Administration for Children and Families (ACF) - Head Start

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Program level Payment Integrity results

Sponsoring agency: Department of Health and Human Services

View on Federal Program Inventory

PROGRAM METRICS

Did not report

in FY 2022

PROGRAM METRICS

$10,844 M

in FY 2023 outlays, with a

94.9%

payment accuracy rate

PROGRAM METRICS

$11,042 M

in FY 2024 outlays, with a

88.0%

payment accuracy rate

PROGRAM METRICS

$11,727 M

in FY 2025 outlays, with a

89.7%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

Unknown Payment Details

Evaluation of corrective actions

Future payment integrity outlook

Additional programmatic information

Head Start was determined to be risk-susceptible in FY 2021. As with other programs, developing and implementing a new improper payment estimation methodology and process can be a time-intensive process. HHS is developing an improper payment measurement and expects to report an error rate for this program in FY 2023.

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2021 - 09/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-4.59

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    Errors are primarily attributed to failing to adhere to the statutory requirements of the Head Start program. The training corrective actions taken by HHS include working with grant recipients in areas such as procurement, source documentation, cost allocation, allowability of cost and other common fiscal challenges that lead to payment errors. HHS also enhanced the Head Start monitoring tool to include transaction reviews.
    The corrective action was not fully completed this reporting period
    Not Completed
    Training
    HHS plans to provide ongoing training to recipients on the issues that caused payment errors in the Head Start program. Training will be conducted in areas such as procurement, source documentation, cost allocation, allowability of cost and other common fiscal challenges that lead to payment errors. HHS also plans to issue Information Memorandum and Program Instructions as needed to ensure fiscal and program integrity. In addition, targeted technical assistance will be provided to individual recipients to address their specific error causes. Further, HHS plans to take recovery action on payment errors identified during improper payment reviews and continue to issue disallowances on errors discovered through HHS Office of Inspector General audits, HHS program reviews, and Single Audits.
    FY2024
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

Overpayments are outside of HHS's control for the Head Start program because pre-approval of individual expenditures is not required. Funds are awarded to recipients who then disburse the funds within the parameters of approved budget categories. Periodically, recipients submit financial reports summarizing the cash transactions made for its federal award. Detail transaction level data is not submitted to HHS pre or post payment unless specifically requested by HHS in special circumstances, and even then, is limited to specific funding recipients and not across all recipients and/or payments.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $187.96 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $187.96 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Financial $187.96 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $9.97 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $9.97 M

Eligibility element/information needed Eligibility amount
Financial $9.97 M

Mitigation strategies taken Mitigation strategies planned
Training Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$9.97 M

Unknown Payment Details

Payments are unknown for the Head Start program because at the time of the HHS review, the available documentation was not sufficient to determine if the payments were proper or improper. There were two Head Start recipients that fell into this category. In one instance, the Head Start recipient was the subject of an active fraud investigation and thus could not be tested. In the other instance, the Head Start recipient failed to provide sufficient documentation at the level of detail necessary to conduct the review.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $355.59 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
Vendors/Providers $355.59 M HHS is unable to determine the specific documentation that the Head Start recipient failed to provide. In one instance, the limitation was imposed because of an active fraud investigation, which prevented HHS from obtaining any information from the recipient. In the other instance, the Head Start recipient did not provide transaction level detail to support expenditures. Therefore, HHS could not determine the nature of the individual expenditures or the documentation required.

Mitigation strategies taken Mitigation strategies planned
Training Training

Evaluation of corrective actions

HHS's planned and completed actions address the causes of the Improper Payments and Unknown Payments because they focus on the specific errors identified during the review. Targeted technical assistance is provided to address the underlying causes of the errors, along with follow-up action to ensure that corrective action was taken to address the root cause of the Improper Payments and Unknown Payments in the Head Start program. Based on our initial assessment, these actions are deemed proportional to the severity of the associated amount and rate of the root cause since the Improper Payments error rate for the Head Start program is 1.83% and the Unknown Payments error rate is 3.28%, resulting in an overall error rate of 5.10%, which is below the statutory threshold of 10%.

