 exhibits (including affidavits) and requested additional documents from ACF. ACF then filed 32 exhibits as well as a motion for summary affirmance (MSA). In support of this motion, ACF asserts that "no hearing is warranted in this case because CSM has not presented sufficient evidence that there is any genuine or material issue of fact with respect to ACF's findings." ACF Br. dated 1/25/05, at 12. ACF maintains that "numerous deficiencies remained uncorrected at the time of the follow-up review, which was beyond the 180 day period required for correction." id. at 7. ACF cites all nine areas of noncompliance identified in its revised notice of termination. With two exceptions (involving the requirements for ongoing monitoring of fiscal management in 45 C.F.R. § 1304.51(i)(2) and standards for financial management systems in 45 C.F.R. § 74.21(b)(3)), ACF relies solely on allegations of noncompliance involving the collaboration classrooms.

With its response to ACF's motion, CSM submitted Exhibits 47 through 68 and a Motion for Production and Taking of Additional Discovery, which included a request to take depositions from, or submit written questions to, the ACF reviewers and ACF's Regional Administrator. The Presiding Board Member denied the request for depositions or written questions on the ground that CSM had not shown that this additional discovery was necessary, and ACF agreed to produce the documents requested by CSM. Letter to parties dated 4/5/05. After receiving these documents, CSM moved to supplement the record with proposed Exhibits 69 through 71. The Presiding Board Member admitted Exhibits 69 and 71 into the record but denied CSM's motion to admit proposed Exhibit 70 on the ground that CSM failed to establish that it constituted part of a "draft review report" on the October 2002 on-site review, as CSM alleged, rather than an individual reviewer's notes, as ACF argued. ⁹ Letter to parties dated 5/25/05. The Board subsequently issued an Order to Develop the Record to which both parties responded.

ANALYSIS

On appeal, CSM says that it disputes ACF's initial findings of noncompliance, which appear in the 2003 Review Report, in the following areas: individualization, disabilities services, curriculum and assessment, communication, human resources, and fiscal management (as well as facilities and enrollment, as to which ACF found the noncompliance was timely corrected). ¹⁰ See CSM Appeal Br. at 25-26 and Motion to Supplement the Record at 2-5. CSM also contends that even assuming it was initially out of compliance in all nine areas, it timely corrected all of the noncompliance. CSM contends further that any initial noncompliance or failure to timely correct such noncompliance that was related to the collaboration classrooms was due to factors beyond its control: the State takeover of the McDowell County school system as well as major flooding in McDowell County. According to CSM, ACF should have taken these factors into account in determining whether there were deficiencies that warranted termination. CSM makes several other arguments for reversing ACF's decision to terminate its grant.

Below, we first address the individual findings of noncompliance on which ACF based its determination that CSM had deficiencies in Early Childhood Development and Health Services and Program Design and Management. We then explain the basis for our conclusion that CSM has raised no genuine dispute of material fact regarding these findings. Finally, we address CSM's other arguments.

I. CSM does not raise a genuine dispute of material fact as to eight of the nine findings of noncompliance on which ACF's motion for summary affirmance relies. ¹¹

A. Individual findings of noncompliance

ACF cited findings in the 2003 Review Report and the 2004 Follow-Up Report concerning the provisions cited below. It is important to note that it is undisputed that all nine classrooms or teachers referred to throughout the 2004 Follow-Up Report were collaboration classrooms or teachers.

1. Early Childhood Development and Health Services

a. Individualization

Section 1304.20 of 45 C.F.R., "Child health and developmental services," provides:

(b) Screening for developmental, sensory, and behavioral concerns.

* * * * * (3) Grantee and delegate agencies must utilize multiple sources of information on all aspects of each child's development and behavior, including input from family members, teachers, and other relevant staff who are familiar with the child's typical behavior.

* * * * *(f) Individualization of the program. (1) Grantee and delegate agencies must use the information from the screening for developmental, sensory, and behavioral concerns, the ongoing observations, medical and dental evaluations and treatments, and insights from the child's parents to help staff and parents determine how the program can best respond to each child's individual characteristics, strengths and needs.

In the 2003 Review Report, ACF found that CSM "only uses the Denver Prescreening Developmental Questionnaire II to plan for individualization. This screening process is incomplete and does not meet the Performance Standards, which require that the grantee use multiple sources of data to plan for individualization." CSM Ex. 1, at 4.

In the 2004 Follow-Up Report, ACF found that this noncompliance had not been corrected. ACF stated that "[a] developmental screening instrument was not utilized to individualize for children in all of the classrooms, nor had individualization for children been documented." More specifically, ACF stated that lesson plans in nine classrooms did not contain documentation of individualization, that teachers in those classrooms confirmed in interviews that there was no method of individualization, and that there was no parental input into planning for children's goals to assure individualization, as evidenced in part by the absence of documentation that teachers conducted home visits with parents. CSM Ex. 6, at 3.

b. Disabilities Services

Section 1308.4(d) of 45 C.F.R. is part of the Head Start Performance Standards on Services for Children with Disabilities, while Part 1304 specifically governs the area of Early Childhood Development and Health Services. A violation of a Head Start requirement that does not appear in the regulations specifically pertaining to any of three broad areas of performance listed in section 1304.3(a)(6)(i)(C) (including Early Childhood Development and Health Services) may nevertheless constitute a deficiency as defined in that section if the violation "is related to a failure [to] perform substantially requirements related to" one of these three broad areas of performance. Saginaw County Community Action Committee, Inc., DAB No. 1953, at 50 (2004). CSM does not dispute that the alleged disabilities service plan violation involves a failure to perform requirements related to Early Childhood Development and Health Services. The specific provisions of section 1308.4(d) on which ACF relied are captioned "Purpose and scope of disabilities service plan."

(d) The Head Start grantee and delegate agency must use the disabilities service plan as a working document which guides all aspects of the agency's effort to serve children with disabilities. This plan must take into account the needs of the children for small group activities, for modifications of large group activities and for any individual special help.

In the 2003 Review Report, ACF found that CSM did not use the disabilities service plan as a working document, as evidenced by the fact that staff interviewed were unsure of the process for providing disability services, lesson plans and classroom materials did not reflect provisions for children with special needs, and there was no documentation showing how the disabilities service plan was used throughout the program. CSM Ex. 1, at 4-5. In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. The report states that nine teachers who were interviewed had not been provided with a copy of the disabilities services plan and had no knowledge of the existence or content of the plan. According to the report, CSM's Head Start Director agreed that the disabilities plan could not be utilized as a working document in the nine classrooms since the teachers did not have a copy of the plan. CSM Ex. 6, at 4. The report also states that these nine teachers did not attend pre-service training on the disabilities service plan and that CSM did not schedule any additional disabilities training with these teachers. id. at 3.

c. Curriculum and Assessment

Section 1304.21 of 45 C.F.R., "Education and early childhood development," provides:

(c) Child development and education and approach for preschoolers.

* * * * * *(2) Staff must use a variety of strategies to promote and support children's learning and developmental progress based on the observations and ongoing assessment of each child (see 45 CFR 1304.20(b), 1304.20(d), and 1304.20(e)).

