December 8, 2003 Lauren Wittenburg Office of Information and Regulatory Affairs Office of Management and Budget 725 17th Street NW Washington, DC 20503 Re: Proposed Information Collection, Administration for Children and Families, “Survey of Salaries and Other Compensation of Head Start Grantees and Delegate Agencies Nationwide”, 68 Fed. Reg. 64,351 (November 13, 2003) Dear Ms. Wittenburg, OMB Watch, a national nonprofit organization that promotes government accountability and civic participation, is submitting these comments regarding the proposed “emergency” information collection from Head Start grantees. The Department of Health and Human Services (HHS) has asked the Office of Information and Regulatory Affairs for clearance to proceed with a national survey of Head Start grantees that asks for three years of data on compensation and travel costs of Executive Directors and Head Start Directors. HHS estimates the survey will take each Head Start grantee nine hours to complete. In the Justification section of its Clearance Package HHS asserts the survey is necessary for it to respond to a request from Rep. John Boehner, Chair of the House Committee on Education and the Workforce, and Rep. Michael Castle, Chair of the Subcommittee on Education Reform. The Boehner/Castle letter states their concern about possible misuse of Head Start funds, and asks for a national review of Head Start financial management. It is important to note that the Boehner/Castle letter says, “We anticipate that the information needed for such a review will be readily accessible,” and asks for a detailed categorical analysis on how Head Start funds are spent, including: ? the percentage of Head Start funds spent on administrative costs ? the average program administrative expense, and ? how administrative expenses are used. The letter goes on to request a list of the 25 highest paid Head Start executives, as well as the amount paid by the program towards their salaries and benefits “if the data are available.” (emphasis added) The letter also seeks available information on the 25 grantees that spend the most on travel for meetings and conferences. The proposed survey is unnecessary because it seeks information that either is already available to HHS or exceeds the request from Reps. Boehner and Castle. It also contradicts the provisions of the Paperwork Reduction Act, and even if it didn't, the proposed survey does not qualify as an “emergency” as HHS claims. As a result, we urge the Office of Information and Regulatory Affairs to deny HHS’s request. We support and promote reasonable government oversight of its grantees, since this protects the public against waste of taxpayer dollars. We also support public disclosure of information about programs funded by the government, since this provides the public with information about how its resources are being put to work. However, we oppose unreasonable and unnecessary reporting burdens that divert resources from the primary mission of programs -- in this case, providing services to children in need. The HHS Clearance Package cites the ongoing Head Start reauthorization process as justification for proceeding with the survey on an expedited basis. We are concerned that the survey may be motivated more by a desire to harass or intimidate Head Start grantees, which are vigorously fighting the administration’s proposals for fundamental changes in the program, than to respond to an inquiry from members of Congress. HHS could respond to the Congressional inquiry with information it either already has, or to which it has ready access. Instead, it has proposed a survey that goes well beyond the request from Congress. This should not be allowed. Moreover, if Congress is concerned about the actions of specific grantees, it can use the power of the Comptroller General at the General Accounting Office to investigate allegations of abuse. Similarly, HHS can pursue through its Inspector General similar allegations. Specific responses to the request and Justification provided by HHS are below: There Is No Emergency HHS’s justification statement does not meet the standards necessary for approval of emergency information collection under 44 U.S.C. 3507(j)(1)(A)(B) of the Paperwork Reduction Act. It merely states that Reps. Boehner and Castle have made a request, and that the reauthorization process is ongoing. Before the normal process of review and approval can be waived, however, much more is required than just a request from two Congressmen. The request, for example, fails to demonstrate that a deadline will be missed without emergency review; the requested information is essential to the mission of the agency; public harm will result if normal clearance procedures are used; or that these procedures would disrupt the information collection. It is worth noting that the Boehner/Castle letter relies solely upon an August 28, 2003 San Antonio Express-News opinion column regarding Parent/Child Inc., which supervises the San Antonio Head Start program. The column references Parent/Child Inc. CEO Blanche Russ-Glover, stating that she “…has an annual salary of $205,640… and four employees each with an annual income exceeding $100,000.” First, HHS did not demonstrate that it conducted a basic assessment of the issues presented by the Boehner/Castle letter. A quick online search of the Internal Revenue Service’s Form 990 returns from Parent/Child Inc. indicates Russ-Glover’s salary was last reported at $180,803 for the fiscal year ending January 31, 