DAB Decision No. 1953: Saginaw County Community Action Committee, Inc.
Saginaw, a non-profit corporation, operates a Head Start program in Saginaw County, Michigan. In November 2001, ACF performed a review of Saginaw's program. As a result of the review, ACF determined that the program had deficiencies related to Head Start performance standards and other regulatory requirements. In January 2003, ACF conducted a follow-up review and determined that Saginaw had corrected some but not all of the deficiencies found in November 2001.
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
SUBJECT: Saginaw County Community Action Committee, Inc. Docket No. A-03-58 Decision No. 1953
DATE: November 30, 2004
This decision contains the Board's ruling on a motion for summary disposition concerning the appeal filed by Saginaw County Community Action Committee, Inc. (Saginaw), a Head Start grantee. The appeal challenges a decision by the Administration for Children and Families (ACF) to terminate Saginaw's Head Start grant. The motion for summary disposition was filed by ACF.
Saginaw, a non-profit corporation, operates a Head Start program in Saginaw County, Michigan. In November 2001, ACF performed a review of Saginaw's program. As a result of the review, ACF determined that the program had deficiencies related to Head Start performance standards and other regulatory requirements. In January 2003, ACF conducted a followup review and determined that Saginaw had corrected some but not all of the deficiencies found in November 2001. These alleged uncorrected deficiencies were the basis for ACF's decision to terminate Saginaw's grant.
In its motion for summary disposition, ACF contended that its termination decision should be affirmed because Saginaw failed to correct deficiencies in program planning, program governance, enrollment, and other areas within the applicable regulatory timeframes. These uncorrected deficiencies, ACF contended, have impaired Saginaw's ability to provide comprehensive and appropriate Head Start services to the children in its community.
We conclude that the undisputed facts establish that Saginaw had the following deficiencies in December 2001:
The undisputed facts based on our review of the record also show that Saginaw did not correct these deficiencies within one year after first receiving notice of them.(1) As of January 2003, Saginaw --
Because there are no genuine disputes of material fact regarding the existence or persistence of these deficiencies, and because a rational trier of fact could reach only one reasonable conclusion based on the record -- namely, that Saginaw failed to timely correct certain program deficiencies -- we grant the motion for summary disposition and affirm ACF's decision to terminate Saginaw's Head Start funding. While we conclude below that each uncorrected deficiency provides an independent basis for the termination, termination is also unquestionably warranted because the cumulative effect of Saginaw's multiple instances of noncompliance clearly constituted a failure to perform substantially the Head Start requirements related to Program Design and Management.
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) 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. A community Head Start program is required to provide for the direct participation of parents of enrolled children in the development, implementation, and management of the program. 42 U.S.C. 9837(b).
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. Id.; 45 C.F.R. Part 1304.
To ensure compliance with the Head Start performance standards and with other program requirements, HHS must 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" -- "deficiency" is a regulatory term whose definition we discuss shortly -- 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). 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 timeframe 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 about 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).
The Head Start regulations at 45 C.F.R. 1303.14(b) authorize ACF to terminate a grantee's funding based on any one of nine grounds. In its motion for summary disposition, ACF sought affirmance of its termination decision based on section 1303.14(b)(4), which 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" (emphasis added). 45 C.F.R. 1303.14(b)(4). As indicated, a grantee must correct its deficiencies immediately or pursuant to the timetable specified in an approved QIP. 42 C.F.R. 1304.60(b). If a grantee fails to do so, then ACF may, pursuant to 42 C.F.R. 1304.60(f), terminate funding. A single uncorrected deficiency is sufficient to warrant termination of funding. 45 C.F.R. 1303.14(b)(4) (authorizing termination for failure to correct "one or more deficiencies"); The Human Development Corp. of Metropolitan St. Louis, DAB No. 1703, at 2 (1999).
Not every instance of noncompliance with a Head Start requirement is a "deficiency" warranting termination pursuant to section 1304.60(f) and 1303.14(b)(4). 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)(C) and 1304.3(a)(6)(iii) are relevant here.
Section 1304.3(a)(6)(i)(C) provides that a deficiency is:
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 pursuant to section 1304.61." 45 C.F.R. 1304.3(a)(6)(iii). 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)(A)-(D) or 1304.3(a)(6)(ii) is deemed to be a deficiency only after the grantee has demonstrated an inability or unwillingness to correct it within the timeframe specified by the responsible HHS official. At that point, the grantee has another opportunity to correct (immediately or pursuant to a QIP) the deficiency before funding can be terminated pursuant to section 1304.60(f) and section 1303.14(b)(4). 45 C.F.R. 1304.61(b); The Human Development Corp. at 8.
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. 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[.]" 45 C.F.R. 1303.14(d)(2).
Saginaw provides Head Start services at multiple sites, or "centers," throughout Saginaw County. Saginaw's grant application for the 2002-2003 school year indicates that it planned to enroll 1,011 children, with most children (967) receiving center-based services and the remaining receiving services in a home setting. ACF Ex. 14, at 22. Saginaw's "funded enrollment" for the previous school year (2001-2002) was also 1,011 children. ACF Ex. 1, at 33.
From November 5 to November 9, 2001, ACF conducted a comprehensive review (the "2001 review") of Saginaw's Head Start program. As a result of the 2001 review, ACF determined that Saginaw's Head Start program was out of compliance with performance standards in the areas of Child Development and Health Services, Family and Community Partnerships, and Program Design and Management, and with other Head Start regulatory requirements. The findings of the 2001 review are set out in a document that we will refer to as the "2001 review report" (ACF Ex. 1).
In the area of Program Design and Management, the 2001 review report identifies noncompliance with a number of performance standards, including standards for program governance, program planning, communication with families, record-keeping and reporting, program self-assessment, human resources management, and program planning. ACF Ex. 1, at 19-31. Also identified within the category of Program Design and Management were findings that Saginaw was out of compliance with regulatory requirements in 42 C.F.R. Part 1305 concerning enrollment and attendance. Id. at 33.
In a summary of the findings concerning Program Design and Management, the 2001 review report indicates that Saginaw's "system for structured shared governance through which parents can effectively participate in Saginaw County CAC Head Start policy" was "non-existent"; that Saginaw's communication system was "ineffective and did not ensure timely sharing of pertinent information between staff, parents, governing bodies, and communities"; that Saginaw's record-keeping and reporting system did not contain organized or complete information about enrolled children and did not enable the program director and governing bodies to monitor program performance; that Saginaw's "human resource management system [did] not create an environment where management and staff clearly understand their roles and responsibilities resulting in a system that does not implement quality services to children and staff"; that "timely training" had not been provided to program staff and governing board members; and that parents were not included in or informed about orientation sessions, workshops, and classroom curriculum training and were unaware of the agency's goals and objectives. ACF Ex. 1, at 19-20.
With respect to program planning, the 2001 review report indicates that Saginaw had not performed an adequate community assessment (which provides the information necessary for planning) and generally lacked an "effective systematic ongoing process for planning which included the consultation of governing board, policy council and other community organizations." ACF Ex. 1, at 24. The report also states that ineffective planning had resulted in under-enrollment, lack of facilities, and an impairment in Saginaw's ability to provide "quality comprehensive services." Id. at 19, 24-25. According to the report, eight of Saginaw's Head Start centers were closed because they had not received the appropriate state licenses. Id. at 25-26. A ninth center (the Arthur Eddy Center) had been closed for almost three weeks due to a boiler problem, and affected children had not received any Head Start services during the closure. Id. at 25. The report states that Saginaw's program was serving only 628 children even though the program had been funded to serve 1,011 children. Id. at 33. In addition, says the report, average daily attendance at Saginaw's centers had fallen below 85%, and Saginaw had not performed an analysis of the reasons for the absenteeism, as required by the Head Start regulations. Id. at 20, 33.
In a letter dated December 13, 2001, ACF formally notified Saginaw that the findings in the 2001 review report revealed "pervasive" deficiencies in all three key areas of the Head Start performance standards and that the deficiencies had compromised Saginaw's ability to provide quality Head Start services. ACF Ex. 5. ACF also notified Saginaw of its obligation to correct the alleged deficiencies pursuant to an approved QIP. Id. Saginaw subsequently developed a QIP that specified the steps it intended to take to correct the identified deficiencies. ACF Exs. 2 and 6. ACF approved the QIP in January 2002. ACF Ex. 6.
In May 2002, ACF conducted an interim onsite review to assess Saginaw's progress in correcting the deficiencies identified by the November 2001 review. See ACF Ex. 7. ACF advised Saginaw of the interim review's findings in a June 20, 2002 letter. Id. The June 20 letter indicated that Saginaw had not made substantial progress in correcting its noncompliance and reminded Saginaw that technical assistance was available to help it do so. Id.
In December 2002, Saginaw certified to ACF that it had corrected all of the deficiencies identified by the 2001 review. Saginaw Ex. 14, at 2.
In January 2003, ACF conducted a followup onsite review (the "2003 review") and determined that Saginaw continued to have deficiencies in the areas of Child Development and Health Services, Family and Community Partnerships, and Program Design and Management. ACF Ex. 8. The findings of the 2003 review are set out in a document that we refer to as the "2003 review report" (ACF Ex. 8). In the area of Program Design and Management, the 2003 review report indicates that Saginaw had made significant improvements in some areas but that it was still noncompliant with certain performance standards and regulatory requirements dealing with program governance, program planning, record-keeping and reporting, program self-assessment, enrollment, and attendance. Id. at 15-28. In addition, the report indicates that deficiencies in planning had contributed to ongoing under-enrollment as well as the program's failure to provide services to 40 children through its "family child care" and "home-based" service options. Id. at 15, 19. Three of its centers remained closed because Saginaw had been unable to obtain required operating licenses. Id. at 15.
On April 4, 2003, ACF issued a notice of termination, advising Saginaw that its designation as a Head Start grantee was being terminated. Saginaw initiated its appeal of this action by filing a motion to dismiss, asserting that ACF's termination notice failed to identify adequately the legal and factual bases for termination and failed to allege a prima facie case for termination. In response to the motion to dismiss, ACF issued a revised termination notice dated June 6, 2003. Saginaw Ex. 14. The June 6 termination notice specified various grounds for termination, including Saginaw's alleged failure to correct deficiencies identified during the 2001 review. Id. at 3.
The Board denied Saginaw's motion to dismiss on October 1, 2003. Saginaw then filed its initial brief (Saginaw Brief) along with several exhibits. Then, ACF filed the pending motion for summary disposition, supported by additional exhibits. Saginaw filed a reply to the motion (Saginaw Reply), and ACF filed a surreply (ACF Surreply).
ACF's Motion for Summary Disposition
ACF asserted in its motion for summary disposition that the evidence of record (including documents submitted by Saginaw) establishes that Saginaw did not timely correct deficiencies, first identified during the 2001 review, in the areas of program planning, program governance, record-keeping and reporting, enrollment, and attendance. Motion for Summary Disposition (MSD) at 1-2, 34-35. ACF also asserted that there is no dispute of material fact regarding the persistence of those deficiencies. Id. at 34. Regarding the alleged deficiency in program planning, ACF contended that Saginaw "had no adequate and up-to-date Community Assessment" in January 2003 and therefore lacked "appropriate planning information to establish long-range and short-range goals and objectives." Id. at 34. Regarding the alleged deficiency in program governance, ACF contended that Saginaw "failed to partner with the Policy Council for effective program governance that involved shared decision-making between Saginaw's Board and Policy Council." Id. at 35. Regarding the alleged deficiencies in record-keeping and reporting, ACF contended that Saginaw's record-keeping system failed to generate reliable or adequate enrollment information. Id. at 35. Regarding the alleged deficiency in enrollment and attendance, ACF asserted that Saginaw "still had not come close to full enrollment" by January 2003, that three of its centers remained closed due to lack of licensing programs, and that 119 children affected by these closures were not provided with Head Start-quality services. Id. at 21, 27. Finally, regarding the alleged deficiency in attendance, ACF contended that attendance rates at Saginaw's centers continued to be below 85 percent in January 2003, and that Saginaw had not performed the required analysis of the children's absenteeism. Id. at 35.