In the 2003 Review Report, ACF found that CSM did not individualize the curriculum it had selected (the Creative Curriculum) or adapt the environment to promote and support the children's learning by providing individualized appropriate activities. In addition, ACF found that goals were not established for each child based on assessments, that each child's progress was not recorded, and that there was "no documentation that demonstrates linkage of observation to individualized, planned activities . . . ." CSM Ex. 1, at 6-7. In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. The report states that nine classrooms did not have a method for observing and assessing children. It further states that the teachers in these classrooms "did not differentiate in providing strategies for children's learning according to their individual needs." According to the report, these teachers "reported that they retained each child's developmental level in memory," and the supplemental curriculum they used "consisted of pre-packaged materials used with every child without any determination of whether the goals matched the skill level of each child." CSM Ex. 6, at 7.

2. Program Design and Managementa. PlanningSection 1304.51 of 45 C.F.R., "Management systems and procedures," provides:

(a) Program planning. (1) Grantee and delegate agencies must develop and implement a systematic, ongoing process of program planning that includes consultation with the program's governing body, policy groups, and program staff, and with other community organizations that serve Early Head Start and Head Start or other low-income families with young children. Program planning must include:

* * * * *(iii) The development of written plan(s) for implementing services in each of the program areas covered by this part (e.g., Early Childhood Development and Health Services, Family and Community Partnerships, and Program Design and Management). (See the requirements of 45 CFR Parts 1305, 1306 and 1308.)

In the 2003 Review Report, ACF found that CSM's planning process did not reflect an analysis of child outcomes data, was not ongoing, and did not address children's developmental progress. CSM Ex. 1, at 10-11.

In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. The report states that although a written plan for using child outcomes data for future planning had been developed, it was not implemented in nine classrooms. According to the report, the nine teachers indicated in interviews that they did not know about the "Child Outcomes requirement." ¹² CSM Ex. 6, at 9-10.

b. Communication

Section 1304.51, "Management systems and procedures," provides:

(e) Communication among staff. Grantee and delegate agencies must have mechanisms for regular communication among all program staff to facilitate quality outcomes for children and families.

In the 2003 Review Report, ACF found that program policies and procedures did not exist for regular communication among staff. The report specifically states that "[t]here is no system to communicate changes in enrollment, tracking information, or follow-up procedures. Also, there is no system for communication with the Pre-K collaboration classrooms." The report notes that CSM uses a communication log, but states that the logs reviewed were incomplete and gave little information about the area of the program being supervised. CSM Ex. 1, at 11.

In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. The report states that "communication was a serious obstacle in the collaboration" between CSM and the county school system. The report noted that the McDowell County School District Assistant Superintendent, the Title I Director, and the Title I Parent Educator stated in interviews that the results from the initial on-site review were not shared with them, that they were unaware of and not involved in the development of the QIP, and that there was little communication regarding training or orientation about Head Start requirements. The report also states that interviews with the nine collaboration classroom teachers "revealed that there was inadequate communication with the Head Start Program" since none of them expressed any knowledge of the child outcome measures, seven of them were unaware of the role of the Family Support Advocates in working with families, and all nine stated that they did not receive any feedback from the Head Start Education Managers who visited their classrooms. CSM Ex. 6, at 10-11.

c. Record-keeping

Section 1304.51, "Management systems and procedures," provides:

(g) Record-keeping systems. Grantee and delegate agencies must establish and maintain efficient and effective record-keeping systems to provide accurate and timely information regarding children, families, and staff and must ensure appropriate confidentiality of this information.

The 2003 Review Report states:

Review of program-wide records reveals that there is not a system in place which will provide efficient and effective record keeping information in order to monitor and assure quality program services. Files lack consistency, accuracy, and in some cases are incomplete.

CSM Ex. 1, at 11.

In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. ACF found specifically that 29 children's files in nine classrooms did not contain on-going observations, child assessments, individualized plans or child outcomes data, and that interviews with the nine teachers validated that this information was not in the children's files. ACF Ex. 6, at 11.

d. Ongoing Monitoring Section 1304.51, "Management systems and procedures," provides:

(i) Program self-assessment and monitoring.

* * * * *(2) Grantees must establish and implement procedures for the ongoing monitoring of their own Early Head Start and Head Start operations, as well as those of each of their delegate agencies, to ensure that these operations effectively implement Federal regulations. In the 2003 Review Report, ACF found, based on record reviews, interviews with staff, and observations by reviewers, "that monitoring of overall program operations is not tied to Performance Standards and is not well established or implemented in a systematic manner." The report states that monitoring was "infrequent" and monitoring reports were "vague and incomplete." CSM Ex. 1, at 11.

In the 2004 Follow-Up Report, ACF found that the noncompliance with section 1304.51(i)(2) had not been corrected. The report states that nine classrooms were not monitored for individualization, screening, assessments, or curriculum implementation. The report further states that a review of the monitoring schedule showed that six classrooms had been visited only once and three had been visited only twice during the entire school year, and that all nine teachers reported that they received no feedback from monitoring. The report also finds that "[t]here was a lack of adequate monitoring in the area of fiscal management as evidenced by continuing year end balances, over $1,200 in bank overdraft charges last year, and the lack of proper contract administration of the collaborative partnership." CSM Ex. 6, at 12.

e. Human Resources

Section 1304.52, "Human resources management," provides:

(k) Training and development.

* * * * *(2) Grantee and delegate agencies must establish and implement a structured approach to staff training and development, attaching academic credit whenever possible. This system should be designed to help build relationships among staff and to assist staff in acquiring or increasing the knowledge and skills needed to fulfill their job responsibilities, in accordance with the requirements of 45 CFR 1306.23. ¹³

In the 2003 Review Report, ACF found that no staff development plans were maintained for Head Start program staff to help them acquire increased knowledge and skills to fulfill their job responsibilities. In particular, the report states that CSM had not developed a plan to train the BOE staff on Head Start performance standards and that disabilities training had not been provided to staff. CSM Ex. 1, at 14.

In the 2004 Follow-Up Report, ACF found that CSM had not corrected this noncompliance. The report states that nine teachers had not received training in Head Start regulations, performance standards, or child outcome requirements. This finding was based on interviews with the nine teachers and the Head Start Director, as well as on the absence of documentation in any of the training records to demonstrate that these teachers attended training on any of these topics. CSM Ex. 6, at 16.

B. CSM's failure to raise any genuine dispute of material fact

In its appeal brief, CSM states that ACF's findings in the 2004 Follow-Up Report that it failed to correct the deficiencies identified above were wrong. In addition, CSM challenges the findings in the 2003 Review Report regarding individualization, curriculum and assessment, planning, communication, and human resources.

CSM submitted numerous exhibits (including affidavits) with its appeal brief to support its position that it corrected its alleged initial noncompliance with these requirements and, where applicable, that it was in compliance with these requirements at the time of the initial on-site review. See CSM Appeal Br. at 38, citing CSM Exs. 21, 22, 26, 27, and 45 (individualization); id. at 39-40, citing CSM Exs. 28, 29, 31-33, 36, and 46 (at 103-114) (disabilities); id. at 40-41, citing CSM Exs. 37 and 38 (curriculum and assessment); id. at 43, citing CSM Ex. 45 (planning); id. at 44, citing CSM Ex. 46, at 140-141 (communication); id. at 45, citing CSM Ex. 46, at 141-142 (record-keeping); id. at 46, citing CSM Ex. 39 and CSM Ex. 46, at 144-145 (ongoing monitoring); and id. at 47, citing CSM Exs. 40 and 41 (human resources).