2002. Along with various benefits, her total compensation was $199,475 for this period. It is quite possible that total compensation is currently $205,640. Year ending: Jan. 31, 2001 Jan. 31, 2002 Wages 174,184 180,803 Retirement 15,676 16,272 Car Allowance 2,400 2,400 TOTAL 192,260 199,475 Source: www.guidestar.org Omitted from both the Boehner/Castle letter and the HHS request is the fact that Parent/Child Inc. is a large nonprofit organization with expenses of $45.5 million for the fiscal year ending January 31, 2002. To put the this salary in perspective, we compared it to that of other nonprofits in Texas, using data contained in IRS Form 990, available from Guidestar, a free nonprofit-hosted service. Sample Executive Director Salaries for Nonprofits in Texas Organization Budget/Expenses Ex. Dir. Salary Benefits/Other Parent/Child, Inc. (2002) $45.5 million $180,803 $18,672 Houston Area Boy Scouts Council (2001) $12.2 million $258,334 $24,963 United Way of San Antonio (2002) $36.7 million $172,388 $44,059 San Antonio Livestock Exposition (2002) $14.2 million $230,000 $9,600 The information suggests that Russ-Glover’s salary is in line with nonprofits of comparable size. United Way of San Antonio, for example, though 24% smaller that Parent/Child Inc., pays its president 8.5% more than Russ-Glover. Management of a $45 million operation requires significant skills that demand market-based compensation. Anything less would result in appropriate public protestations about a lack of accountability. This information raises two concerns about the HHS proposal. First, where is the “emergency,” and second, why did HHS not propose to put compensation in the context of organizational size. The Proposed Information Collection Exceeds the Request From Congress The proposed survey form attached to the Clearance Package reaches far beyond the scope of the Boehner/Castle request. The form states that salary and benefit information “will be reported for the three budget years prior to the current year for each of the five highest-paid staff members.” (emphasis not added) The letter from Congress acknowledges that HHS, rather than asking for three years of information, conducts a triennial evaluation of each grantee-- the implication being that the agency should already have that information. The proposed survey seeks details on Executive Director and Head Start Director compensation that goes beyond what is reported to the IRS or HHS. The survey asks for total benefits paid across 16 different subcategories, including travel information for the Executive Director, Head Start Director, board members and consultants. The Boehner/Castle letter, by comparison, only requests total travel expenses for the top 25 Head Start programs, if the data is available, and not broken down by individual employee. It does not ask for any survey at all, much less an extensive one. Instead it simply states, “We anticipate that the information needed for such a review will be readily accessible…” The letter only requests the salary and benefit data, “if the data are available.” Head Start programs should not have to bear the burden of time and expense to respond to this survey, since the information sought clearly exceeds this request. Data is Available Without the Survey HHS states that the “survey process is designed to utilize existing data sources of program audits and reports," but does not adequately explain how this will occur. If existing data is indeed being utilized, why must new data be collected? The data for administrative expenses as well as salary information is already available in the grantee budget (Form SF-424). Head Start programs, as well as other federal grantees, are routinely audited. If federal funds are being abused, there already is a procedure to determine such problems. Nonprofit organizations are also subject to a 1996 federal law (section 4958 of the Taxpayer Bill of Rights). Under this "intermediate sanctions" provision, nonprofit executives must not be paid an amount that is inconsistent with other comparable nonprofits. There must be evidence of unreasonable compensation before penalties can be levied. Nonprofit executive compensation is already publicly available through the IRS Form 990, and widely disclosed through GuideStar. Why should these efforts be duplicated? Administrative costs are a key item of interest in the Boehner/Castle letter, which notes, “administrative expenses are part of the reporting requirements that are mandated by Congress and reviewed by the Department…” A random sample of Head Start programs could be audited, for example, to determine whether there is abuse of administrative costs or excessive executive compensation. Additional public information about Head Start salaries is available. On November 25, the National Head Start Association released results of its own salary survey that included a downloadable file listing salaries for every Head Start position in every Head Start program. The information is available at http://www.nhsa.org. NHSA’s analysis shows that 99 percent of Head Start Directors make less than $100,000, with the average salary of $63,114 for 2000/2001, which is lower than the $69,000 average paid to elementary school principals. They also note that all Head Start salaries, including executive directors, are pre-approved by HHS. Since HHS and HHS already have this information, there is no need to survey Head Start grantees to get it again. Following a November 26 request by Reps. Boehner and