In response to ACF's motion, Saginaw contended that ACF's initial deficiency findings (that is, the findings in the 2001 review report) were legally insufficient. "[W]hen making an allegation of deficiency," Saginaw asserted, "ACF must consider both the seriousness of the predicate conduct and the overall effectiveness of the program rather than looking solely at strict compliance or noncompliance with individual performance standards." Saginaw Reply at 6-7. Saginaw asserted that the "initial allegations of noncompliance, even if true, were not sufficiently severe to allow the ACF to make a determination of deficiency in the area of Program Design and Management on the grounds asserted because a detached observer using the proper holistic [approach] would have agreed that Saginaw's overall program was delivering quality services to its enrollees." Id. at 7. Saginaw also contended that ACF failed to apply the applicable regulatory standards or definitions and that its deficiency findings were based on "irrelevant factors" and regulatory requirements; that ACF's legally insufficient deficiency findings deprived Saginaw of proper notice and an opportunity to correct its noncompliance; that ACF failed to apply a "substantial compliance" standard in determining whether Saginaw had corrected the alleged deficiencies within one year; that ACF was attempting to shorten the timeframe for corrective action; and that all of ACF's initial allegations were "tainted" because of ACF's reliance on the Program Review Instrument for Systems Monitoring (PRISM), which provides a framework for evaluating a grantee's compliance with the performance standards. See Saginaw Brief & Saginaw Reply. In addition, Saginaw contended that there are genuine disputes of material fact that warrant a hearing in this case. Id.
In support or opposition to the motion, the parties relied entirely on documentary evidence. Neither party submitted affidavits or declarations, and neither identified witnesses who might testify at a hearing or described the substance of proposed testimony. However, while the motion for summary disposition was pending, Saginaw filed a motion to compel depositions from the ACF employees who conducted the 2001 and 2003 reviews. We address the motion to compel at the end of the Discussion section below.
Before discussing the merits of ACF's motion, we address a number of legal issues raised by Saginaw.
Saginaw's first two contentions relate to the requirement in 45 C.F.R. 1304.60(b) that ACF provide a grantee with adequate written notice of alleged deficiencies and an opportunity to correct them. First, Saginaw asserted that the findings of the May 2002 interim review, some of which are mentioned in ACF's June 6, 2003 termination notice, constitute deficiency findings distinct from the deficiency findings set out in the 2001 review report. Saginaw Brief at 5-6. Saginaw contended that ACF improperly relied on these interim deficiency findings to support its termination decision because it failed to provide adequate written notice and an opportunity to correct them, as required by 45 C.F.R. 1304.60(b). The factual premise of this contention is dubious because the interim findings merely report on Saginaw's progress toward correcting the deficiencies or violations identified in the 2001 review report. They do not constitute -- and we do not view them as -- additional, distinct grounds for termination. In any event, no remedy is necessary because we are upholding the termination based only on Saginaw's failure to correct deficiencies identified in the 2001 review report.
Second, Saginaw contended that it was denied adequate notice and an opportunity to correct the alleged deficiencies "because the ACF erroneously relied upon the organizational structure of the PRISM review instrument rather than the definition of deficiency in the Head Start regulations in making the initial, incorrect deficiency claims found in the  review report." Saginaw Brief at 6. PRISM is an acronym for Program Review Instrument for Systems Monitoring. The PRISM is a standard tool used by ACF to help its reviewers collect pertinent information, assess a grantee's compliance with performance standards and other requirements, and report the findings of a compliance review. See CMS Ex. 17. The PRISM used in this case was organized around 17 "core questions," each of which addresses one or more standards of performance in section 45 C.F.R. Part 1304 or some other Head Start requirement. Saginaw asserted that "[b]ecause the organization of the 17 PRISM Core Questions does not follow the concept of deficiency under section 1304.3(a)(6)(i)(C), the ACF's use of PRISM Core Questions as units of deficiency not only resulted in incorrect initial allegations of deficiency but also inflated the number of supposed deficiencies." Id. at 10-11.
We find no merit to this argument. Contrary to Saginaw's assertion, the PRISM, which ACF used to identify and report its 2001 and 2003 review findings, was used in a manner that adequately identifies Saginaw's deficiencies. As indicated, a grantee's noncompliance constitutes a deficiency under section 1304.3(a)(6)(i)(C) if it involves a failure to "perform substantially the requirements related to Early Childhood Development and Health Services, Family and Community Partnerships, or Program Design and Management." The PRISM was used here to organize and present ACF's review findings in each of these three broad areas or categories of performance. See ACF Ex. 1. In each performance category, the relevant review findings are correlated with a specific performance standard or other Head Start program requirement. Thus, for example, in the section of the 2001 review report dealing with Program Design and Management -- the requirements for which appear largely in subpart D of the performance standards(2) -- the PRISM's core questions address whether Saginaw was in compliance with requirements for program governance, program planning, communication, and other performance areas addressed under subpart D.(3)
We note that, on December 18, 2001, five days after ACF notified Saginaw that it had deficiencies in its program, the parties met to discuss the need for action "to correct the findings and deficiencies cited during the on-site program review." See ACF Ex. 4. There is no indication that Saginaw raised any objections at that meeting to the adequacy of the December 13, 2001 notice letter -- which informed Saginaw that it had deficiencies in all three key performance categories. ACF Ex. 5. We also note that Saginaw organized its QIP around the findings in the 2001 review report, correlating each proposed corrective action with the standard or requirement with which Saginaw had been found to be noncompliant. See Saginaw Ex. 2. That Saginaw responded to the 2001 review findings in this systematic manner is some indication that ACF's use of the PRISM did not create any significant confusion or uncertainty about the nature of the deficiencies alleged in the 2001 review report. For this reason, and because the PRISM's structure does in fact mirror the organization of the program performance standards in Part 1304 (and its related requirements), we reject Saginaw's contention that ACF's use of the PRISM deprived it of adequate notice of the deficiencies to be corrected.
Saginaw's next contention is that the allegations of noncompliance in the 2001 review report are not serious or severe enough to constitute a "deficiency." Saginaw Brief at 7-8. The preamble to the final rule establishing the Head Start performance standards explains that a grantee's noncompliance with one or more requirements of the Head Start regulations does not, in and of itself, constitute a deficiency. 61 Fed. Reg. at 57,207. To constitute a deficiency, says the preamble, the grantee's noncompliance "must be of a level of significance that results in the failure of the grantee to substantially provide required services or to substantially implement required procedures." Id. The preamble also states that a deficiency "by its nature . . . materially impairs the accomplishment of program goals[.]" Id. In the following sections, we apply these guidelines in determining whether the 2001 review findings concerning program planning, program governance, and enrollment were sufficient to establish that Saginaw had one or more deficiencies as defined in section 1304.3(a)(6)(i)(C).(4)
Next, Saginaw contended that a grantee should be found to have "corrected" a deficiency if it is in "substantial compliance" with the applicable performance standard. See Saginaw Brief at 11-14; Saginaw Reply at 15-18. Saginaw contended that "[b]ecause a deficiency is defined [in section 1304.3(a)(6)(i)(C)] in terms of substantial compliance with performance standards, a deficiency cannot be found when a grantee is in substantial compliance." Saginaw Brief at 11. ACF responded that the regulations require a grantee to come into full compliance with the performance standards in order to avoid termination. MSD at 65.
This issue was presented to us in First State. In that case, we found that ACF's interpretation of the regulations was reasonable but that we would apply a substantial compliance standard in order to avoid deciding whether the grantee had adequate and timely notice of ACF's interpretation. Under the substantial compliance standard articulated in First State, a grantee will be found to have corrected a deficiency if any continuing noncompliance with the relevant performance standards does not substantially impair its ability to provide eligible children and their families with quality services or to meet or carry out program goals and policies established in the Head Start statute and regulations. Here, we find no need to choose which standard ought to apply because we conclude that Saginaw failed to correct its deficiencies under either standard.
Finally, Saginaw asserted that ACF is wrong in treating certain "benchmark" dates in the QIP as the deadlines for correcting the alleged deficiencies. Saginaw Reply at 18-19. For each alleged violation, the QIP specifies various "activities to be performed" -- activities that would, in whole or part, serve to bring Saginaw into compliance with a particular performance standard or regulation. For each activity or set of activities, the QIP specifies one or more benchmark dates, most of which fall between March and August 2002. See Saginaw Ex. 2.
Relying on section 1304.60(c), which states that a QIP must specify a "timeframe" for corrective action, ACF contended that the benchmark dates in Saginaw's QIP signify the end of the timeframes within which Saginaw had agreed to correct its various deficiencies, and that the regulations permit termination when a grantee fails to correct a deficiency within the timeframe specified in the QIP. See MSD at 47-50; ACF Surreply at 19-21. Saginaw, on the other hand, contended that the benchmark dates were not "absolute deadlines as evidenced by the course of dealings" between the parties, and that it should be found to have timely corrected the deficiency if correction was done within one year after receipt of ACF's deficiency notice (that is, by the end of December 2002). Saginaw Reply at 18-19.
We agree with ACF that the regulations required Saginaw to correct deficiencies within the timeframes specified in the QIP. See First State at 2, 8, 15-16. The QIP which ACF approved here, however, did not clearly specify timeframes, or deadlines, for completing corrective action. Instead, it contains "benchmark" dates, but does not define what the benchmark dates are supposed to signify. (5) The QIP does not state that these dates constitute deadlines for corrective action, as opposed to being merely reference dates for measuring Saginaw's progress toward completing corrective action. There is, in addition, no correspondence or other evidence indicating that ACF approved the QIP on condition that Saginaw correct deficiencies by the benchmark dates, or that Saginaw understood those dates as constituting the outer bounds of a "timeframe" for corrective action. See ACF Ex. 6. Comments made by ACF in the wake of the May 2002 interim review suggest precisely the opposite -- that the timeframe proposed by Saginaw and accepted by ACF was one year, the statutory maximum. In its June 20, 2002 letter, which reported the results of the interim review, ACF stated that Saginaw had made insubstantial or inadequate progress in eliminating the previously cited deficiencies. Although many of the benchmark dates had already passed when the interim review was conducted, ACF did not refer to the benchmark dates or warn Saginaw of the consequences of not heeding them. Instead, ACF reminded Saginaw that the Head Start Act "allows no more than a year for correction" and urged Saginaw to "use the remaining time wisely and take the actions needed to correct the deficiencies." ACF Ex. 7, at 9.