In its motion for summary affirmance, ACF argued that none of the exhibits submitted by CSM "contradict[s]" the findings in the 2004 Follow-Up Report because the exhibits do not pertain to the nine collaboration classrooms or teachers. In particular, ACF asserted that CSM's exhibits do not address the findings that: 1) individualization did not occur in the collaboration classrooms, 2) the collaboration classroom teachers had not received a copy of the disabilities service plan or received training on using the plan, 3) the collaboration classroom teachers used a supplemental curriculum without observing and assessing children to determine whether the curriculum was matched to the skill level of each child, 4) the child outcomes plan was not implemented in the collaboration classrooms, 5) the communication system did not provide for direct communication with staff in the collaboration classrooms, 6) the children's files in the collaboration classrooms were incomplete, 7) there was no ongoing monitoring of the collaboration classrooms, ¹⁴ and 8) the collaboration classroom teachers did not receive any training with respect to Head Start performance standards, regulations, or child outcomes. MSA at 23, 26, 31, 34, 36-37, 39, 43, and 44-45.

In response to ACF's motion, CSM maintained that it corrected any noncompliance with the requirements in question. CSM submitted several additional exhibits in support of its position. See CSM Response to MSA at 36-37, citing CSM Exs. 47-50, 62-65 (individualization); id. at 37, citing CSM Exs. 66, 67 (disabilities); id. at 39, citing Exs. 47-50, 56, and 63-65 (curriculum and assessment); id. at 42, citing CSM Exs. 63-65 (each at 9), and CSM Ex. 67, 23 (planning) ¹⁵; id. at 44-45, citing CSM Exs. 52, 53, 57, and 67 (communication); id. at 47-48, citing CSM Exs. 60, 67 (record-keeping); id. at 49-50, citing CSM Exs. 51, 58, 60, 63-65, 67, and ACF Ex. 19 (ongoing monitoring); and id. at 51, citing CSM Exs. 61 and 67 (human resources). ¹⁶ However, CSM did not specifically argue that any of the documentation it had submitted showed that it complied with the applicable requirements in any of the nine collaboration classrooms. In addition, none of the additional affidavits submitted by CSM specifically alleged that CSM had complied with the applicable requirements in any of the nine collaboration classrooms.

CSM also argued that the previously submitted affidavit of its Disabilities Manager directly contradicted ACF's findings. However, the Disabilities Manager alleges that "[s]everal training sessions have occurred," not that the collaboration classroom teachers received training. CSM Ex. 66, 4. In addition, the Disabilities Manager's allegation that "all staff members have been provided copies of the disabilities plan" does not on its face encompass the collaboration classroom teachers, since they were employed by the county schools rather than CSM's Head Start Program and, therefore, are not "staff" of CSM. CSM Ex. 74, Att. E at 1. Since there is no clear reference to the collaboration classrooms in this affidavit, we would have been hard pressed to conclude at any point in this proceeding that these statements (or any similarly general statements in other affidavits regarding this or other allegedly uncorrected deficiencies) raise a genuine dispute of material fact, even when viewed most favorably to CSM. However, even assuming we could reasonably have reached that conclusion at some point in this proceeding, we cannot do so after the issuance of the Board's Order to Develop the Record and CSM's response to it, both of which are discussed below.

After reviewing the record, the Presiding Board Member notified the parties that she found no indication that any of the teachers identified in CSM's affidavits or other exhibits submitted with respect to any of the alleged deficiencies were teachers in collaboration classrooms. She also noted that none of the classrooms identified in CSM's exhibits appeared to be collaboration classrooms. ¹⁷ The Presiding Board Member therefore directed CSM as follows:

CSM . . . should state . . . whether or not it disputes that none of the teachers identified in the exhibits on which it relies taught in BOE [collaboration] classrooms during the relevant time periods. If CSM contends that certain of these teachers did teach in the BOE classrooms during the relevant time periods, CSM should make a proffer of evidence to support its position with respect to each teacher. At minimum, the proffer should identify the teacher and the BOE classroom in which he/she taught as well as the time period during which he/she taught there. CSM should also state whether or not it disputes that none of the classrooms for which it provided documents were BOE classrooms. If CSM alleges that certain documents it submitted as exhibits do relate to certain BOE classrooms, it should make a proffer of evidence to support its allegation. This proffer, at minimum, should identify each document that relates to a BOE classroom and the classroom to which it relates

Order to Develop the Record dated 6/20/05, at 2.

In response to the Board's Order, CSM proffered the affidavit of its Head Start Director, Pamela Waddell. CSM Response to Order to Develop the Record at 2, citing CSM Ex. 73. Ms. Waddell states that she is the person who "pulled from [CSM's] . . . records examples of lesson plans and individualization to be submitted on behalf of [CSM]" and that "[m]ost of these documents are contained in [CSM's] Exhibits 47, 48, 49 and 50." She then admits that "[t]he documents do not include examples from the Board of Education collaborative classrooms." id. at 7. However, Ms. Waddell alleges that the examples of monitoring reports submitted as CSM Exhibit 39 include monitoring reports for five collaboration classrooms. CSM Ex. 73, 9.

Five of the six monitoring reports in CSM Exhibit 39 pertain to collaboration classrooms; nevertheless, this exhibit does not raise a genuine dispute of material fact with respect to ACF's finding that CSM failed to timely correct the deficiencies found in the 2003 Review Report. All of the observations discussed in the monitoring reports were made after August 26, 2003, the end of the period for correction in CSM's approved QIP. Thus, these observations could not establish that CSM timely corrected any noncompliance. ¹⁸ In addition, these reports do not specifically address whether CSM met any of the requirements as to which ACF found it was out of compliance except monitoring. Even assuming the monitoring reports raised a factual dispute regarding ACF's finding on monitoring or any of ACF's other findings, however, CSM submitted no evidence purporting to dispute any of ACF's findings for the four collaboration classrooms for which there were no monitoring reports.

CSM also asserts in its response to the Board's order that some of the documents it submitted earlier (CSM Exhibits 47-50) raise genuine disputes of material fact that preclude summary judgment for ACF even though CSM acknowledges that these documents address ACF's initial findings of noncompliance with respect to only non-collaboration classrooms. According to CSM, since the findings resulting from ACF's initial on-site review were "based not just on the [BOE] collaborative classrooms," a showing by CSM that it met the applicable requirements in the non-collaboration classrooms at the time of this review would preclude ACF from terminating based on deficiencies found in the follow-up review to be uncorrected only in the collaboration classrooms. CSM Response to Board Order to Develop the Record at 1-2. ¹⁹ If CSM is arguing that it had no deficiency at the time of the initial review because it met the relevant performance standards for some of the classrooms in its Head Start program, the argument has no merit. Since all of the classrooms were subject to the Head Start program requirements, a deficiency finding on either review could properly be based on noncompliance in any of the classrooms.