Future payment integrity outlook

Administration for Children and Families (ACF) - Head Start has NOT established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $11,689 M
Current year +1 estimated future improper payments $0 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 0 %

The program's current year improper payment and unknown payment rate of 5.1 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

HHS has not determined a tolerable rate for the Head Start program as this is the first year for calculating and reporting an Improper and Unknown Payment estimate for the program under the new methodology. HHS anticipates determining a tolerable rate in the future once more performance data is available.

HHS has not determined a tolerable rate for the Head Start program as this is the first year for calculating and reporting an Improper and Unknown Payment estimate for the program under the new methodology. HHS anticipates determining a tolerable rate in the future once more performance data is available. Once HHS establishes a baseline and develops a tolerable rate for the Head Start program, we can assess needs with respect to internal controls, human capital and information systems and other infrastructure to reduce improper payments and unknown payments to a determined tolerable rate.

HHS did not request resources in the most recent budget submission of the agency specific to establishing and maintaining controls in the Head Start program to reduce the Improper Payments and Unknown Payments to the tolerable rate. HHS has not determined a tolerable rate for the Head Start program as this is the first year for calculating and reporting an Improper and Unknown Payment estimate for the program under the new methodology. HHS anticipates determining a tolerable rate in the future once more performance data is available. Once HHS develops a tolerable rate for the Head Start program, we will assess resource needs to reduce improper payments and unknown payments to a determined tolerable rate, and include in the HHS budget submission if warranted.

Additional programmatic information

HHS annually awards over $10 billion in federal grants to approximately 2,100 funding recipients for the Head Start program. HHS is committed to ensuring the most vulnerable families benefit from enrollment in the Head Start program. To accomplish this, HHS strives to identify strategies to strengthen our monitoring and oversight of the Head Start program to ensure that funds are used for their intended and allowable purposes.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2022 - 09/2023


    Confidence interval:

    90% to <95%


    Margin of error:

    +/-2.6

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Training
    The training corrective actions taken by HHS included working with Head Start funding recipients to provide training through the Regional Technical Assistance Networks and National Centers. The training was in areas such as procurement, source documentation, cost allocation, allowability of cost and other common fiscal challenges that lead to payment errors.
    FY2024 Q4
    Completed
    Change Process
    The change process corrective action taken by HHS was to enhance its oversight to include transaction reviews of Head Start funding recipients. This enhanced oversight resulted in process changes or targeted training where needed based on deficiencies and weaknesses found during the Head Start funding recipients' transaction reviews.
    FY2024 Q4
    Completed
    Training
    HHS plans to provide ongoing training to Head Start funding recipients on the issues that caused payment errors in the Head Start program. Training will be conducted in areas such as procurement, source documentation, cost allocation, allowability of cost and other common fiscal challenges that lead to payment errors. HHS also plans to conduct improper payment training to ensure Head Start funding recipients and sub-recipients understand the purposes, processes, and expectations around payment integrity. In addition, HHS plans to conduct training specific to financial record keeping, sharing comprehensive and practical approaches to financial records management.
    FY2025
    Planned
    Change Process
    HHS Change Process corrective actions planned include engaging expert consultant services to assess approaches to support Head Start funding recipients' processes and HHS internal oversight procedures in the Head Start program. HHS also plans to issue sub-regulatory guidance to clarify fiscal and operational requirements of the Head Start program.
    FY2025
    Planned
    Audit
    HHS will continue to utilize audits as a corrective action in the Head Start program. HHS will continue to review Head Start funding recipients' transactions to determine if expenditures are properly supported. HHS will take recovery actions on payment errors identified through improper payment reviews and audits by the HHS Office of Inspector General, program reviews, and Single Audits.
    FY2025
    Planned
    Predictive Analytics
    HHS plans to utilize Predictive Analytics as a corrective action in the Head Start program. HHS will leverage modern technologies to support Head Start funding recipients by monitoring aspects of recipient financial performance and alerting HHS when a recipient may be moving towards non-compliance with policies and procedures.
    FY2025
    Planned

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M

Overpayments are outside of HHS's control for the Head Start program because pre-approval of individual Head Start funding recipient expenditures is not required. Funds are awarded to Head Start funding recipients who then disburse the funds within the parameters of approved budget categories. Periodically, Head Start funding recipients submit financial reports summarizing the cash transactions made for its federal award. Detail transaction level data is not submitted to HHS pre or post payment unless specifically requested by HHS in special circumstances, and even then, is limited to specific Head Start funding recipients and not across all Head Start funding recipients and/or payments.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $15.72 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $15.72 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Financial $15.72 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $9.19 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $9.19 M