Statements or omissions in the 2003 review report and termination notice, viewed in the light most favorable to Saginaw, likewise suggest that ACF contemplated a one-year timeframe for corrective actions. The January 2003 review report contains no findings that Saginaw failed to take specified corrective actions within "deadlines" or timeframes specified in the QIP. See ACF Ex. 8. And ACF's June 8, 2003 termination letter states: "The approved QIP provided that all deficiencies identified in the November 2001 review would be corrected no later than one year after [Saginaw] received notice of the deficiencies." Saginaw Ex. 14, at 2.
Relying on First State, ACF argued that Saginaw's failure to complete certain activities or take certain "interim actions" by the benchmark dates in the QIP can be a basis for termination. In First State, we found that a grantee's failure to take certain corrective actions by the "deadlines" specified in the QIP -- deadlines that were short of the one-year maximum deadline -- was a basis for termination. First State at 2-5, 15-16. However, Saginaw has disputed that the benchmark dates in Saginaw's QIP represented "deadlines" or signified timeframes that Saginaw knew it was required to meet upon penalty of termination. Given these circumstances, we conclude for purposes of summary disposition that the relevant timeframe for correcting the alleged deficiencies in this case was one year from the date that Saginaw received notice of those deficiencies.
We now turn to the merits of ACF's motion for summary disposition.
Head Start grantees are entitled under the regulations to an evidentiary hearing to contest the basis for ACF's termination decision. See 45 C.F.R. 1303.16. The Board may, however, issue a decision without a hearing if the prerequisites for summary disposition are satisfied. DOP Consolidated Human Services Agency, Inc., DAB No. 1689, at 6-8 (1999). Summary disposition -- or summary judgment -- is appropriate when the record shows that there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); DOP at 7 (summary disposition is appropriate when the grantee "fail[s] to allege that testimony at a hearing would address any disputed facts the resolution of which was necessary to decide the case").
The extent to which the parties have carried their respective evidentiary burdens under the relevant substantive law is a factor in evaluating whether the prerequisites for summary disposition have been met. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (in ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burdens). The burdens of proof applicable to Head Start grant terminations are well-settled. ACF must make a prima facie showing (that is, proffer evidence sufficient to support a decision in its favor absent contrary evidence) that it has a basis for termination under the relevant regulatory standards. See Target Area Programs for Child Development at 6 (indicating that ACF must "set forth legally adequate reasons to support a denial of refunding or termination" and provide "sufficient specificity for the grantee to respond to the substance of individual findings"). If ACF makes this prima facie showing, the grantee must demonstrate by a preponderance of the evidence that ACF lacks sufficient grounds for termination.(6) Id. This means that, when ACF has presented a prima facie case for termination, a grantee can avoid summary disposition only if it offers evidence that there is a genuine dispute of material fact or otherwise demonstrates that the record, viewed in the light most favorable to the grantee, might cause a rational trier of fact to conclude that ACF lacked sufficient grounds for termination. See DOP at 6-8.
Although ACF's termination notice alleged multiple deficiencies in each of the three key performance categories identified in 45 C.F.R. Part 1304,(7) ACF's motion for summary disposition was based only on alleged deficiencies in the area of Program Design and Management. The motion focused, in particular, on alleged noncompliance with performance standards and program requirements relating to program planning, program governance, enrollment, attendance, and record-keeping. Because we find that the evidence concerning the alleged deficiencies in program planning, program governance, and enrollment is sufficient to support a judgment in favor of ACF, we limit our discussion to those deficiencies.
ACF's regulations at 45 C.F.R. 1304.51(a) set forth Head Start performance standards regarding "program planning." In general, section 1304.51(a) requires a grantee and its delegate agencies to "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." ACF's program guidance(8) (Guidance) on the Head Start performance standards explains that "[p]rogram planning occurs in a continuous cycle, involving key members of the Head Start community" and is therefore "critical for setting clear program goals and for defining an organized approach to program services driven by the specific priorities of the community." Guidance at 179. "Planning begins with the Community Assessment, through which agencies collect data about community strengths, needs, and resources." Id. A grantee uses this data to make decisions about (among other things): (1) the service options and settings (e.g., center-based, home-based) to be provided; (2) how the grantee and its agencies will be organized to deliver services; (3) the kinds of staff skills and experience needed to reflect the languages, cultures, and heritage of community members; and (4) the services that the grantee will provide directly and those it will provide through community collaboration and referrals. Id. at 179-80.
ACF's reviewers found in December 2001 that Saginaw lacked an "effective systematic ongoing process for planning" that involved its governing board, policy council and other community organizations. ACF Ex. 1, at 24. They also found that the absence of an effective planning process had had a "detrimental effect on the grantee's ability to provide and sustain the provision of quality comprehensive services throughout the areas of Early Childhood Development and Health Services, Family and Community Partnerships, and Program Design and Management." Id. The reviewers identified certain other consequences of Saginaw's ineffective planning process, including the failure to enroll a sufficient number of children, its failure to open eight centers because of licensing problems, and its failure to provide children affected by the closures with Head Start-quality services. Id. at 19, 24-25.
In addition to stating a broad finding regarding Saginaw's planning process, the 2001 review report indicated that Saginaw was out of compliance with certain specific requirements, including the following: (1) the requirement in section 1304.51(a)(1)(i) that a grantee perform an adequate community assessment; and (2) the requirement in section 1304.51(a)(1)(ii) that a grantee establish short and long-term goals that are tied to the findings of the community assessment and the grantee's annual self-assessment; and (3) the requirement in section 1306.30(a) that a grantee provide enrolled children with "comprehensive" services. See ACF Ex. 1, at 24-26.
In its motion for summary judgment, ACF contended that each of these items of noncompliance constitutes a deficiency that Saginaw has failed to correct within the timeframe called for in the statute and regulations. We address each of these alleged deficiencies in turn.
ACF's regulations at 45 C.F.R. 1304.51(a)(1)(i) provide that a grantee's program planning "must include . . . [a]n assessment of community strengths, needs and resources through completion of the Community Assessment, in accordance with the requirements of 45 C.F.R. 1305.3." Section 1305.3(c) requires the grantee to perform a comprehensive community needs assessment every three years and to update the assessment annually. 45 C.F.R. 1305.3(c). In addition, section 1305.3(c) specifies the types of information that must be included in the assessment.(9)
The 2001 review report states that Saginaw's community assessment, last updated in 2001, "was not completed in full accordance with the requirements of 45 C.F.R 1305.3," and that it "failed to fully identify the demographic make-up of eligible children, other child care programs serving eligible children, the estimated number of children with disabilities, and resources in the community to address the needs of eligible families." ACF Ex. 1, at 24-25. In response to this and the reviewers' other program planning findings, Saginaw stated in its QIP that its board of directors and policy council would "create a written comprehensive plan for systematic planning tied to the priorities for Saginaw County," as well as "create and update [a] Resource manual for the agency" (providing information regarding community, health, social, and educational services available to Head Start families). Saginaw Ex. 2, at 35. The QIP did not indicate what steps would be taken to address the reported shortcomings of Saginaw's community assessment.
A status report dated May 15, 2002 indicates that Saginaw had updated its community assessment in April 2002. Saginaw Ex. 5, at 9. The May 15 status report also states that the "resource manual" Saginaw had pledged to create would be presented to the policy council for approval on May 14, 2002. Id.
During the May 2002 interim review, ACF found that Saginaw's community assessment (as updated in April 2002) was still deficient and that Saginaw's "on-going failure to effectively assess" the community had impaired its "ability to effectively develop written plans, conduct short and long-term planning, and . . . provide comprehensive child development services." ACF Ex. 7, at 5. As evidence of this impairment, ACF pointed to Saginaw's failure to open five child development centers and noted that 12 of its centers had class sizes that exceeded maximum allowed levels. Id. at 5-6.
No further review of the community assessment occurred until January 2003. According to ACF, the community assessment that was evaluated during the 2003 review is contained in Saginaw Exhibit 28. Inspection of that exhibit reveals that it is composed of two documents: the first is entitled "2002 Saginaw County Community Action Committee Head Start Program Community Assessment," which we will call the "2002 assessment." Saginaw Ex. 28, at 13. This appears to be the community assessment as it existed in April 2002. The second document is entitled "2003 Updated Community Assessment"; we refer to it as the "2003 update." Saginaw Ex. 28, at 1. The 2003 update appears to have been prepared by Saginaw (or by a person or firm with whom Saginaw contracted) some time between June and December 2002. For purposes of this decision, we assume that the 2002 assessment and the 2003 update together constitute Saginaw's community assessment as of January 2003.
The 2003 review report states that Saginaw "continue[d] to exhibit extreme difficulty in its efforts to establish and implement a systematic, ongoing process for effective program planning." ACF Ex. 8, at 19. Although Saginaw had established a new "program planning process" that was approved by its policy council on December 18, 2002, "all the elements for the planning process were still not implemented," according to the report. Id. Regarding the community assessment, the 2003 review report contained the following findings:
ACF Ex. 8, at 19. In addition, the 2003 review report states that the "resultant effect of the lack of appropriate assessment has been the lack of enrollment" in Saginaw's "Home Base" and "Family Child Care" programs and its inability to achieve full funded enrollment. Id.
ACF contended in its motion for summary disposition that Saginaw's failure to produce an adequate community assessment was a deficiency and therefore an adequate basis for termination. MSD at 37-41. For its part, Saginaw did not dispute the findings that its 2000-2001 community assessment lacked certain information required by sections 1304.51(a)(1)(i) and 1305.3(c) of the regulations. Nor did it dispute ACF's finding that these omissions rendered it noncompliant with section 1304.51(a)(1)(i) as of December 2001.
The regulations at section 1304.51(a) make it clear that an adequate community assessment is a prerequisite for effective program planning. The community assessment provides the information that enables a grantee to organize and deploy its resources effectively and to leverage the resources of the community to meet the needs of its Head Start-eligible population. The reported gaps in Saginaw's community assessment as of December 2001 were such that Saginaw could not engage in effective planning. There was, for example, no estimate of the number of children with disabilities. Without such an estimate, Saginaw could not have accurately determined the amount and type of resources required to meet the needs of this segment of the Head Start population. Saginaw's 2001 assessment also lacked information about community resources. Without such information, Saginaw would have been unaware of the possibilities for collaboration with community organizations to provide services needed by the Head Start population. It is likely that information about community resources was especially important given Saginaw's reported inability to open several centers and to provide the children affected by the closures with quality comprehensive services. See ACF Ex. 1, at 25-26 (indicating that eight centers had not been licensed for operation, and that the Arthur Eddy Center had been closed for more than 20 days with children receiving no services during the closure). For these reasons, and because Saginaw has not raised a genuine dispute of material fact concerning the relevant findings in the 2001 review report, we find that Saginaw's noncompliance relating to the community assessment constituted a substantial failure to carry out required procedures and substantially impaired Saginaw's ability to conduct adequate program planning and ensure that the needs of the Head Start-eligible population were being met. Accordingly, we conclude that, as of November 2001, Saginaw's noncompliance in this area of performance was a "deficiency" within the meaning of section 1304.3(a)(6)(i)(C).
We now evaluate ACF's contention, which Saginaw disputed, that this deficiency was not corrected within one year after Saginaw received notice of it. Relying on the findings of the 2003 review report, ACF contended in its motion for summary disposition that Saginaw's community assessment did not, as of January 2003, contain certain information required by section 1305.3(c), including: the estimated number and geographic location of Head Start-eligible children in Saginaw County; the ethnic or racial composition of Head Start-eligible children and families in the county; the number of disabled children younger than five and their families; and child development and childcare programs serving Head Start-eligible children. MSD at 37-41.