We therefore conclude that the findings of noncompliance discussed above, either individually or together with the other findings in the same area, support findings of deficiencies in Early Childhood Development and Health Services and Program Design and Management.

II. ACF gave adequate notice of the deficiencies on which the termination was based.

CSM takes the position that ACF's February 13, 2003 letter asserted a single deficiency under 45 C.F.R. § 2304.3(a)(6)(i)(C) that was based on the "theory" that items of noncompliance constituted a deficiency only when considered collectively. CSM Appeal Br. at 26-27. CSM identifies numerous findings of noncompliance in the 2003 Review Report that it considers erroneous. See, e.g. id. at 22-28. Applying the aggregation theory it attributes to ACF, CSM then argues that if even one of the findings is wrong, the deficiency would no longer exist on the first review and, therefore, could not provide a basis for termination if found on the follow-up review, since 45 C.F.R. § 1304.60(b) requires ACF to give CSM notice and an opportunity to correct a deficiency.

CSM's arguments have no merit. Notwithstanding ACF's statement in the February 13, 2003 letter that "a deficiency exists in your Head Start program as defined in 45 CFR 1304.3(a)(6)(i)(C)," the notice elsewhere indicates that ACF found a failure to perform substantially the requirements related to both Early Childhood Development and Health Services and Program Design and Management. See CSM Ex. 2 (emphasis added). Under section 1304.3(a)(6)(i)(C), these constitute separate deficiencies. But even assuming ACF's use of the language "a deficiency ... as defined in 45 C.F.R. § 1304.3(a)(6)(i)(C)" refers to a single deficiency, this does not suggest a "theory" that every item of noncompliance ACF mentioned was a necessary element of this deficiency and that ACF could not terminate after the follow-up review unless all of the noncompliance remained uncorrected. A deficiency within the meaning of section 1304.3(a)(6)(i)(C) exists where a grantee fails "to perform substantially the requirements related to Early Childhood Development and Health Services, Family and Community Partnerships, or Program Design and Management." (Emphasis added.) ACF could properly determine that a deficiency existed based on even one finding of noncompliance if it concluded that the grantee failed to perform substantially the requirements related to Early Childhood Development and Health Services or Program Design and Management (the areas of section 1304.3(a)(6)(i)(C) at issue here). ²⁰ As we have discussed, there is no genuine dispute of material fact regarding eight of the nine findings of noncompliance on which ACF ultimately proposed to terminate CSM's grant.

CSM also argues that ACF's February 2003 letter did not provide adequate notice because the letter "did not provide many details regarding the specific items considered in the area of Early Child Development and Health Services or in the area of Program Design and Management." CSM Appeal Br. at 15. According to CSM, the February 2003 letter was unclear "regarding the exact basis for ACF's allegations" of noncompliance regarding disabilities services, fiscal management, and human resources. ²¹ id. at 15-16. ²² Even assuming this is true, the regulations at 45 C.F.R. § 1303.14(c)(1) provide that a notice of termination may refer to specific findings in another document that form the basis for the termination. As indicated above, the February 2003 letter referred to "deficiencies identified in" the 2003 Review Report, which contained additional detail. CSM does not contend that the detail in the 2003 Review Report was insufficient to give it adequate notice of these deficiencies.

CSM argues further that ACF's February 2003 letter did not give CSM any notice of two deficiencies identified in ACF's October 19, 2004 termination letter: Planning and Record-keeping. CSM states that "neither issue was cited" or "mentioned" in the February 13 letter. CSM Appeal Br. at 17. CSM acknowledges that these two "issues are noted" in the 2003 Review Report, but asserts that "not every item of noncompliance" mentioned in the report "contributes to a deficiency." id., citing 45 C.F.R. § 1304.61 and The Human Development Corporation of Metropolitan St. Louis, DAB No. 1703 (1999).

This argument is not persuasive. The 2003 Review Report includes "Planning" and "Record-keeping and Reporting" along with its other findings under the heading "Program Design and Management." CSM Ex. 1, at 9-11. As indicated above, ACF's February 13 letter incorporated by reference the findings in the 2003 Review Report. CSM also addressed Planning and Record-keeping and Reporting in its QIP. CSM Ex. 3, at 4, 7. Thus, CSM clearly understood the February 2003 letter as giving notice that problems in these areas were part of the basis for the finding of a deficiency within the meaning of section 1304.3(a)(6)(i)(C), which includes a failure to perform substantially the requirements relating to Program Design and Management. Furthermore, while CSM is correct that under section 1304.61, certain types of noncompliance do not constitute a deficiency until after the grantee has been given an opportunity to correct them (see Human Development Corp. at 8), this is not true of ACF's findings here that CSM failed to comply with the requirements for planning and record-keeping. Since ACF cited these findings under the umbrella requirement Program Design and Management, noncompliance with these requirements can support an initial deficiency finding under section 1304.3(a)(6)(i)(C) without any prior opportunity for correction.

CSM also points out that the 2003 Review Report speaks merely of "findings that require corrective action" when addressing the planning requirement in contrast to "substantial findings that require corrective action" when addressing the record-keeping requirement. CSM Appeal Br. at 17, citing CSM Ex. 1, at 10 (emphasis added). ²³ CSM suggests that by omitting the word "substantial," ACF indicated that it did not view the planning findings as contributing to its determination of a deficiency in Program Design and Management under section 1304.3(a)(6)(i)(C). We see no basis for this reading. After quoting the requirement for "development of written plan(s) for implementing services in each of the program areas covered by this part [e.g., Program Design and Management]," the 2003 Review Report explains that CSM did not meet this requirement because its planning did not use child outcomes data to guide programmatic decisions. CSM Ex. 1, at 11. Thus, the report makes it clear that ACF viewed the planning findings, no less than the record-keeping findings, as contributing to the Program Design and Management deficiency cited under section 1304.3(a)(6)(i)(C). Moreover, as noted above, by including these areas in its QIP, CSM indicated that it understood them to be a basis for ACF's deficiency finding.

CSM's argument also erroneously assumes that ACF must describe as "substantial" the noncompliance it finds with respect to each component of the umbrella requirement Program Design and Management in order to find a "failure to perform substantially the requirements related to . . . Program Design and Management." The quoted phrase does not necessarily refer to each of the components, but can refer to performance of those components in the aggregate. Thus viewed, it is irrelevant whether ACF uses the word "substantial" when describing the findings related to the individual components so long as the aggregate findings constitute a "failure to perform substantially" the requirements related to Program Design and Management.

Finally, CSM argues that it did not receive adequate notice of the deficiencies because ACF's initial notice "was not 'prompt' within the meaning of section 1304.60(b)." CSM Appeal Br. at 14. CSM asserts (and ACF does not dispute) that ACF's 2004 Guide for conducting on-site reviews states that "delivery of the final Head Start Review Report within 45 calendar days of the end of the on-site phase of the review is imperative." id., quoting 2004 PRISM Guide, at 33, n.2. ²⁴ ACF's initial on-site review was conducted October 21-25, 2002, more than three months before the February 13, 2003 notice transmitted the 2003 Review Report to CSM. CSM acknowledges, however, that the 2004 PRISM Guide "was not binding on the ACF during the 2003 program year . . . ." CSM Appeal Br. at 14. Moreover, even if the February 13, 2003 notice of the deficiencies was not prompt, CSM does not cite any authority for invalidating the notice on this ground and does not allege that it was prejudiced by any delay in issuing the notice. ²⁵

III. ACF could reasonably require that CSM come into full compliance in order to correct deficiencies under 45 C.F.R. § 1304.3(a)(6)(i)(C).