Eligibility element/information needed Eligibility amount
Financial $9.19 M

Mitigation strategies taken Mitigation strategies planned
Training Audit, Change Process, Predictive Analytics, Training

Technically improper payments

The causes of the technically improper payments in the Head Start program were primarily accounting related errors and missing required documentation in the records of the sampled Head Start funding recipients. In several instances, payments were made from the incorrect account at the time of payment for which the allocation was corrected in a subsequent period. Additionally, while the validity of some payments could be determined, all of the required supporting documentation was not maintained in the financial records.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $364.73 M

Mitigation strategies taken Mitigation strategies planned
Training Audit, Training

Additional information

$373.92 M

Unknown Payment Details

Payments are unknown for the Head Start program because at the time of the HHS review, the available documentation was not available or sufficient to determine if the payments were proper or improper. For two large Head Start funding recipients selected for testing, the Head Start funding recipients were unable to provide sufficient documentation at the level of detail necessary to conduct the review. In other instances, the documentation provided was insufficient to support the calculations related to the payments.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $933.24 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
Vendors/Providers $933.24 M HHS is unable to determine the specific documentation that the Head Start funding recipient failed to provide. In some instances, the Head Start funding recipient did not provide transaction level detail to support expenditures therefore, HHS could not determine the nature of the individual expenditures or the documentation required. In all instances, HHS is unable to determine if the payment is proper or improper without the documentation to conclude if the expenditures qualified as an allowable use of funds under the Head Start program.

Mitigation strategies taken Mitigation strategies planned
Training Audit,Change Process,Training

Evaluation of corrective actions

HHS's planned and completed actions address the causes of the Improper Payments and Unknown Payments in the Head Start program because they not only focus on the specific errors identified during the improper payment review, but will also evaluate policies, processes, and procedures that could lead to improper payments. Targeted technical assistance will be provided to Head Start funding recipients to address the underlying causes of the errors. Planned corrective actions will also address not only areas warranting improvement at the Head Start funding recipient level, but also at the HHS level. HHS also plans to monitor the implementation and interim effectiveness of the corrective actions to determine if additional corrective actions are warranted. HHS's planned actions are proportional to the severity of the associated amount and rate of the root causes of errors in the Head Start program as they are based on the root causes of errors at both the recipient and federal level.

HHS's corrective actions for the Head Start program are adequate because they not only focus on the specific errors identified during the improper payment review, but will also evaluate policies, processes, and procedures that could lead to improper payments. Corrective actions will also address not only areas warranting improvement at the Head Start funding recipient level, but also at the HHS level. HHS also plans to monitor the implementation and interim effectiveness of the corrective actions to determine if the corrective actions are adequate and having the desired effect or if additional corrective actions are warranted.

HHS's planned and completed actions are focused on the causes of the Improper Payments and Unknown Payments in the Head Start program because they are based on the specific errors identified during the improper payment review. Targeted technical assistance will be provided to Head Start funding recipients to address the underlying causes of the errors. Further, the corrective actions are focused not only on specific errors identified at the Head Start funding recipient level, but also on policies, procedures, and processes at the Federal level to support Head Start funding recipients.

HHS will effectively implement and prioritize planned actions to focus on the cause of the Improper Payments and Unknown Payments in the Head Start program. HHS will provide targeted technical assistance to Head Start funding recipients to address the causes of the identified errors. HHS will also issue Information Memorandum and Program Instructions as needed to ensure fiscal and program integrity. In addition, HHS will follow-up with individual Head Start funding recipients to ensure that corrective action was taken to address the identified error causes. HHS is also designating an official who will be accountable for the progress of HHS reducing Improper Payments and Unknown Payments in the Head Start program. While HHS cannot immediately determine if the planned corrective actions are reducing Improper Payments and Unknown Payments, HHS plans to monitor the implementation and interim effectiveness of the corrective actions and enhance the corrective actions as deemed necessary.

Future payment integrity outlook

Administration for Children and Families (ACF) - Head Start has established a baseline.