Our review indicates that Saginaw's community assessment -- consisting of the 2002 assessment and the 2003 update -- contains some of the information that ACF says is missing. For example, there is information about the number of Head Start-eligible children and families in the county as well as their ethnic and racial makeup. The 2002 assessment states that there are 35,844 Head Start-eligible families and an estimated 5,654 Head Start-eligible children in the county. Saginaw Ex. 28, at 13. The 2003 update states that "there are . . . an estimated 4,760 3 & 4 year old children eligible for Head Start" and provides an ethnic and racial profile of those children. Id. at 5. In addition, the 2002 assessment contains information about the geographical location of the county's Head Start-eligible children. Id. at 16-17 (showing the "locations and numbers of children age five years and under, who, according to their location's poverty index, would be Head Start eligible"). Both the 2002 assessment and 2003 update contain estimates of the number of children with disabilities four years old or younger.(10) Saginaw Ex. 28, at 11, 19.
Notwithstanding the inclusion of this and other information, Saginaw's community assessment remained (in January 2003) deficient in significant respects. Section 1305.3(c)(2) states that a community assessment must contain information about "[o]ther child development and care programs that are serving Head Start eligible children, including publicly funded State and local preschool programs, and the approximate number of Head Start eligible children served by each." 45 C.F.R. 1305.3(c)(2) (italics added). Saginaw's community assessment contains a list of "other child development and care programs" as well as data about the "capacity" of child care centers or organizations in the county. However, the assessment fails to provide estimates of the number of Head Start eligible children actually served by each of these programs, centers, or organizations.(11) See Saginaw Ex. 28, at 11-12, 18-19.
Section 1305.3(c)(6) states that a community assessment must contain information about "[r]esources in the community that could be used to address the needs of Head Start eligible children and their families, including assessments of their availability or accessibility." 45 C.F.R. 1305.3(c)(6). Saginaw's community assessment lists these resources -- various community health, nutrition, and social service organizations -- but in many instances fails to describe the services provided by the organization or give "assessments of their availability or accessibility." See Saginaw Ex. 28, at 19, 21, 22-27.
Section 1305.3(c)(5) states that a community assessment must contain information about the "education, health, nutrition and social service needs of Head Start eligible children and their families as defined by families of Head Start eligible children and by institutions in the community that serve young children." Saginaw's community assessment purports to address this requirement in a brief narrative. See Saginaw Ex. 28, at 20-21. The narrative is focused mostly on health issues (12); little or no mention is made of education, nutrition, or social service needs. Moreover, there is no indication that the information presented was obtained from canvassing Head Start families or institutions that serve Head Start-eligible children and families.
The information omitted from Saginaw's most recent community assessment is significant. The information required by sections 1305.3(c)(2) and 1305.3(c)(6) is critical for ensuring that community resources are tapped, when necessary, to meet the needs of Head Start-eligible children and families. Such information may have helped Saginaw develop plans to mitigate the impact of its reported failure to open a number of its child development centers. Equally critical is the information required by section 1305.3(c)(5). Without such information, a grantee cannot identify accurately the specific and unique needs of its Head Start population and thereby ensure that the program's limited resources are directed toward meeting those needs. See Home Education Livelihood Program, Inc., DAB No. 1598 (1996) (noting that the purpose of the community assessment is to assess the unique needs of a grantee's particular community). Such information is also necessary to enable the grantee to fulfill its concomitant obligation to develop meaningful program goals and financial objectives.
Because the record shows without doubt that the community assessment being used by Saginaw in January 2003 did not contain critical information required by section 1305.3(c), we conclude that ACF made a prima facie showing that Saginaw failed to correct (within one year) the deficiency relating to its comprehensive assessment. We also conclude that a rational trier of fact, viewing the entire record in the light most favorable to Saginaw, could not reasonably find that Saginaw had corrected this deficiency by January. Indeed, the only substantial evidence offered by Saginaw was a copy of the community assessment that the 2003 review found to be inadequate. Saginaw offered no testimony or other evidence suggesting that the information contained in the assessment was, under the circumstances, adequate to enable it to engage in effective program planning in the aforementioned areas that were specifically identified as deficient in January 2003.
Section 1304.51(a)(1)(ii) provides that program planning must include "[t]he formulation of both multi-year (long-range) program goals and short-term program and financial objectives that address the findings of the Community Assessment, are consistent with the philosophy of Early Head Start and Head Start, and reflect the findings of the program's annual self-assessment[.]" 45 C.F.R. 1304.51(a)(1)(ii). The 2001 review report indicates that Saginaw was out of compliance with this requirement based on the following findings:
ACF Ex. 1, at 25. In response to these findings, Saginaw stated in the QIP that it would "[d]evelop written short/long term goals tied to the Community Assessment and Self-Assessment findings." Saginaw Ex. 2, at 36.
ACF found continued noncompliance with section 1304.51(a)(1)(ii) during the 2003 review. The 2003 review report states that Saginaw's three-year strategic plan had expired on December 31, 2002, and that Saginaw had no current "Head Start specific" strategic plan. ACF Ex. 8, at 20. The report also indicates that Saginaw's funding application for 2002-2003 included or referred to a "two-year, six goal process for implementation," but that the specified two-year goals were not based on any findings from Saginaw's community assessment or self-assessment. Id. "The inability of [Saginaw] to formulate short and long range goals specific to the operation of the Head Start program," says the report, "continues to hamper the growth and development of a quality program for the children and families of Saginaw County." Id.
A failure to develop long and short-term program goals that address the findings of a community assessment is, without question, a deficiency within the meaning of section 1304.3(a)(6)(i)(C). Without such goals, there can be no assurance that the grantee will act in a timely and effective manner to meet the Head Start community's most urgent, acute, or widespread needs. See Guidance at 180 (indicating that goal setting is a process for establishing "agreed-upon priorities about what the grantee expects to accomplish").
Saginaw did not dispute the finding in the 2001 review report that it had failed to develop program goals tied to its community assessment. (13) Saginaw Brief at 46-47; Saginaw Reply at 31-32. Nor did it specifically contend that this noncompliance was insufficiently serious to constitute a deficiency, or that the facts alleged in the 2003 review report fail to make a prima facie case for termination pursuant to section 1304.60(f). Id. Consequently, the dispositive issue is whether Saginaw corrected the deficiency within one year (that is, by January 2003).
ACF contended that Saginaw did not do so. MSD at 41-42. Not until October or November 2002, ACF asserted, did Saginaw present a "written system for planning," entitled "Program Design and Management/Planning Policy: Program Planning Development Policy and Procedures For Services and Programming Administered by Saginaw County CAC." Id. at 42 (citing Saginaw Ex. 27). According to ACF, this document was based on a deficient community assessment and contained no specific or concrete goals for Saginaw's program. Id.
Saginaw did not respond to ACF's assertions about its "written system for planning." Instead, it asserted that timely and sufficient corrective action was taken when its policy council approved a set of program goals in April 2002. (14) Saginaw Reply at 31-32. These goals are set forth in a document entitled "Saginaw County CAC Head Start Goals 2001-2004." That document -- Saginaw Exhibit 36 -- lists seven goals with "performance measures" for each. The document has a "submission date" of May 1, 2002 and indicates that it was approved by Saginaw's policy council on April 16, 2002.
As indicated, section 1304.51(a)(1)(ii) requires a grantee to develop program goals based on the findings of the community assessment. ACF's reviewers found that Saginaw had failed to develop goals based on the community assessment or self-assessment. Nothing in Exhibit 36 indicates that the listed goals and objectives were developed to address, or actually reflect, the findings of Saginaw's community assessment even as it existed in April 2002, much less as updated in 2003. In addition, Saginaw has made no attempt to show or describe the relationship between the assessment and its goals. Although it is conceivable that testimony from knowledgeable witnesses would have been helpful to Saginaw in addressing ACF's findings in this area, Saginaw proffered no declarations and failed to identify witnesses who could provide relevant, supportive testimony. Under the circumstances, merely pointing to Exhibit 36 is insufficient to create a genuine issue of material fact or to overcome ACF's prima facie case.
ACF's regulations at 45 C.F.R. 1306.30(a) state that "[a]ll Head Start grantees must provide comprehensive child development services, as defined in the Head Start Performance Standards." 45 C.F.R. 1306.30(a). This regulation expresses one of the key policy principles of Head Start, which is that young children need comprehensive, inter-disciplinary services -- including education, health, nutrition, social services, and parent involvement -- in order to develop social competence and reach their full potential. See 61 Fed. Reg. 17,754, 17,755 (April 22, 1996). Section 1306.30(a) requires the grantee to provide all children enrolled in its program with comprehensive child development services that meet the Head Start performance standards. See 53 Fed. Reg. 49,565, 49,568 (Dec. 8, 1988).
In December 2001, ACF's reviewers found that Saginaw was out of compliance with section 1306.30(a) because eight of its centers (which were slated to serve 228 children) were closed because licenses for them had not been obtained. ACF Ex. 1, at 25-26; ACF Ex. 10. The reviewers also determined that a ninth center had been closed for at least 20 days, and that children affected by this closure were not provided with Head Start services. ACF Ex. 1, at 24-26. The reviewers attributed Saginaw's failure to open its centers to inadequate planning. Id. at 19 ("Enrollment, overall training, health services, lack of facilities are key examples of ineffective planning").
In response to the findings regarding section 1306.30(a), Saginaw promised in its QIP to "establish procedures to ensure that services are provided and continued in the event of closure or licensing process." Saginaw Ex. 2, at 36. Saginaw's periodic status reports indicate that these procedures were implemented in mid-2002. Saginaw Ex. 5, at 9. In September 2002, Saginaw reported that "[a]lternative programming has been implemented with families at sites that are currently undergoing licensing procedures" and that "Education and Family Service staff are working with respective families (at their comfort level) while these centers complete the licensing process." Saginaw Ex. 9, at 6.
Despite these actions by Saginaw, ACF's reviewers found continuing noncompliance with section 1306.30(a) in January 2003. The 2003 review report states that three of Saginaw's centers remained closed due to "licensing issues," and that affected children and families had been offered "home-based" services. ACF Ex. 8, at 21. According to the report, these home-based services "were not truly of the Head Start home-based model, and are not comprehensive in nature as defined by the Head Start standards." Id.
ACF contended in its motion for summary disposition that Saginaw's failure to correct its alleged noncompliance with 1306.30(a) was an adequate ground to sustain its decision to terminate Saginaw's funding. MSD at 44. ACF asserted that the ongoing site closures affected 119 children, but that Saginaw was able to provide only 29 of those children with home-based services. Id. ACF also asserted that Saginaw's failure to open three centers was "tied inextricably to its failure to provide adequate planning," explaining:
Id. at 45.
Saginaw did not dispute the accuracy of the factual information or findings in the 2001 or 2003 review reports. Nor did Saginaw dispute ACF's assertion that alternative services were available only for approximately 29 of the 119 children affected by the ongoing closures of three centers. In addition, Saginaw has failed to offer any explanation for its inability to open three centers and its apparent failure to provide affected enrollees with comprehensive Head Start services. Finally, Saginaw did not assert that the reviewers' findings are insufficient to prove a continuing violation of section 1306.30(a).