CSM argues that termination was not warranted based on failure to correct a deficiency within the meaning of section 1304.3(a)(6)(i)(C) because CSM "was at least substantially performing the requirements related to" the requirements for Early Childhood Development and Health Services and Program Design and Management at the time of the follow-up review conducted March 29 - April 2, 2004. ²⁶ CSM Appeal Br. at 31. CSM asserts that ACF erroneously applied a full performance standard in determining whether CSM had corrected the deficiencies found in the initial on-site review. In support of its position, CSM cites the definition of a deficiency under section 1304.3(a)(6)(i)(C) as a "failure to perform substantially the requirements related" to any of the three areas listed, as well as the provision in section 1304.3(a)(14) defining the term "[m]inimum requirements" as meaning "that each . . . Head Start grantee must demonstrate a level of compliance . . . such that no deficiency, as defined in this part, exists in its program." CSM reasons that, in order to correct a deficiency, it need do no more than attain the level of performance at which no deficiency would have existed in the first instance. CSM also argues that the Board held in First State Community Action Agency that the applicable standard is substantial compliance or performance. See CSM Appeal Br. at 29-31; CSM Response to MSA at 27-33.

In First State, the Board did not decide what constitutes the proper standard but simply declined to rely on the full compliance standard because it questioned whether ACF had given the grantee in that case adequate and timely notice of that standard. Because of the notice issue, the Board looked at whether the grantee had timely made improvements sufficient to conclude that it was substantially performing each requirement at issue. See First State at 13, 15.

²⁷ In a later decision where there was no notice issue, the Board found that ACF could reasonably apply a full compliance standard. Addressing the same arguments raised by CSM here, the Board stated:

While the definition of a deficiency sets forth substantial performance as the applicable standard for an initial finding of a deficiency in the listed areas, that definition does not address the standard for correction of an identified deficiency in any area that is set forth as a basis for termination. Specifically, the provision at 45 C.F.R. § 1304.60(f) that requires correction of identified deficiencies does not incorporate a substantial performance standard; nor is there any mention of substantial performance in the termination provision for failure to timely correct deficiencies at 45 C.F.R. § 1303.14(b)(4). Furthermore, ACF explained a reasonable basis for the interpretation that correction requires full compliance; to permit grantees to only partially correct a deficiency to avoid termination would effectively result in grantees never fully complying with Head Start requirements. . . .

In addition, PHA does not dispute that, under section 1304.3(a)(iii) and 1304.61, ACF may require a grantee to come into full compliance in order to correct noncompliance that does not constitute a deficiency unless uncorrected. It is logical to read the regulations to accord ACF the same authority to require full compliance to correct a deficiency, which represents a significant failing, that is available for uncorrected noncompliance.

Philadelphia Housing Authority, DAB No. 1977, at 10-11 (2005); accord DOP Consolidated Human Services Agency, DAB No. 1689, at 8-9 (1999). ²⁸ Thus, ACF could properly terminate CSM's Head Start grant if CSM failed to fully correct any deficiencies found in ACF's initial on-site review. ²⁹.

IV. CSM's allegation of bias on the part of ACF does not raise a genuine dispute of material fact.

CSM alleges that "personal animosity" on the part of ACF reviewers and program officials influenced ACF's findings and ACF's decision to terminate the grant. According to CSM, "[t]his question of improper motive renders summary disposition inappropriate." CSM Response to MSA at 10.

CSM submitted five affidavits alleging that ACF acted out of bias in making its findings of noncompliance. See CSM Response to MSA at 55-57, citing CSM Ex. 58 (Nuckols affidavit), CSM Ex. 67 (Johnson affidavit), CSM Ex. 59 (Moore affidavit), CSM Ex. 60 (Melnik affidavit), and CSM Ex. 61 (O'Neal affidavit). As evidence of bias, the affiants point mostly to alleged disparaging comments by ACF personnel as well as ACF's questioning whether Head Start funds were used to pay for a luxury vehicle driven by CSM's former executive director. However, CSM does not allege any relationship between the alleged comments and particular findings of noncompliance, and the alleged questioning about possible misuse of Head Start funds did not result in a finding that became a basis for the termination. Moreover, questions about the use of Head Start funds do not evidence bias since reviewers have an obligation to raise such questions.

The O'Neal affidavit does allege that at the follow-up review, ACF's Human Resources reviewer "did not seem interested in actually reviewing the changes that the Council had made" and that the reviewer stated during the March-April 2004 review that she did not need to review anything other than a training log. Ms. O'Neal concludes, "Because of the perfunctory nature of the review, I do not believe that the Human Resources findings were accurate." CSM Ex. 61, 10, 12. Ms. O'Neal does not specifically allege that the reviewer was biased, however. ³⁰ Even if ACF failed to conduct a complete review to determine whether CSM's noncompliance with respect to human resources had been corrected, this would not preclude summary judgment since CSM did not provide documents on appeal which might raise a genuine dispute of material fact with respect to ACF's finding that the noncompliance had not been corrected.

Furthermore, as the Board has previously stated, "reviewer bias does not affect the reliability of objective evidence, i.e., evidence that is not dependent on subjective reviewer observation." Philadelphia Housing Authority at 12. As our earlier discussion indicates, there is no genuine dispute of material fact regarding the objective evidence supporting the deficiency findings gathered during the reviews, much of which consists of CSM's own documents, admissions or, in some cases, absence of documentation. Accordingly, CSM's allegations of bias do not raise a genuine dispute of material fact that would make summary judgment inappropriate.

V. CSM has not raised a genuine dispute as to whether the factors it asserts were beyond its control caused its noncompliance. CSM asserts that even if it was not in compliance, factors beyond its control (flooding and the State takeover of the county school system) caused that noncompliance and ACF should have taken these factors into consideration. CSM Appeal Br. at 9; see also CSM Response to MSA, at 12-13. We note at the outset that CSM has not pointed to any evidence in the record that ACF actually did not give these factors any consideration. While ACF denies any legal duty to consider such factors and vigorously disputes that the flooding and State takeover excuse CSM's noncompliance, it does not actually state that ACF did not consider these factors. Thus, the record before us does not preclude the possibility that ACF considered the factors as part of its review process but determined that they did not excuse CSM's noncompliance. ³¹

But even if ACF did not consider the flooding and State takeover, we cannot, after a careful examination of CSM's argument and the record, find any evidence that could lead a reasonable trier of fact to conclude, drawing all inferences favorable to CSM, that these factors caused CSM's noncompliance on either the initial or follow-up review. CSM presents the following facts. Based on the results of an "Education Performance Audit of the McDowell County School System," the West Virginia Board of Education voted on November 8, 2001 to take control of the county school system, effective immediately. CSM Response to Order to Develop the Record at 6, citing CSM Ex. 72 (affidavit of Dr. Clifton Moore, CSM's former Executive Director), at 9 and Att. B at 6-8. ³² Approximately one month later, on December 11, 2001, CSM entered into the collaboration agreement with the county school system. ³³ In an affidavit, CSM's Office Manager, Marlene Valentine, describes the situation that ensued as follows:

Although the agreement was made in December and efforts to enroll children started immediately, because of the condition of the local schools just before the take over and the change in school management, the partnership was not really ready to start up until February. The two programs had only a short time to work together in the spring of 2002 due to the fact that in May of 2002 the county experienced another flood that closed the schools and Head Start.