The reduction target is equal to the estimated future Improper Payment and Unknown Payment rate for the Head Start program because the reported Improper Payment and Unknown Payment rate exceeded the statutory threshold. Therefore, HHS is taking aggressive action and set a goal to reduce the Head Start Improper Payment and Unknown Payment rate below the statutory threshold.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $12,170.5 M
Current year +1 estimated future improper payments $893.31 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 7.34 %
Current year +1 estimated future improper payment and unknown payment reduction target 7.34 %

The program's current year improper payment and unknown payment rate of 11.98 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

HHS has not determined a tolerable rate for the Head Start program as this is the second year for calculating and reporting an Improper and Unknown Payment estimate for the Head Start program under a new methodology. The wide variance between the FY 2023 Improper Payments and Unknown Payments rate of 5.10% compared to the FY 2024 Improper Payments and Unknown Payments rate of 11.98% is indicative that HHS does not have sufficient data to determine a tolerable rate for the Head Start program. HHS anticipates determining a tolerable rate in the future once more performance data is available.

HHS has not determined if they have in place what is needed with respect to internal controls, human capital, information systems, and other infrastructure to reduce Improper Payments and Unknown Payments to the tolerable rate for the Head Start program. HHS has not determined a tolerable rate for the Head Start program as this is the second year for calculating and reporting an Improper and Unknown Payment estimate for the Head Start program under a new methodology. HHS anticipates determining a tolerable rate in the future once more performance data is available.

The HHS FY 2025 Justification of Estimates for Appropriations Committees request an increase for the Head Start program to support funding to stabilize their workforce through increased wages and benefits. Qualified staff are leaving Head Start for better paying jobs, including in public school settings and in different sectors such as retail and hospitality. The staffing crisis is due to a confluence of factors, including persistently low and stagnant wages, particularly for frontline staff, lack of comprehensive benefits, and insufficient supports for staff health and wellness. This Budget request provides $543.7 million to account for a full Cost of Living Adjustment to support Head Start programs to keep pace with inflation. The lack of qualified staff is a contributing factor to limited understanding of financial and programmatic policies, processes, and procedures, which leads to an increase in the likelihood of improper and unknown payments.

Additional programmatic information

HHS annually awards over $10 billion in federal grants to approximately 2,100 funding recipients for the Head Start program. HHS is committed to ensuring the most vulnerable families benefit from enrollment in the Head Start program. To accomplish this, HHS strives to identify strategies to strengthen our monitoring and oversight of the Head Start program to ensure that funds are used for their intended and allowable purposes. Based on our planned corrective actions, we do not expect the rate to be over 10% for the Head Start program in FY 2025. HHS is putting a number of mitigation strategies in place to support stronger internal processes to support this goal, including securing consultant services to conduct a review of current processes, enhancing training and technical assistance for grantees, and strengthening current oversight. Since the Improper Payments and Unknown Payments error rate for the Head Start program is based on a one-year look back, HHS believes that the corrective actions implemented in FY 2024 will be reflected in the FY 2025 results.

Accountability for detecting, preventing, and recovering improper payments

HHS evaluates its processes and controls each year in accordance with the requirements of the Office of Management and Budget Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Controls, which includes Appendix C, Requirements for Payment Integrity Improvement. As part of this annual assessment, HHS requires its offices to complete an Internal Control and Risk Management Certification that is signed by a senior member of the applicable office. Further, the HHS Operating Division prepares an assurance statement which represents the HHS Operating Division head's informed judgement as to the overall adequacy and effectiveness of Internal controls within the HHS Operating Division related to operations, reporting, and compliance. In addition, non-federal entities that receive federal funds, including states, local governments, tribes, and non-profit organizations, are subject to audit requirements under the Single Audit Act of 1984, as amended in 1996. The implementing guidance, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, that was in effect during 2023, required Single Audits for nonfederal entities that expend $750,000 or more in federal awards during the nonfederal entity’s fiscal year. With the Office of Management and Budget's April 2024 released revisions to the Uniform Guidance, the threshold increases to $1,000,000 effective October 01, 2024. In addition to the improper payment error rate calculation activities, overpayments are identified and recovered through Single Audits and HHS Office of Inspector General audits. Foreach of the aforementioned activities, recipients are subject to disallowances for any expenditures not made in accordance with program regulations.