Instead, Saginaw contended that ACF may not terminate funding based on section 1306.30(a) because the relevant findings in the 2001 review report were legally insufficient to constitute a "deficiency," as the term is defined in section 1304.3(a)(6)(i). According to Saginaw, these findings, which ACF placed in the report under the "core question" for "planning," do not allege a deficiency because section 1306.30(a) does not contain a "performance standard for planning but is a simple directive to provide comprehensive development services." Saginaw Reply at 21; see also Saginaw Brief at 34-35. The assumption underlying this contention is that violations of regulatory requirements other than the performance standards in 45 C.F.R. Part 1304 cannot constitute a deficiency as defined in section 1304.3(a)(6)(i). See Saginaw Brief at 9-10 (noting that section 1304.3(a)(6)(i)(C) "clearly and unquestionably requires substantial noncompliance with the performance standards" in subparts B, C, or D in Part 1304). We have determined, however, see infra footnote 3, that the violation of a regulatory requirement not found in 45 C.F.R. Part 1304 may amount to a deficiency under section 1304.3(a)(6)(i)(C) if the violation is attributable in some way to the grantee's failure to perform substantially requirements related to the three broad areas of program performance, including Program Design and Management. Here, ACF's reviewers attributed Saginaw's noncompliance with section 1306.30(a) to its failure to meet performance standards relating to program planning. Saginaw submitted no evidence or argument to dispute this assessment by ACF, and, as discussed above, we find that Saginaw failed to correct certain deficiencies in program planning by January 2003. We conclude, therefore, that Saginaw's failure in 2001 to provide comprehensive services to children affected by the site closures is a deficiency that needed to be corrected within one year. (15)
Saginaw contended that we may not consider the finding in the 2003 review report about the inadequacy of the home-based services provided to 29 children affected by the ongoing site closures. Saginaw asserted that this finding constitutes a new or distinct deficiency finding about which it has not been given notice or an opportunity to correct. Saginaw Brief at 48. We do not agree. As we indicated in First State, the findings of a followup review need not be identical to findings of the initial or earlier review in order to satisfy applicable notice requirements:
First State at 17 (citations omitted; emphasis added). Here, section 1306.30(a)'s requirement is clear: enrollees must be provided with comprehensive services. Saginaw understood in 2001 that it was being cited for failing to provide comprehensive services to children affected by a site closure because the QIP called upon it to establish procedures to "ensure" that these children received comparable services in an alternative setting. The subsequent finding that the services actually provided to these children were not comprehensive does not represent a new deficiency but merely shows that Saginaw did not meet its obligation under section 1306.30(a) to provide the children with comprehensive services, as it had promised to do in the QIP. Consequently, we conclude that Saginaw was not deprived of its notice rights under the regulations.
In conclusion, it is undisputed that, as of late 2001, Saginaw was failing to provide children enrolled in its Head Start program with comprehensive services. As discussed, that failure was a deficiency that had to be corrected within one year. The undisputed facts show that this deficiency was not corrected within one year because a substantial number of children affected by ongoing closures were still not receiving comprehensive services. Although some affected children were offered home-based services, those services did not conform with the Head Start home-based model and were not comprehensive in nature. Because this deficiency was not corrected within one year, ACF may terminate Saginaw's funding pursuant to section 1304.60(f).
ACF made a prima facie showing that, as of December 2001, Saginaw was out of compliance with 45 C.F.R. 1304.51(a)(1)(i), 1304.51(a)(1)(ii), and 1306.30(a) and that these failures to comply with Head Start program requirements constituted one or more deficiencies relating to program planning and Program Design and Management. ACF also made a prima facie showing that the deficiency or deficiencies were not corrected within one year after Saginaw was first notified about them. Viewing the record in the light most favorable to Saginaw, we find that there is no genuine dispute of material fact regarding the elements of ACF's prima face case, and that further proceedings (including an in-person hearing) would not yield evidence that might persuade a rational trier of fact that the deficiencies relating to program planning were corrected within the applicable one-year timeframe.
The 2001 review revealed that Saginaw's board of directors and policy council were not working together to govern the local Head Start program, as required by the performance standards. In response, Saginaw promised in its QIP to take certain corrective action, including developing policies and procedures to ensure that the board of directors, policy council, and management staff engage in "shared governance." The performance standards require that both the board and policy council be involved in developing and approving such policies and procedures. As explained below, however, Saginaw produced no evidence that its board of directors fulfilled its obligation to approve the policies and procedures that would ensure effective shared governance by the board and policy council.
The Head Start Act requires a grantee to have procedures that enable parents to "directly participate in decisions that influence the character of programs affecting their interest." 42 U.S.C. 9837. Pursuant to this statutory mandate, the Head Start performance standards require a grantee (and its delegate agencies, if any) to "establish and maintain a formal structure of shared governance through which parents can participate in policy making or in other decisions about the program." 45 C.F.R. 1304.50(a). A grantee's governance structure consists of: a governing body, the group with legal and fiscal responsibility for administering the program; and a policy council or policy committee composed of community representatives and parents of currently enrolled children. See 45 C.F.R. 1304.50(a) and 1304.50(b).
The objective of the program governance standards, which are found in 45 C.F.R. 1304.50, "is to ensure that each local agency establishes governing bodies and policy groups to oversee the implementation of the Head Start legislation, regulations, and policies and to ensure that the program delivers high quality, comprehensive services to enrolled children and families." Head Start Performance Standards (proposed rule), 61 Fed. Reg. 17,554, 17,769 (April 22, 1996). In accordance with that objective, section 1304.50(g) requires grantees to have "written policies that define the roles and responsibilities of the governing body members and that inform them of the management procedures and functions necessary to implement a high quality program." 45 C.F.R. 1304.50(g). Grantees must also define the policy council's role and responsibilities: section 1304.50(c) provides that the policy council must "be charged with responsibilities" for the major governance and management actions and policies described in paragraphs (d), (f), (g), and (h) of section 1304.50. 45 C.F.R. 1304.50(c).
Not only must the roles and responsibilities of these organizations be adequately defined, they must work together (along with the grantee's management staff) to ensure that the program is effectively governed and implemented. Section 1304.50(d)(1) is of particular relevance here. It states that the policy council "must work in partnership with key management staff and the governing body to develop, review, and approve or disapprove" the policies, procedures, and actions listed in subparagraphs (i) through (xi), including:
45 C.F.R. 1304.50(d)(1). A policy council also has responsibility (along with the governing body) to establish written procedures to resolve internal disputes between the governing body and policy group, and to establish policies and procedures to reimburse the reasonable expenses of policy or parent group members. 45 C.F.R. 1304.50(f) and (h).
According to the regulatory preamble, "[i]n order to build strong partnerships when there is a shared decision-making structure, it is essential that the roles and responsibilities of each entity be clearly understood[.]" 61 Fed. Reg. at 57,201. To facilitate this understanding, Appendix A to the program performance governing standards outlines the key responsibilities of the policy council, governing body, and grantee management staff and also indicates when these groups share responsibility for a particular governance or management function.
In explaining the requirement for a "partnership" among the grantee's governing body, policy council, and management staff, ACF's program guidance states:
Guidance at 164. The guidance also notes "[c]ommunication between [the governing body and policy council] is improved if there is at least one representative from the governing body serving on the policy group and at least one representative from the policy group serving on the governing body." Id. at 161.
The 2001 review report found that Saginaw had not "ensured the proper functioning" of the policy council, noting that 80% of policy council meetings had taken place without a quorum and that Saginaw's expense reimbursement policies had hampered the involvement of parents in council activities. ACF Ex. 1, at 21. The reviewers also found little or no indication that the policy council and Saginaw's board of directors (the "governing body") were engaged in shared decision-making, stating:
In addition, the reviewers determined that Saginaw was not in compliance with 45 C.F.R. 1304.50(d)(1)(ii), which requires the policy council to work in partnership with the governing body and key management staff to develop and review or disapprove "[p]rocedures describing how the governing body and the appropriate policy group will implement shared decision-making." In support of that finding, the 2001 review report states:
ACF Ex. 1, at 22 (emphasis added).
In response to ACF's program governance findings, Saginaw indicated in its QIP that it would develop a written plan "to ensure shared decision making between the Board and Policy Council inclusive of program planning, philosophy and long range and short term goals." Saginaw Ex. 2, at 32. Saginaw also indicated that it would "[d]evelop a Communication Plan outlining areas of shared decision-making between" the board and policy council as well as develop and implement a training plan to foster "effective partnerships" between the two groups. Id. at 31. The benchmark dates for these actions were April 1, 2002 and May 1, 2002. Id. at 31-32.
During the May 2002 interim review, ACF found that Saginaw had made "little changes or improvements towards correction" of the alleged program governance deficiencies. ACF Ex. 7, at 5. Although Saginaw had shown improvement in a few areas,(16) ACF reported that it had found no evidence of an "effort to develop procedures to describe implementation of shared decision making" or to define the roles and responsibilities of Saginaw's board. Id. According to ACF, "the lack of such procedures continue[d] to further indicate an ineffective and inappropriate governance structure for shared decision making[.]" Id.
Periodic status reports concerning the implementation of the QIP indicate that Saginaw considered at least two measures to address ACF's program governance findings. One of these measures was the adoption of bylaws requiring the council and board to share members. The second measure involved the development of written procedures to define how the process of shared governance would actually work. In May 2002, Saginaw reported that the board of directors would be "extending invitations to the policy council for two (2) representatives to participate" on each of the Board's subcommittees. Saginaw Ex. 5, at 9. Saginaw also reported that training had been "offered" to policy council members, board members, and management staff, and that "shared decision making" would be "more defined" in the policy council's bylaws. Id.
A June 15, 2002 status report indicates that the policy council and management staff were meeting weekly to develop Saginaw's funding application; that the council and board had met to review and approve the application; and that revisions to "planning procedures" would be "proposed for finalization" by July 12, 2002. Saginaw Ex. 6, at 8. In addition, the June 15 status report mentions a recommendation to amend the board's bylaws to include: (1) a provision providing for the seating of two policy council members on each of the board's subcommittees; and (2) a "written shared decision-making process with definition of roles and responsibilities[.]" Id. The June 15 report also indicates that the board and council had agreed to "meet weekly throughout the Quality Improvement Plan process to approve policies and procedures as they are finalized." Id.
These issues were mentioned next in a September 2002 status report, which indicates that "[s]hared governance and By-law revisions" had been "reviewed" and would be forwarded to the board of directors for approval at its September 26, 2002 meeting. Saginaw Ex. 9, at 6. Saginaw also reported that revisions to the policy council bylaws would be presented to the council at its next meeting. Id.
The policy council's bylaws were in fact revised. In a status report dated October 15, 2002, Saginaw reported that the council had approved provisions calling for the appointment of liaisons from the board to the council and for the appointment of liaisons from the council to the board. ACF Ex. 10, at 7. Saginaw also reported that "[j]oint meetings of the Policy Council and Board of Directors [have] occurred so that information is shared and . . . action is taken on necessary quality improvement steps[.]" Id. at 8. In addition, Saginaw reported that a "monthly report on the status of goals and objectives for the program, health services being provided, status of sites, and program operations is now being given to both Board and Policy Council as well as enrollment and financial information." Id. The October 15 status report does not indicate what actions, if any, were taken by the board at its September 26 meeting, or at any other time, concerning the revisions to the policy council bylaws. Saginaw furnished no copies of any board meeting minutes from 2002.