CSM Ex. 74, 8. Thus, according to Ms. Valentine, when the review team came in October 2002, "the Head Start Program was still setting up the collaboration and recovering from the floods." ³⁴ id., 9. Ms. Valentine further states that even prior to the State takeover, the county school system was "not keeping proper records," and that "the flooding in May of 2002 either destroyed or delayed records from the Board of Education. Thus, certain information, such as attendance and lesson plans for the collaboration classrooms was not available when the reviewers came in October of 2002." id., 10. Ms. Valentine also alleges that because of "the many new policies and procedures that had to be put in place to fix" the county school system's own problems, "[s]cheduling meetings, training, and monitoring [was] difficult because of conflicts" with the county school system's "own conferences and training requirements." id., 11. In addition, according to Ms. Valentine, "because of all the other changes happening, the Board of Education did not immediately adopt the Creative Curriculum used by the Head Start Program." id.; see also CSM Ex. 72 (Moore affidavit), 12, 13, 17; CSM Ex. 73 (Affidavit of Pamela Waddell, CSM's Head Start Director as of October 2003), 10, 11. Dr. Moore's affidavit also alleges that-

the conflicts in terms of scheduling, the priority given to implementation of basic state educational requirements, and delays in implementation of a uniform curriculum also had detrimental effects on communication, record-keeping, and monitoring. For example the Council and the [Head Start Program] communicated program requirements to the BOE, but given the transformation occurring within the BOE following the state take over and the absence of general accountability and oversight immediately preceding the take over, there were misunderstandings and miscommunications. Monitoring efforts were also made more difficult by uncertain schedules for BOE staff and use of different curricula.

CSM Ex. 72, 17.E. Dr. Moore also alleges that a July 2001 flood "contributed to the problems confronting the county's schools . . . ." id., 11.

Assuming these allegations are true, we must still conclude that a rational trier of fact could not conclude that CSM's noncompliance with any of the Head Start program requirements was due to factors beyond CSM's control. Even viewing the evidence in the light most favorable to CSM, the evidence is insufficient to show a nexus between the State takeover and any of the specific findings of noncompliance. As the affidavits acknowledge, the problems in the county schools that CSM claims caused its initial noncompliance existed prior to, as well as after, the State takeover. Thus, CSM entered into the collaboration agreement knowing of the alleged problems. Even if CSM was not aware of these problems prior to the State takeover, once the State takeover occurred, it would have been apparent that the county schools had problems. CSM entered into the collaboration agreement a month after the State takeover. Thus, to the extent that the problems in the county schools caused CSM's noncompliance with any requirements, that noncompliance resulted from CSM's deliberate decision to enter into the collaboration agreement despite the existence of problems severe enough to require the State takeover, and was not the result of a factor outside CSM's control. Moreover, CSM does not dispute ACF's assertion that CSM could have terminated the collaboration agreement if it became apparent to CSM after entering into the collaboration agreement that the problems in the county schools would interfere with its ability to comply with the applicable requirements. ³⁵ In addition, the State takeover occurred more than eight months before the end of the period for correction under CSM's approved QIP, yet CSM proffers no evidence that it took any steps at all to correct its noncompliance in the collaboration classrooms.

Furthermore, even viewing the evidence in the light most favorable to CSM, the evidence is insufficient to show a nexus between the July 2001 flood or the May 2002 flood and any of the specific findings of noncompliance. Ms. Valentine's affidavit alleges that the flooding in May 2002 "either destroyed or delayed records" for the collaboration classrooms; however, with the exception of the finding relating to record-keeping, ACF's findings of noncompliance rely not only on the lack of records but also on admissions made by teachers in the collaboration classrooms or other county school personnel who were interviewed by the reviewers. The allegation that records were destroyed or delayed does not undercut these admissions. ³⁶ Furthermore, the regulations at 45 C.F.R. § 74.53(b) (made applicable to Head Start grants by 45 C.F.R. § 1301.10(a)) provide that all documents pertinent to a grant award shall be retained for a period of three years from the date of the submission of the quarterly or annual financial report, or until "all litigation, claims or audit findings involving the records have been resolved and final action taken." The Board has consistently held, with respect to an earlier version of this requirement at section 74.21(a), that a grantee is not excused from producing relevant documentation unless it shows that specific documents actually existed, were retained for the requisite three-year period, and then were innocently destroyed. See, e.g., California Dept. of Health Services, DAB No. 1240 (1991). (The allegation that records were "delayed" is irrelevant since CSM had ample opportunity in this proceeding to produce any records not shown to the reviewers.) CSM never alleged the existence of specific documents prior to the May 2002 flood that in its view would have established compliance with any of the performance standards at issue.

Since we have found that CSM presented no evidence from which a trier of fact could reasonably conclude that the flooding and State takeover caused its noncompliance, we need not reach the issue of whether ACF had a legal duty to consider these factors. ³⁷

CSM also argues that in light of the factors discussed, ACF should have given it a full year from ACF's February 13, 2003 letter to correct any deficiencies. According to CSM, it "proposed longer time frames," but ACF "insisted on the 180 day time frame in the February 2003 . . . letter." CSM Appeal Br. at 10-11. Since we have concluded that CSM has not raised a genuine dispute as to whether its noncompliance was caused by factors beyond its control, we need not reach this further argument. However, we note that the Act and implementing regulations give ACF the discretion to determine the length of the correction period. The only limitation on this discretion is that ACF not allow more than one year to correct noncompliance pursuant to a QIP. See 42 U.S.C. § 9836a(d)(2)(A)(ii); 45 C.F.R. § 1304.60(b) and (c). CSM cites no authority that would require (or permit) the Board to overturn a termination decision based solely on ACF's choice of a period of less than one year for correction of deficiencies.

Conclusion

For the reasons discussed above, we grant ACF's motion for summary affirmance and uphold ACF's termination of CSM's Head Start grant.

Judge

______________________
Judith A. Ballard

______________________
Cecilia Sparks Ford

______________________
Sheila Ann Hegy
Presiding Board Member

Footnotes

[1] Subpart B of 45 C.F.R. Part 1304, which is comprised of sections 1304.20 - 1304.24, is captioned "Early Childhood Development and Health Services." Subpart C of 45 C.F.R. Part 1304, which is comprised of sections 1304.40 - 1304.41, is captioned "Family and Community Partnerships." Subpart D of 45 C.F.R. Part 1304, which is comprised of sections 1304.50 - 1304.53, is captioned "Program Design and Management."