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2023 - 09/2024


    Confidence interval:

    90% to <95%


    Margin of error:

    +/-3.59

Causes

The causes of the improper payments and unknown payments in the Head Start program were primarily accounting related errors and missing required documentation in the records of the sampled Head Start funding recipients. In several instances, payments were made from the incorrect account at the time of payment for which the allocation was corrected in a subsequent period. Additionally, while the validity of some payments could be determined, all of the required supporting documentation was not provided at the time of the review.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.0 M
Amount of overpayments outside the agency's control $2.69 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $2.69 M

Underpayment root cause Underpayment amount
Amount of underpayments $5.47 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $5.47 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $188.38 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $1,010.33 M

Prevention

In collaboration with grant staff, HHS has initiated and planned several actions to correct the root causes of improper and unknown payments and to prevent future occurrences. HHS has developed a Data Transaction Validator, also known as the Improper Payment Data Scanner, which will immediately notify recipients of discrepancies in fiscal transaction data; this tool is complete and scheduled for use during the FY2026 review cycle. HHS will also launch the National Center on Program Management & Quality Assurance in FY2026, focusing on strengthening fiscal and management capacity among Head Start recipients to address the underlying causes of improper payments and reinforce internal controls. Additionally, in FY2026, HHS will continue to utilize modern technologies to monitor recipient financial performance and alert HHS when recipients demonstrate high-risk drawdown behaviors.

Beginning in Spring 2026, HHS will deploy targeted technical assistance for the smallest recipients with the highest improper payment rates. This will begin with a fiscal institute and will be supported by ongoing use of monitoring and regional data to identify risk factors requiring intervention through the Fiscal Consultants Initiative. HHS is implementing several recommendations from the Office of Head Start (OHS) Fiscal Assessment, including development of a fiscal toolkit and a risk assessment tool, to mitigate fraud, waste, and abuse. Where recipients maintain inaccurate or insufficient fiscal documentation, HHS will issue disallowances as appropriate to ensure accountability and compliance.

To support long-term prevention efforts, fiscal transaction reviews have been formally integrated into ongoing monitoring activities through the FY2026 OHS Monitoring Protocol, and HHS is developing internal policies for disallowance tracking and retroactive testing to identify previously unknown improper payments. Improper payment review methods will also be incorporated into additional monitoring mechanisms to ensure consistent oversight. In FY2026, HHS will pilot a Fiscal Risk Assessment tool for all new five-year grant recipients, beginning with smallest recipients with the highest improper payment rates in the last two review cycles, enabling early identification of fiscal risks.

Finally, HHS will continue the implementation and monitoring of Defend the Spend notifications to help ensure proper drawdown approvals and strengthen real-time fiscal oversight. Collectively, these actions—initiated or scheduled for completion throughout FY2026—provide a comprehensive, preventative, and corrective framework to reduce improper and unknown payments across HHS programs.
HHS will closely monitor how corrective actions are implemented and assess their interim effectiveness. This monitoring will help determine whether further steps are needed to ensure stronger controls. The approach is intended to be responsive and adaptable as results are evaluated over time. Importantly, HHS’s corrective actions are proportional to the severity and rate of errors identified. They are also carefully aligned with the root causes of errors at both the federal and recipient levels to strengthen overall program integrity.

HHS’s planned and completed actions to address Improper and Unknown Payments in the Head Start program are based on the specific errors identified during the improper payment review. Targeted technical assistance will be provided to funding recipients to address the underlying causes of these errors. Corrective actions will also focus on strengthening federal-level policies, processes, and procedures that support recipients. HHS will monitor the implementation and interim effectiveness of these actions to determine whether they are adequate or if further steps are needed.

To ensure accountability, HHS will issue Information Memoranda and Program Instructions as necessary and will follow up directly with funding recipients to confirm corrective action has been taken. An official has been designated to oversee progress in reducing Improper and Unknown Payments across the program. While the impact of corrective actions cannot be immediately measured, HHS will evaluate their effectiveness over time and adjust as needed. These actions reflect a coordinated approach at both the federal and recipient levels to strengthen fiscal integrity and reduce future errors.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training
Underpayments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training
Technically improper payments Audit, Change Process, Cross Enterprise Sharing, Training Audit, Change Process, Cross Enterprise Sharing, Training
Unknown payments Audit,Change Process,Cross Enterprise Sharing,Training Audit,Change Process,Cross Enterprise Sharing,Training

Eligibility element/information needed Description of the eligbility element/information
Financial The financial position or status of a beneficiary, recipient, or their family