As amended, the policy council's bylaws indicate that the council is responsible for reviewing and approving service plans, grant applications, personnel policies, hiring and termination of employees, and the selection of delegate agencies. Saginaw Ex. 23, at 1-2. These bylaws also indicate that the council is responsible for other actions, including initiating ideas for program improvement, coordinating agency-wide activities and training for parents, and recruiting volunteer service parents and communities. Id. The bylaws further indicate that the council's membership includes two non-voting governing body representatives, or "liaisons" from the board, and that these liaisons "will prepare a written report for the Policy Council records and give an oral report of the activities of the CAC Board of Directors at the next regular scheduled Head Start Policy Council meeting." Id. In addition, the council's bylaws provide that two policy council members will be elected as liaisons to the board of directors, and that these liaisons "will present a brief oral report of the Policy Councils [sic] activities to the CAC Board of Directors and provide members with a copy of minutes for each meeting." Id. at 11.
In January 2003, ACF's reviewers determined that Saginaw's "system for structured shared governance" had shown "improvement," and that the policy council and board had been meeting regularly in an effort to address program deficiencies. ACF Ex. 8, at 15. However, the reviewers found that Saginaw had "not developed written policies or procedures to ensure the appropriate delineation [of] roles and responsibilities within the shared decision making process." Id. In addition, the reviewers determined that Saginaw was still not compliant with section 1304.50(d)(1)(ii) for the following reasons:
ACF Ex. 8, at 17.
In its motion for summary disposition, ACF contended that termination of funding is warranted because Saginaw failed to correct its noncompliance with section 1304.50(d)(1)(ii) prior to the benchmark date (April 1, 2002) in its QIP, or at any time. MSD at 50-54. ACF contended that Saginaw promised in the QIP to develop a written plan for shared decision-making by the board and policy council but that these entities failed to work together to develop and approve such a plan. Id. at 51-52. ACF also contended that it "reasonably expected" that Saginaw's board would "enact written requirements" providing for the membership of council members given that Saginaw's system of shared governance was found to be "non-existent" in late 2001 and that Saginaw had promised to develop a written plan to ensure shared decision-making. Id. at 52. "Without this written requirement," said ACF, "Saginaw's Policy Council risked being completely barred from any formal role on Saginaw's governing body" and therefore deprived of an "appropriate and effective voice" in program operations. Id.
In response to ACF's motion, Saginaw contended that the findings in the 2001 review report do not show noncompliance with section 1304.50(d)(1)(ii). Saginaw Brief at 37; Saginaw Reply at 20-21. Even if it was noncompliant with that requirement in late 2001, asserted Saginaw, the noncompliance was corrected when the policy council amended its bylaws to provide for the appointment of board liaisons to the policy council and council liaisons to the board. Id. at 37-40. Saginaw asserted that the evidence of joint meetings by the policy council and board during 2002 would also support a finding that it was in substantial compliance with section 1304.50(d)(1)(ii). Id. at 40.
We disagree with Saginaw that the 2001 review report fails to allege facts showing a violation of 45 C.F.R. 1304.50(d)(1)(ii). In late 2001, ACF's reviewers determined that Saginaw had practically no system for shared governance. ACF Ex. 1, at 21. The reviewers found little or no evidence that the board and policy council were engaged in shared decision-making, notwithstanding the steps taken to appoint liaisons to each other's group. Id. (finding "absolutely no connection" between the two groups). The reviewers also found that there was no "written procedure describing a process of shared decision making" involving the board and policy council, that the participation of the policy council liaison to the Board was "limited," and that nothing in the board or council meeting minutes indicated that shared decision-making was taking place. Id. at 22. These findings -- which Saginaw did not dispute -- are more than adequate to establish that, as of late 2001, Saginaw's policy council, board, and management staff had not worked in partnership to develop, review, and approve policies and procedures describing how shared decision-making would be implemented.
Saginaw insisted that the 2001 review report shows that it was following "procedures" for shared decision-making. See Saginaw Brief at 37. We can find no support for this assertion in the 2001 review report, and Saginaw failed to identify or describe the procedures it was allegedly following. Moreover, the 2001 review report expressly states that the board had no "written procedure" that described a "process" of joint decision-making, and that council meeting minutes revealed no evidence of shared decision-making despite the presence of a board liaison, who shared only limited program information with the council. ACF Ex. 1, at 22.
Saginaw also contended that its alleged failure to develop "written" policies or procedures for shared decision-making is an inadequate basis for finding it noncompliant with section 1304.50(d)(1)(ii) because that regulation and the accompanying guidance do not require that these policies or procedures be in writing. According to Saginaw, the guidance for section 1304.50(d)(1)(ii) indicates that the development of written policies "is merely one suggested method" of complying with that regulation.(17) Saginaw Brief at 37.
We find no merit to this argument because the gravaman of the 2001 deficiency finding was not that Saginaw had policies or procedures that it failed to reduce to writing, but that it lacked any effective procedures for implementing a process of shared governance. That Saginaw understood this is evident from its QIP, which called for the development of a "plan" for shared decision-making. Saginaw Ex. 2, at 32.
We note, in any event, that although the regulations do not expressly require that procedures for shared governance be in writing, they imply that written procedures are critical to ensuring compliance. A grantee is required by the regulations to establish a "formal structure" of shared governance. 45 C.F.R. 1304.50(a). ACF's guidance advises grantees that "[f]ormal systems of communication and a thoughtful plan of ongoing training serve as a critical foundation to the development of effective working partnerships among the policy group, the governing body, and key management staff."(18) Guidance at 164. It is difficult to imagine how a "formal" governance structure could be established for a program as large and complex as Saginaw's -- or how the components of that structure could cooperatively conduct their business -- without some key operational policies and procedures being reduced to writing.(19)
In short, the findings in the 2001 review report clearly show that, as of December 2001, Saginaw's board and policy council had not worked in partnership to develop or implement a strategy, written or otherwise, for shared decision-making. Because Saginaw has not raised a genuine factual dispute concerning those findings, and because those findings reflect that Saginaw failed to comply with a requirement that is intended to ensure that parents have an effective voice in Head Start program governance, we conclude that Saginaw was noncompliant with section 1304.50(d)(1)(ii) in late 2001 and that this noncompliance constituted a deficiency in program governance that Saginaw was obligated to correct within one year.
We further conclude that a rational trier of fact, viewing the record in the light most favorable to Saginaw, could not reasonably find that Saginaw had removed this deficiency in program governance by January 2003.(20) As indicated, Saginaw promised in its QIP to develop a written plan "to ensure shared decision making between the Board and Policy Council inclusive of program planning, philosophy and long range and short term goals." Saginaw Ex. 2, at 32. Saginaw offered no evidence that it developed such a plan by January 2003. The board's current bylaws, which were signed by board's secretary in October 2003, refers in article IV, section 13 to a "Head Start Program Governance Plan" that establishes a "shared governance procedure," but Saginaw has not submitted a copy of the plan or indicated when it was adopted. See Saginaw Ex. 42.
Saginaw contended -- and for purposes of ACF's motion we accept -- that the policy council's bylaws contain a procedure or mechanism to foster shared decision-making -- namely, the reciprocal appointment of liaisons to and from the council and board.(21) These appointments were evidently approved by the policy council. Policy council adoption is insufficient to establish compliance with the regulation, however. What section 1304.50(d)(1)(ii) requires is that the policy council and the board work together to develop and approve procedures and policies to implement shared governance. See 45 C.F.R. 1304.50, Appendix A (indicating that the board and the council have responsibility for approving or disapproving procedures to implement shared decision-making). The record contains no evidence that, prior to January 2003, the board of directors approved the appointment of liaisons to and from the policy council, and the board's current bylaws make no mention of the appointments. There is also no evidence (or an allegation) that the board considered or approved other measures to facilitate shared governance, such as the provisions in the policy council's bylaws calling for interaction between policy council committees and the grantee's management staff. (22)
ACF's guidance suggests that implementing shared governance ordinarily requires, among other things, the development of "consultation" and "approval" processes designed to expedite decision-making as well as "written procedures" for the board's and council's various policy functions. Guidance at 164. Saginaw submitted no evidence and made no allegation that such processes and procedures were adopted by the council and board prior to January 2003. Although there is evidence that Saginaw's board and policy council worked together during 2002 in order to submit a funding plan and to oversee implementation of the QIP, it is unclear what procedures the two bodies followed to conduct their joint business or how they intended to collaborate in other areas of joint responsibility. The best evidence of what procedures were followed to conduct joint business would be documents showing the written procedures in effect. The best evidence of collaboration would be the minutes of board and policy council meetings (or equivalent documentary evidence). The record, however, is devoid of documentary evidence of the procedures that the council and board had agreed to use to share governance of the program. Although testimony from board and policy council members (among others) would shed light on this issue, Saginaw submitted no declarations and failed to identify or describe any potential witnesses or testimony in response to the motion for summary disposition. Because ACF made a prima facie showing that Saginaw had failed to correct the deficiency in question by January 2003, it was Saginaw's burden to proffer evidence that a rational trier of fact might find sufficient to establish that the deficiency had been corrected by January 2003. Saginaw did not do so here.
According to Saginaw, ACF's sole basis for finding it deficient in 2003 was that the board of directors failed to amend its bylaws to include a provision regarding reciprocal liaisons. Saginaw Reply at 26. Saginaw contended that this shortcoming is an insufficient ground for termination because the QIP did not require the board to amend its bylaws but merely to develop written procedures for shared governance, an action that the board in fact took. Saginaw Brief at 39; Saginaw Reply at 26. We note, however, that the reviewers in 2003 found not only that the board had failed to adopt a bylaw concerning liaisons, but that Saginaw lacked policies and procedures (apart from the appointment of the liaisons) stipulating how the board and policy council would collaborate to oversee the program, set goals, and make decisions in areas of joint responsibility. Saginaw had promised in the QIP to develop and adopt such policies and procedures to effectuate shared governance and thus ensure its compliance with 45 C.F.R. 1304.50(d)(1)(ii). That regulation unambiguously requires a grantee's governing body (here, the board of directors) to work in partnership with the policy council and management to develop and approve policies and procedures to establish and implement a system of shared governance. Because Saginaw was found in 2001 to be without any effective policies and procedures for shared governance, Saginaw cannot reasonably contend that the QIP did not contemplate action by the board to adopt procedures or policies for shared governance -- including the appointment of council and board members to each other's group -- because board consideration and approval of those policies and procedures is precisely what the regulation requires.(23)
Saginaw also contended that it should be found in "substantial compliance" with section 1304.50(d)(1)(ii) because it succeeded in correcting other deficiencies in the area of program governance. Saginaw Brief at 36. This contention is meritless because the regulations require that a grantee correct all deficiencies. See 45 C.F.R. 1304.60(a), (c), and (f). Although the 2003 report states that Saginaw's "system for structured shared governance" had "shown improvement," ACF determined that Saginaw remained out of compliance with five program governance requirements, including section 1304.50(d)(1)(ii), in January 2003. ACF Ex. 8, at 15, 18. Saginaw offers no credible reason why we should consider its continuing noncompliance with section 1304.50(d)(1)(ii) to be insubstantial or not serious enough to constitute a deficiency. Without clear and authoritative written procedures that create a process for shared decision-making between Saginaw's governing board and its policy council, there can be absolutely no assurance or likelihood that the type of shared governance that the regulations contemplate can actually occur in the operation of Saginaw's Head Start program.