[2] Section 641A(d)(1)(B)(ii), which was added to the Act on October 27, 1998, several months after section 1304.60(b)'s effective date, gives ACF authority to require correction within 90 days without a QIP. See Pub. L. No. 105-285, § 108(d); 61 Fed. Reg. 57,186 (Nov. 5, 1996).

[3] Compliance with certain Head Start requirements, e.g., record-keeping, can be established only through documentary evidence. For those requirements, a genuine dispute of material fact can exist only when the position of the party opposing summary judgment is supported by documentary evidence, absent an allegation that the documentation is not available because of circumstances beyond the grantee's control. Thus, the absence of documentation in and of itself may be a basis for summary judgment. Union Township Community Action Organization at 7.

[4] In a related prior proceeding before the Board (discussed later), CSM asserted that under the collaboration agreement, the McDowell County Board of Education (BOE) operated the collaboration classrooms "effectively, as a delegate agency." Docket No. A-04-142, Motion to Dismiss or Remand dated 8/5/04, at 17. ACF denied that the BOE was a delegate agency, noting, for example, that the collaboration agreement had not received prior approval from the responsible HHS official, as 45 C.F.R. § 1301.33 requires for creation of delegate agencies. ACF letter dated 10/19/04, at 1-2. CSM no longer argues that the BOE is a delegate agency and also does not dispute ACF's assertion that CSM, as grantee, has full responsibility for the compliance with Head Start requirements of all of its classrooms, including the collaboration classrooms. If CSM did dispute these legal matters, we would resolve them in favor of ACF. We see no basis for finding the BOE a delegate agency and note, in any event, that termination of a Head Start grantee can be based on the actions of a delegate agency. See Richmond Community Action Program, Inc., DAB No. 1571, at 35 (1996) (stating that while Head Start performance requirements apply to both the grantee and its delegate, "the regulations, taken as a whole, indicate that it is the grantee who is directly responsible for the operation of the Head Start program and against whom ACF may take appropriate action.") We also see nothing in the definition of "collaboration" or "collaborative relationships" in 45 C.F.R. § 1304.3 that indicates that such relationships modify in any way the grantee's legal responsibility for operating its Head Start program in compliance with Head Start requirements.

[5] ACF's February 13, 2003 letter identifies the end of this 180-day period as August 26, 2003. CSM Ex. 5, at 3.

[6] Prior to that date, CSM submitted at least one QIP that ACF found unacceptable. See ACF Br. dated 1/25/05, at 4-5, citing ACF Exs. 3-5 and 26.

[7] The Board found principally that the notice did not clearly indicate the factual findings and authorities on which ACF relied for each of the regulatory bases for termination other than section 1303.14(b)(4) that were specified in the termination notice.

[8] CSM concedes that in its replacement termination notice, "ACF corrected . . . the major flaws from the July 2004 letter," and, while challenging deficiency determinations, cites no uncorrected "flaw." CSM Appeal Br. at 6.

[9] The Presiding Board Member noted that nothing on the face of the document submitted as Exhibit 70 identifies it as a draft report, but provided an opportunity for CSM to submit information to show that it is a draft report. CSM made no response.

[10] CSM does not appear to dispute ACF's initial findings in the areas of record-keeping or ongoing monitoring.

[11] We discuss ACF's findings of noncompliance in eight of the nine areas addressed in ACF's motion for summary affirmance. CSM may have raised an issue of material fact with respect to the finding in the one remaining area (identified by ACF as "fiscal management") that CSM was not complying with 45 C.F.R. § 74.21(b)(3) at the time of the initial on-site review. See CSM Ex. 60 (Affidavit of Brenda Melnik, CSM's Finance Director) at 5 (alleging that new financial management procedures adopted by CSM in July 2002 were implemented no later than September 2002). We need not reach this issue since a single uncorrected deficiency is sufficient to warrant termination of funding (45 C.F.R. § 1303.14(b)(4)) and ACF's eight other findings provide a legally sufficient basis for ACF's termination of CSM's Head Start funding since CSM has not raised a genuine dispute of material fact regarding them.

[12] CSM argues that the provision on planning in section 1304.51(a)(1)(iii) requires only "implementation of the program planning process itself." CSM Appeal Br. at 43. (Both CSM and ACF erroneously refer to section 1304.20(a)(1)(iii) instead of 1304.51(a)(1)(iii). There is no subsection (iii) in section 1304.20(a)(1).) CSM asserts that it complied with this requirement since, in addition to having "a written plan for child outcomes," CSM "has implemented a detailed, on-going process for program planning, which is reproduced in the program's Annual Calendar." id., citing CSM Ex. 45. CSM also notes ACF's concession that CSM had developed a written plan for tracking child outcomes. id. citing CSM Ex. 5, at 8. ACF disputes CSM's reading of the planning requirement, arguing that it includes a requirement for actual tracking of child outcomes. MSA at 33-34. We conclude that ACF's reading of the regulation is reasonable in light of the lead-in language in section 1304.51(a)(1) requiring a grantee to "develop and implement a systematic, ongoing process of program planning . . . ." Without actually tracking child outcomes, a grantee would be unable to do ongoing program planning for Early Childhood Development and Health Services, which requires individualization based on child outcomes data, because the grantee would not have the data necessary to evaluate and update its plans. Moreover, CSM's approved QIP indicates that CSM understood ACF's interpretation, which was stated in the 2003 Review Report, since the corrective action for this noncompliance includes analyzing child outcomes data. CSM Ex. 3, at 4.

[13] Section 1306.23(a) provides that "Head Start grantees must provide pre-service training and in-service training opportunities" that, among other things, are "directed toward improving the ability of staff and volunteers to deliver services required by Head Start regulations and policies."

[14] ACF's motion did not specifically rely on the other finding in the 2004 Follow-Up Report that there was a lack of adequate monitoring in the area of fiscal management.

[15] CSM continued to dispute ACF's interpretation of the requirement for planning as requiring implementation as well as development of a child outcomes plan. CSM Response to MSA at 42. Nonetheless, CSM argued that it complied with the requirement as interpreted by ACF.

[16] Although we do not describe the contents of these and other exhibits cited by CSM (with some limited exceptions), we have thoroughly examined each and every one of them.

[17] Upon further review, it appears that certain pages in a few of the documents in CSM's exhibits pertain to collaboration classrooms or teachers; however, these documents are not probative because they pertain to time periods after the deadline in CSM's approved QIP for correcting the deficiencies. See, e.g., CSM Ex. 53 (documents showing communication with collaboration classroom teachers regarding health services). In addition, CSM's 2002-2003 Head Start program calendar, also submitted by CSM as evidence of compliance with the requirement for communication, was prepared for distribution to one of the collaboration classrooms. See CSM Ex. 57. However, there is no evidence of similar communication with the remaining eight collaboration classrooms.

[18] Although ACF stated that one of the reports was for the relevant period, the dates on the documents show otherwise. We also note that the observations discussed in the monitoring reports were made after the date CSM certified to ACF that it had corrected all deficiencies (September 25, 2003) and, indeed, more than one year after ACF's initial notice of deficiencies. Thus, even if ACF had given CSM the maximum one-year correction period ACF is allowed to give under 45 C.F.R. § 1304.60(c), these documents would be immaterial.