Additional information

In addition to the actions already described, the Head Start program continues to strengthen its overall payment integrity posture by fostering a culture of accountability, transparency, and continuous improvement. Head Start’s long-standing emphasis on fiscal responsibility is reflected in its integrated system of financial oversight, which combines recipient self-monitoring, federal monitoring reviews, and periodic independent audits. These layers of oversight help ensure that federal funds are used effectively to support children and families, while also enabling HHS to identify patterns, share best practices, and target assistance to recipients that need additional support.
Another important element of the program’s payment integrity story is its investment in building recipient capacity. Many Head Start recipients operate in underserved communities with limited administrative resources, and HHS works to mitigate these challenges by offering ongoing training, technical assistance, and tools designed to strengthen local financial systems. These capacity-building efforts not only help reduce improper and unknown payments but also enhance long-term organizational stability and fiscal stewardship among recipients.
Finally, Head Start’s commitment to continuous learning and improvement extends to the development of new methodologies for estimating improper and unknown payments. As the program now enters its second year under a revised methodology, HHS is using these early results to refine processes, improve data quality, and enhance future reporting. This iterative approach ensures that the agency’s understanding of payment risks evolves over time and supports informed decision-making. Collectively, these efforts underscore Head Start’s dedication to protecting taxpayer resources while maintaining its mission to promote school readiness and support the well-being of children and families.

Reduction target

9.87 %

HHS has not yet assessed whether its current internal controls, human capital resources, information systems, and related infrastructure are sufficient to reduce improper and unknown payments in the Head Start program to a level where the cost of further reductions would outweigh the benefits. Because this is only the second year of reporting improper and unknown payment estimates under the new methodology, HHS has not established a tolerable error rate against which to measure the adequacy of its existing infrastructure. As additional years of performance data become available, HHS expects to define a tolerable rate and conduct a more informed evaluation of whether current systems and capacities are adequate. This future assessment will help determine whether further investments are warranted or whether existing controls are appropriately cost-effective in managing improper and unknown payments.

In the most recent budget submission, HHS requested resources that support the agency’s broader effort to strengthen payment integrity within the Head Start program. The FY 2026 Justification of Estimates includes reform principles focused on improving efficiency and modernizing program operations, which indirectly enhance the agency’s capacity to prevent and detect improper and unknown payments. By maintaining the $21 million set-aside to supplement federal administrative costs and evaluation activities, the budget request ensures continued support for oversight functions, data analysis, and financial management systems that contribute to payment integrity. These requested resources help sustain the infrastructure needed to monitor program performance and ensure that federal funds are used appropriately and effectively.

HHS employs a multilayered approach to ensure that executive managers, program officials, and, where appropriate, state and local governments are held accountable for meeting improper payment reduction goals. Each year, HHS conducts a comprehensive assessment of internal controls in accordance with OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Controls, including Appendix C, which specifically addresses payment integrity improvement. As part of this process, senior officials in each HHS office must complete and sign an Internal Control and Risk Management Certification, affirming their responsibility for maintaining effective controls that prevent, detect, and reduce improper payments. Operating Divisions also submit annual assurance statements, which require leadership to evaluate and attest to the adequacy of internal controls over operations, financial reporting, and compliance—including controls related to payment accuracy.
Beyond federal leadership accountability, HHS ensures that states, local governments, tribes, and nonprofit organizations receiving federal funds meet accountability standards through the Single Audit process. Entities that expend at least $1,000,000 in federal awards are required to undergo an annual Single Audit. These audits evaluate if recipients have effective controls in place and if federal funds, including Head Start grants, are spent in accordance with applicable requirements. Findings from Single Audits and HHS Office of Inspector General (OIG) audits are used to identify overpayments and may result in the repayment of disallowed costs, complementing enforcement mechanisms for improper payment recovery.
HHS further reinforces accountability by using audit results, monitoring activities, and internal reviews to guide corrective action expectations for both internal leadership and external recipients. Executive managers and program offices are expected to address identified weaknesses promptly, and failure to do so can influence performance evaluations and oversight decisions. Collectively, these steps create a robust framework that emphasizes oversight, prevention, and timely recovery of overpayments, ensuring all levels of program administration are responsible for maintaining strong payment integrity.

$193.85 M