We conclude that ACF presented a prima facie case for termination based on the finding in the 2003 review report that Saginaw had failed to correct its noncompliance with section 1304.50(d)(1)(ii) within one year. Because there are no genuine issues of material fact, and because the evidence proffered by Saginaw is insufficient (under any reasonable interpretation) to rebut ACF's prima facie case, ACF may terminate Saginaw's grant based on Saginaw's failure to correct this deficiency in program governance.
ACF's regulations at 45 C.F.R. 1305.7(b) provide that a Head Start grantee "must maintain its funded enrollment level." "Funded enrollment" means "the number of children which the Head Start grantee is to serve, as indicated on the grant award." 45 C.F.R. 1305.2(f).
The 2001 review report states that Saginaw was not in compliance with section 1305.7(b) because, as of October 31, 2001, Saginaw's actual enrollment was 628 children, substantially less than its "funded enrollment" of 1,011 children. ACF Ex. 1, at 33.
In response to the under-enrollment finding, Saginaw indicated in its QIP that the following activities would be performed:
ACF Ex. 2, at 51. The QIP specified May 1, 2002 as the benchmark date for these activities and stated that the "desired/measurable outcomes" would be the following:
The May 2002 interim review found that Saginaw continued to be under-enrolled. ACF Ex. 7, at 8. In addition, ACF found that "the program's failure to monitor licensing activities and adhere to maximum class size requirements posed additional possible decreases in enrollment figures." Id.
In January 2003, ACF's reviewers found that Saginaw still had not reached full enrollment for the 2002-2003 school year, noting that its funded enrollment level was 1,011 children but that its program was serving only 768 children. ACF Ex. 8, at 27. The reviewers also noted that Saginaw received Head Start funds to serve 40 children through "Family Child Care" and "Home-Based" program options,(24) but that Saginaw still had no "current plan of action" for these programs.(25) Id.
ACF contended in its motion for summary disposition that Saginaw's failure to come into compliance with section 1305.7(a) by January 2003 was a sufficient basis upon which to terminate funding under section 1304.60(f) and 1303.14(b)(4). MSD at 46-47. In response, Saginaw did not dispute the figures cited in the 2001 review report for its actual and funded enrollment. Nor did it dispute the finding that it remained under-enrolled in January 2003.(26) Instead, Saginaw made two legal or quasi-legal arguments. First, it contended that a violation of section 1305.7 cannot constitute a "deficiency" as that term is defined in section 1304.3(a)(6)(i)(C) because the enrollment requirement is not one of the performance standards in Part 1304. Saginaw Brief at 54-55. This argument we have already addressed and rejected. A violation of a Head Start requirement in section 1305 (or in sections 1301, 1306, or 1308) may constitute a deficiency, as defined in section 1304.3(a)(6)(i)(C), if the violation is related to a failure perform substantially requirements related to Program Design and Management (or one of the other two broad areas of performance). Here, ACF's reviewers determined that Saginaw's under-enrollment was the result of deficiencies in Program Design and Management, particularly the deficiencies in planning (see infra footnote 25), two of which we discussed above. Saginaw did not dispute the existence of this relationship.(27) See Saginaw Brief at 44, 54-58; Saginaw Reply at 37-38. Accordingly, we find that, in both late 2001 and early 2003, Saginaw's noncompliance with section 1305.7(b) constituted a deficiency.
Second, Saginaw asserted that its QIP did not require it to achieve full enrollment during the 2002-2003 program year, but only that it "'take strides to increase its enrollment by 10% during the 2002-2003 program year and consider maintaining its established funded enrollment or lowering it for the 2003-2004 program year.'" Saginaw Brief at 57 (quoting Saginaw Ex. 2, at 51). Saginaw asserted that enrollment in the 2002-2003 year increased by 22% from the previous year, surpassing the QIP goal, and that this increase was a direct result of "aggressive" recruitment efforts. Id. In light of these efforts and the fact that the enrollment goal set out in the QIP was achieved, Saginaw contended that it "must be viewed in substantial compliance" with section 1305.7(b) as of January 2003. Id.
We find no merit to this argument. Substantial compliance is determined with reference to the criteria contained in the relevant performance standard or regulatory requirement, not by the terms of a QIP. Section 1304.60(f) of the regulations requires a grantee to "correct a deficiency" within the QIP timeframes, not merely take the actions specified in the QIP. We elaborated on this principle in First State, where we stated:
First State at 19.
Here, the requirement in question, section 1305.7(b), calls upon the grantee to maintain its funded enrollment -- that is, enroll as many children as it is funded to serve. Saginaw did not come close to satisfying that requirement by January 2003. Its enrollment gap in December 2001 was 383 children. By January 2003, Saginaw had reduced the enrollment gap by only 36 percent (from 383 to 243 children); in other words, more than 20% of the children that Saginaw was funded to serve were not receiving services at all. By no reasonable measure can this be considered "substantial compliance" with section 1305.7(b).
We note, moreover, the record creates doubt about what actions and goals Saginaw expected would suffice to bring itself into compliance with section 1305.7(b). The QIP, as submitted to ACF in January 2002, indicates that the "desired/measurable outcome" of Saginaw's corrective action would be a 10% increase in enrollment for the 2002-2003, after which Saginaw would consider maintaining or reducing its funded enrollment for 2003-2004. Saginaw Ex. 2, at 51. Given the size of the gap between actual and funded enrollment (383 children) in late 2001, however, Saginaw could not reasonably believe that reducing that gap by substantially less than 50% would be adequate to constitute substantial compliance. Indeed, there is evidence that Saginaw did not actually harbor that belief. In its March 15, 2002 QIP update, a document that appears to fully restate the QIP, Saginaw indicated that the "desired/measurable outcome" for its corrective work was that it "would meet funded enrollment." Saginaw Ex. 3, at 49. No reference was made to an outcome short of full enrollment. Id. Similarly, Saginaw's April 15, 2002 QIP update specifies full enrollment as the desired outcome. Saginaw Ex. 4, at 41. In addition, updates from October and November 2002 indicate that Saginaw was attempting to achieve full enrollment. See Saginaw Ex. 10, at 10 (noting that Saginaw continued to be under-enrolled and that it had not met its mandate under section 1305.6(c) to make available 10% of enrollment opportunities to children with disabilities); November 2002 Update, Saginaw Ex. 11, at 7 (indicating that Saginaw was not fully enrolled and that partnerships were being considered with day care providers and others in order to achieve full enrollment). Although testimony from directors, managers, or council members might have dispelled the doubt about the compliance standard Saginaw had in fact pledged to meet, Saginaw offered no such testimony.
Because Saginaw's failure to attain funded enrollment is a program "deficiency," and because it is undisputed that Saginaw failed to correct that deficiency within one year of receiving of it, CMS is entitled to terminate Saginaw's grant pursuant to 45 C.F.R. 1304.60(f).
When Saginaw filed its initial brief (prior to the filing of the motion for summary disposition), it also filed a motion to compel production by ACF of all documents and records, including the review teams' audit papers and notes, relevant to the findings in the 2001 and 2003 review reports. On December 9, 2003, the Board denied the motion to compel, noting that ACF had expressed an intention to furnish with its response brief "all documents that relate to the findings on which the termination is based." See December 9, 2003 Ruling on Motion to Compel Discovery. We advised Saginaw, however, that it could renew the motion after it received ACF's response brief. Id.
On February 11, 2004, ACF filed its motion for summary disposition. Saginaw did not then renew its request for documents. However, with its reply to ACF's motion for summary disposition, Saginaw filed a motion to compel the depositions of ACF employees who participated in the onsite reviews of Saginaw's program and in the preparation of the 2001 and 2003 review reports. Saginaw indicated in this motion that ACF had provided 404 pages of handwritten and typed notes that were illegible, undated, or unsigned, and that depositions were necessary to "decipher the contents of the notes" and to discern their relevance. Motion to Compel at 2. ACF objected to the motion, asserting, among other things, that its "pending motion for summary judgment would dispose of the case, so even if depositions were allowed, . . . it is premature to consider depositions at this point in the proceedings." ACF Response to Motion to Compel. Saginaw replied that depositions were needed because the reviewers' notes were "inadequate to permit Saginaw to investigate and respond fully to the allegations made against [its] Head Start program." Saginaw Reply Brief on Motion to Compel at 1. Saginaw reiterated that the notes were difficult to read and understand and did "not identify the sources of observations or purported findings." Id. at 4. It also stated that depositions were "needed to clarify these notes to allow Saginaw to fully develop the record on a central issue in the appeal -- namely, the "improper conduct of the PRISM reviews of Saginaw's Head Start program and the incorrectness of the ACF's allegations." Id. In addition, Saginaw noted that ACF's procedures for data collection and retention had been recently amended to require reviewers to initial and date their handwritten notes, and that these procedures emphasized the importance of adequate and accurate note-taking. Id. at 5. Finally, Saginaw asserted that taking depositions "would not delay the holding of the hearing in this appeal" and would in fact streamline the hearing process. Id. at 6-8.
We find that Saginaw has not shown a need for depositions of ACF's reviewers. The purpose of this proceeding is not to flesh out the deliberative history of ACF's deficiency findings but to determine whether the grantee was, at particular times, in compliance with Head Start requirements. In general, the best evidence of a grantee's compliance are the documents generated by the grantee in operating its program (documents presumably within Saginaw's control), as well as statements from knowledgeable employees, executives, or governing board or policy body members (none of whom Saginaw sought to depose). See Mansfield-Richland-Morrow Total Operation Against Poverty, Inc., DAB No. 1671 (1998). Saginaw did not assert that it faced obstacles in obtaining this "best evidence." Nor did Saginaw contend that testimony by reviewers was needed to clarify the deficiency findings made in the 2001 or 2003 review reports. Saginaw also made no attempt to show, or explain why, the reviewers were likely to have material information about the program's compliance status that could not have been obtained from other sources. (28) The suggestion that depositions would generate information about the "improper conduct of the PRISM reviews" does not justify Saginaw's request because, as indicated, the methods and thought processes used by the reviewers to develop their deficiency findings are generally irrelevant to the Board's de novo inquiry, which is focused on the substantive merits of those findings. See id. Faced with the deficiency findings in the 2001 and 2003 review reports, Saginaw was required to demonstrate affirmatively that it was in compliance with Head Start performance requirements (or at least that there were genuine disputes of material fact underlying those findings), regardless of what information the reviewers considered or did not consider.
We note that the Board's practice manual (29) informs parties that discovery will be granted "only to order production of specific items of information which the DAB determines a party needs to directly address a specific, dispositive issue in a case," and that a discovery request must "describe specifically what information [the party] need[s] and state how this information is necessary and relevant to [the] case." These considerations are particularly relevant where the party requests an intrusive and burdensome form of discovery such as depositions. Here, Saginaw made no attempt to show that the depositions were needed to help it raise genuine disputes of material fact concerning the dispositive issues -- namely, the existence of particular deficiencies in the areas of Program Design and Management -- raised in ACF's motion for summary disposition. Saginaw merely asserted that the discovery performed to date had not allowed it to "investigate" and "respond fully" to the allegations against its Head Start program.
For all these reasons, and especially because Saginaw failed to specify concretely what material information might be obtained from the depositions of ACF's reviewers, we deny its request for depositions.