[19] CSM refers to "some of the items listed in the ACF October 2004 termination letter" when making this argument, implying that the argument applies to more than one of the findings of noncompliance. CSM Response to Board Order to Develop the Record at 2. However, the only example CSM gives pertains to curriculum and assessment.

[20] The preamble to the 1996 revised Head Start regulations states that "the term 'substantially' [in 45 C.F.R. § 1304.3(a)(6)(i)(C)] does not necessarily mean that a majority of the requirements are not being met but, rather, that a knowledgeable person reviewing the findings would determine that the grantee agency is not operating a quality program." 61 Fed. Reg. 57,185, 57,207 (Nov. 5, 1996). Thus, "substantial performance" is a qualitative, not a quantitative, assessment.

[21] CSM also argues that it was not given adequate notice of the alleged fiscal management deficiency because the factual findings regarding this deficiency in the initial and follow-up reviews were too dissimilar. We do not need to reach this issue since, as explained earlier, we do not rely on ACF's findings regarding fiscal management in concluding that termination was warranted.

[22] CSM indicated that these were only examples, and did not provide a comprehensive list of all of the respects in which it believed the letter was unclear.

[23] CSM notes that this language was changed in the version of the 2003 Review Report that was sent to it with ACF's October 19, 2004 letter. CSM Appeal Br. at 17, comparing CSM Ex. 7, at 10 with CSM Ex. 1, at 10. According to ACF, the version of the 2003 Review Report it sent to CSM in October 2004 was printed using revised software that merely changed how ACF's review findings were organized and presented. MSA at 16. In any event, for purposes of determining whether CSM was given notice and an opportunity to correct the deficiency, we look to the version of the report that CSM received with ACF's February 13, 2003 letter.

[24] A copy of this document is not in the record, but currently appears at http://www.headstartinfo.org/pdf/PRISMGuide2004.pdf.

[25] Although we would expect ACF to make every attempt to follow the Guide, the 45-day provision therein is not a regulatory deadline.

[26] Contrary to what CSM's argument implies, the period for correction of any deficiencies did not extend to the time of the follow-up review. (In any event, the follow-up review commenced in November 2003 and was simply continued in March 2004.) Instead, as discussed earlier, CSM was required by its approved QIP to correct its deficiencies (whatever the relevant standard for correction) within 180 days of receipt of notice of the deficiencies (by August 26, 2003).

[27] Here, CSM does not claim that ACF's February 13, 2003 letter did not provide adequate notice that CSM was required to fully correct its deficiencies.

[28] Philadelphia Housing Authority does not refer to the definition of "[m]inimum requirements" in section 1304.3(a)(14). However, that term, like the definition of "deficiency," does not describe the level of performance necessary to correct a deficiency. See section 1304.60(b) (stating that "[i]f the responsible HHS official, as a result of information obtained from a review of . . . a Head Start grantee, determines that the grantee has one or more deficiencies, as defined in §1304.3(a)(6) of this part, and therefore also is in violation of the minimum requirements as defined in § 1304.3(a)(14) of this part, he or she will notify the grantee . . . of the finding, identifying the deficiencies to be corrected . . . .").

[29] Even if the proper standard were substantial compliance, that would not change the result in this case since CSM did not raise a genuine dispute of material fact as to whether it was substantially performing either the requirements related to Early Childhood Development and Health Services or the requirements related to Program Design and Management.

[30] We also question whether a review can fairly be characterized as "perfunctory" based simply on the quantity or type of information a reviewer is observed to examine at any given time. The reviewer might have examined other information of which the observer is unaware or, as the reviewer indicated here, might not need to examine additional information to make an accurate evaluation.

[31] ACF describes the current review process, which uses an instrument known as the Program Review Instrument for Systems Monitoring (PRISM), as an "integrated, comprehensive outcome-focused approach" that enables ACF "to obtain 'big picture' information about the grantee" such that ACF is not required to consider other information. ACF Response to Order at 7-8. ACF contrasts this with the On-Site Program Review Instrument (OSPRI) used to measure the grantee's compliance in the case cited by CSM (discussed below). The OSPRI, ACF states, was so "detail-oriented," that "monitoring reviews almost always found specific items that needed to be improved, even in otherwise excellent programs." id. For this reason, ACF would consider other relevant information in addition to the OSPRI findings when determining whether a deficiency existed. id. at 8. This comparison suggests that the scope and flexibility of the PRISM review process enables CMS to consider as an integral part of that process information that would only have been considered outside the process under OSPRI. Moreover, the record shows that, prior to the initial on-site review, ACF took into account the impact that the flooding had on the operation of CSM's Head Start program. According to the Head Start program specialist assigned to CSM, on August 21, 2001, ACF provided CSM with $31,032 in emergency flood funds and waived $7,758 of non-federal match due to the natural disaster. ACF Ex. 26, 11. In addition, on November 11, 2002, ACF provided CSM with $7,755 in reprogrammed funds for flood recovery. id.

[32]The report on the performance audit found that "[u]nhealthy and unsafe conditions exist in many schools that place employees and students in danger," that "[n]umerous statutory and policy requirements are not being followed related to instructional programs, personnel, finance, and facilities that prevent students from obtaining a thorough and efficient education," and that "[d]eficiencies exist in leadership throughout the system." CSM Ex. 72, 9, quoting Att. A.

[33] A previous collaboration agreement with CSM, signed in the fall of 1999, was cancelled by the county school system on October 9, 2000. CSM's Response to Order to Develop the Record at 4-5, citing CSM Ex. 74, 3, 5 and CSM Ex. 72, 3-6.

[34] CSM refers to two floods in addition to the May 2002 flood, a July 2001 flood (addressed in another affidavit discussed below) and a November 2003 flood. With respect to the latter flood, CSM alleges only that the November follow-up review "ended a day early because flooding forced the evacuation of the review team." CSM Response to MSA at 3.

[35] The collaboration agreement provides that either party may terminate the agreement by providing a 90-day written notice to the other party. CSM Ex. 74, Att. E, at 4.

[36] None of the affidavits submitted by CSM disputes the description in the 2004 Follow-Up Report of what teachers or other individuals told the reviewers when interviewed.

[37] We note that Home Education Livelihood Program, DAB No. 1598 (1996)(HELP), on which CSM relies, is factually and legally distinguishable. HELP served children of migrant farm workers, and the Board found a reasonable nexus between the grantee's inability to predict crop conditions and its inability to maintain full funded enrollment when crop conditions were poor. The Board also factored in ACF's failure to fund HELP until more than three months into its program year. As discussed below, CSM has not presented any evidence of a nexus between the flooding and State takeover and any specific deficiency findings. Neither was there a funding delay here; in fact, as noted earlier, ACF gave CSM additional funding because of the floods. Legally, while the Board reversed ACF's termination of HELP based, in part, on factors it concluded were beyond the grantee's control, it did not hold that ACF must always consider factors claimed to be beyond a grantee's control. Also, as CSM acknowledges, the Board decided HELP under earlier Head Start regulations. Those regulations required ACF to make an independent determination that a deficiency was material in order to terminate based on that deficiency, while the present regulations presume that a deficiency is material. Thus, there was a question in HELP that is not present here as to whether any "unique factors" cited by the grantee would render its noncompliance immaterial.