Because there are no genuine disputes of material fact regarding the existence or persistence of several program deficiencies, and because a rational trier of fact could reach only one reasonable conclusion based on the record -- namely, that Saginaw failed to timely correct certain the deficiencies -- we grant the motion for summary disposition and affirm ACF's decision to terminate Saginaw's Head Start funding. While we conclude that each uncorrected deficiency provides an independent basis for the termination, termination is also unquestionably warranted because the cumulative effect of Saginaw's multiple instances of noncompliance clearly constituted a failure to perform substantially the Head Start requirements related to Program Design and Management.
Judith A. Ballard
Donald F. Garrett
1. ACF's motion addressed other deficiencies that we do not discuss in this decision. As discussed below, a failure to correct any one deficiency may be the basis for termination under the Head Start regulations.
2. Section 1304.1 states that the standards in Part 1304 "are to be used in conjunction with the regulations at 45 C.F.R. 1301, 1302, 1303, 1305, 1306, and 1308." 45 C.F.R. 1304.1. In some instances, the performance standards in Part 1304 expand on comparable requirements contained elsewhere in the regulations. See Head Start Performance Standards (proposed rule), 61 Fed. Reg. 17,754, 17,774 (April 22, 1996).
3. A few of the core questions in the 2001 review report relate specifically to alleged noncompliance with Head Start requirements other than the performance standards. By asserting that the PRISM improperly identified these instances of noncompliance as deficiencies, Saginaw implied that violations of requirements not found in subparts B, C, and D of section 1304 cannot constitute a "deficiency" within the meaning of section 1304.3(a)(6)(i)(C). The regulatory language does not support that proposition, however. Section 1304.3(a)(6)(i)(C) states that a deficiency is --
45 C.F.R. 1304.3(a)(6)(i)(emphasis and italics added). The express references to parts 1301, 1305, 1306, and 1308 in section 1304.3(a)(6)(i) make it clear that noncompliance with requirements other than those contained in section 1304 may be the basis for a deficiency finding pursuant to section 1304.3(a)(6)(i)(C) if the noncompliance "involves" a failure to "perform substantially" requirements related to Early Childhood Development and Health Services, Family and Community Partnerships, or Program Design and Management. Whether a grantee's noncompliance involves a failure to perform requirements related to these performance areas is a primarily a factual question that must be resolved by examining the review findings and related evidence.
4. If the findings of noncompliance in the 2001 review report do not show a deficiency, then ACF may not seek to terminate Saginaw's funding until it gives Saginaw an additional opportunity to correct the noncompliance pursuant to section 1304.61(b). Human Development Corp. at 2, 8.
5. The most common definition of "benchmark" is a reference point or standard by which something is measured or judged. See The American Heritage Dictionary of the English Language (4th ed.).
6. "A grantee always bears the burden to demonstrate that it has operated its federally funded program in compliance with the terms and conditions of its grant and the applicable regulations. Moreover, a grantee is clearly in a better position to establish that it did comply with applicable requirements than ACF is to establish that it did not. Therefore, the Board has held that the ultimate burden of persuasion is on the grantee to show that it was in compliance with program standards." DOP at 6-7 (citations omitted).
7. Early Childhood Development and Health Services; Family and Community Partnerships; and Program Design and Management.
8. ACF has published the Program Performance Standards from 45 C.F.R. Parts 1301 through 1311 in a document that includes ACF's rationale and guidance for each provision, as well as sources of related information. We refer to this document as the Guidance.
9. Section 1305.3 provides that the community assessment "must include the collection and analysis of the following information about the grantee's Early Head Start or Head Start area":
45 C.F.R. 1305.3(c)(1)-(c)(6).
10. It appears that the estimate of the number of disabled children was derived in part from the Supplemental Security Income (SSI) rolls. SSI benefits are payable to disabled children if their income and assets fall within eligibility limits. See 20 C.F.R. 416.110 and 416.202.
11. The only data provided was for the number of four year old children served by publicly funded preschools. See Saginaw Ex. 28, at 11.
12. The 2003 update contains additional information about health needs and services in Saginaw County. Saginaw Ex. 28, at 11.
13. Saginaw contended that the findings in the 2003 review report constitute new or different grounds for termination, and therefore ACF may not rely upon the findings to support its termination decision. Saginaw Brief at 47. In particular, Saginaw contended that the finding in the 2003 review report that Saginaw's short and long-term goals were not based upon the community assessment or self-assessment does not also appear in the 2001 review report. This contention is entirely without merit. Both the 2001 and 2003 review reports unambiguously convey that Saginaw failed to develop program goals based on its community assessment.
14. Without discussion or explanation, Saginaw contended that its goals are also set out in its "service plan" (Saginaw Ex. 16) and an August 2002 "fact sheet" (Saginaw Ex. 34). The service plan, however, merely describes the "procedures" that Saginaw purportedly adopted to comply with the performance standards, and the August 2002 fact sheet is simply a brief, general statement of Saginaw's Head Start "mission" along with a general description of the ways in which it carries out that mission.
15. Saginaw suggested that upholding a deficiency finding based on section 1306.30(a) would be contrary to our holding in Human Development Corp. Saginaw Reply at 33. In Human Development Corp., ACF argued that the grantee's failure to maintain its funded enrollment was a deficiency within the meaning of section 1304.3(a)(6)(i)(C) because it involved a failure to provide the services called for by the performance standards in 45 C.F.R. Part 1304, subparts B and C. We rejected this expansive application of the regulations, noting that it would effectively make under-enrollment "the basis for finding a grantee out of compliance with virtually all of the Head Start requirements." The situation here is clearly distinguishable, however. First, our conclusion is not based on a finding of under-enrollment but on a finding that Saginaw failed to provide comprehensive services to enrolled children who were supposed to receive services at three of its centers but did not because of licensing problems. Second, ACF made an investigatory finding, not refuted by Saginaw, of an actual connection between the violation of section 1306.30(a) and its failure to meet the performance standards in 45 C.F.R. Part 1304 -- namely, its failure to conduct adequate program planning. Third, Saginaw's failure is substantial and "related to" Program Design and Management. Having designed a program dependent on center licensing, Saginaw needed to manage its program so that the centers would be licensed and available to provide the services so that licensing failures would not deprive Head Start children of the services for which Saginaw received funding.
Saginaw also contended that section 1306.30(a)'s language is so broad - encompassing all of the performance standards - that it fails to give a grantee notice of the standard that must be met. Saginaw Brief at 47-48. We reject this contention because the regulation clearly identifies the compliance standard -- services must be "comprehensive child development services, as defined in the Head Start Performance Standards." The criteria for comprehensiveness are set out in 45 C.F.R. Part 1304, subpart B of the performance standards. See Head Start Performance Standards (proposed rule), 61 Fed. Reg. 17,754, 17,761 (April 22, 1996) ("The objective of [subpart B of the performance standards] is to provide high quality, comprehensive services that foster each child's social competence by supporting and nurturing the child's social, emotional, cognitive, and physical development").
16. For example, the policy council and board of directors were found to be working together to develop the program's funding application for 2002-2003. See ACF Ex. 7, at 5.
17. The program guidance for section 1304.50(d)(1)(ii) identifies the following "suggested strategies" for implementing "successful shared decision-making": (1) developing written procedures describing how shared decision-making will be implemented; (2) ensuring that information about program planning, policy, and operations is shared via the communications system required by section 1304.51; (3) "[s]upporting open channels of communication" between the policy council and governing body through such measures as (a) the exchange of minutes from meetings, (b) forums for open discussion between the groups; (c) joint meetings on specific issues or concerns; (4) the participation of policy group members in staff meetings; and (5) the concurrent membership of selected individuals in both the governing body and policy group. Guidance at 165.
18. The section of the program guidance cited by Saginaw (Guidance at 165) neither states nor implies that a grantee could forego the adoption of any written policies or procedures and still satisfy its obligations under section 1304.50(d)(1)(ii). It merely identifies "suggested strategies for successful shared decision-making," see infra footnote 17, without indicating that any one strategy would necessarily be sufficient in a given situation. Nowhere does the guidance indicate that a particular strategy could be implemented without some written policies or procedures.
19. One obvious and important reason for putting such policies or procedures in writing is to ensure that they are communicated accurately and in a timely way to all interested persons.
20. Saginaw contended that the finding of noncompliance in the 2003 review report represents a new or previously unidentified deficiency finding that cannot be used to support a termination action until Saginaw has had an opportunity to address the finding. Saginaw Brief at 36-37 & n.8. We reject this contention because there is sufficient similarity between the findings in the 2001 and 2003 review reports: in both, ACF's reviewers found Saginaw to be noncompliant with section 1304.50(d)(1)(ii) because it had failed to create and adopt policies or procedures for shared decision-making. See ACF Ex. 1, at 22 (finding a "lack of a written procedure describing a process of shared decision making"); ACF Ex. 8, at 17 (finding that Saginaw "lacks a written procedure which effectively delineates how the two governing bodies would implement shared decision-making within the Saginaw County Head Start program"). In other words, both reports made it clear that the procedures in place were insufficient to ensure that parents (through the policy council) had an effective voice in the governance of Saginaw's Head Start program.
21. Saginaw asserted, in passing, that its "service plan" also contains procedures for shared decision-making. See Saginaw Brief at 39-40; Saginaw Reply at 25-27. The service plan summarizes Saginaw's "local operation procedures" in a number of areas, including program governance. See Saginaw Ex. 16. The plan indicates that procedures to ensure shared decision-making "are taken before both the Board of Directors and Policy Council" but fails to identify what those procedures are. Id. at 72. Overall, the plan is silent or vague about how the board of directors and policy council are expected to interact to reach consensus or decisions about policy goals, planning, program operations, and other key areas of joint responsibility.
22. The policy council's bylaws create five standing committees and indicate that the executive-personnel committee and the budget committee will meet "regularly" with Saginaw's executive director and work with the staff on certain activities. Saginaw Ex. 23, at 13-14. The bylaws specify that the executive-personnel committee -- which has responsibility for personnel policies, program planning, parent training, and program assessment -- will consist of the policy council's chairperson and vice-chairperson as well as the two liaisons from the board. Id.
23. The finding by ACF's reviewers in 2003 that the board's bylaws did not contain a provision regarding liaisons is sufficient evidence that the board had not, in fact, approved policies and procedures for shared governance so that the burden shifted to Saginaw to show that such approval had, in fact, been given.
24. The Family Child Care option is funded through a Head Start demonstration project and is defined as "child care and education provided to children in a private home or other family-like setting other than the child's own home." 65 Fed. Reg. 52,394, 52,396 (Aug. 29, 2000). Home-based services are services "provided to children, primarily in the child's home, through intensive work with the child's parents and family as the primary factor in the growth and development of the child." 45 C.F.R. 1306.3(j).
25. In the section of the 2003 review report that addresses planning deficiencies, ACF made the following findings about the family child care and home-based program options:
ACF Ex. 8, at 19.
26. In a December 15, 2002 status report, Saginaw conceded that it had not achieved full enrollment, as required by section 1305.7(b). ACF Ex. 12, at 8.
27. Saginaw merely asserted that section 1305.7(b) does not contain performance standards for program planning. Saginaw Brief at 44.
28. Saginaw asserted that ACF's reviewers could provide testimony about the "sources" of their information but failed to indicate why it could not, with reasonable diligence, identify these information sources (be they persons or documents) by other means.
29. The practice manual is available on the DAB website.
Last Reviewed: September 2010
Last Updated: August 27, 2014
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