Castle; Sen. Judd Greg, Chair of the Senate Committee on Health, Education, Labor and Pensions; and Sen. Lamar Alexander, Chair of the Subcommittee on Children, Families, the General Accounting Office (GAO) launched an examination of Head Start program monitoring and financial controls. The examination will include financial controls and program monitoring practices, and will help the committees in their reauthorization of the Head Start program. This makes the detailed survey proposed by HHS unnecessary. Unnecessary Cost to Head Start Programs and the Public The cost estimates in the Clearance Package appear to be out of line. How did HHS calculate 8.5 burden hours to retrieve and submit the Form 990, SF-424, and PIR? How was the estimate of 30 minutes to complete the web-based survey form, and $13 per hour to complete the survey, calculated? A senior level financial expert would be required to obtain the type of information HHS seeks, as well as access to data sources other than Form 990 or SF-424, since the survey goes beyond what they provide or what has been requested. Retrieving the survey information may not be as simple as HHS thinks. The grant year may or may not coincide with the grantee’s fiscal year, or the three budget years prior to the grant year. The 16 benefit categories in the survey may not coincide with the categories used by a grantee’s accountants. Individual employees do not necessarily track travel information. As a result, answering the survey questions is likely to take considerably more time than projected, and require services of management or outside expertise-- such as a consultant or certified public accountant. This will greatly increase the cost of responding to the survey. HHS should use their own resources to analyze the data already collected from grantees. It is clear HHS has the resources necessary to respond to the Boehner/Castle letter. The clearance package says that about 95 percent of Head Start programs submit annual Program Information Reports electronically, and all use a the web-based Head Start National Reporting System to report descriptive data. In 1998 HHS conducted a study of Head Start employee benefits, using a representative sample of all Head Start programs. (See HHS Log No. ACYF-IM-HS-98-13.) The sample consisted of 360 programs and employees, not the entire universe of Head Start programs. The study included overview information on Head Start salaries, showing an average Head Start Director salary of $42,728. This demonstrates that HHS has the resources and expertise to provide the kind of information requested without resorting to an expensive and burdensome survey of the entire Head Start community. Thus, there are simpler, cheaper alternatives within the department's reach. The Survey is an Unnecessary Burden on Grantees HHS should state very clearly that the time spent in completing this burdensome survey is billable to Head Start grants. It should also provide grant supplements to cover the cost, so that program resources are not diverted from the core mission of Head Start -- helping young children. Implementation and Privacy Problems Part 4 of the Clearance Package says, “This survey process is designed to utilize existing data sources of program audits and reports. The primary source for responding to the data collection will be IRS Form 990.” However, Form 990 does not necessarily contain the information sought in the survey. For example, HHS says all Head Start grantees will be asked to submit the salary, benefit and compensation data for the program’s five highest paid staff (although this question does not appear on the draft survey). Schedule A, Part I of Form 990 requests compensation information for the “Five Highest Paid Employees Other Than Officers, Directors, and Trustees” that were reported in Part V of the main Form that made more than $50,000. However, if one staff member makes $60,000 and all other staff are below $50,000, there would only be one person reported on Schedule A. Similarly it is possible that the five highest paid individuals in the organization are not all working on Head Start issues, particularly if the organization also provides other services (e.g., energy assistance). Part V of the Form 990 requests compensation information for “officers, directors, trustees, and key employees.” Key employees include those having responsibilities similar to officers, directors and trustees. It includes the chief management and administrative officials, but “does not include the heads of separate departments or smaller units within an organization... These persons are managers within their specific areas but not for the organization as a whole and, therefore, are not key employees.” (pg. 26, Specific Instructions for Form 990) Thus, if the organization receiving the grant to provide Head Start also provides other services, it is quite probable that the Head Start director will not be listed in Part V. HHS claims the Form 990 reports “aggregate compensation for any officer, director, trustee, or key employee receiving more than $100,000 from the organization and related organizations (item 75).” This is not accurate. Item 75 requires the respondent to answer yes or no as to whether part of the compensation for “any officer, director, trustee, or key employee” receiving more than $100,000 came from related organizations. If yes, then the respondent is to provide an attachment with the names of people, the compensation, and information about the related organization. The IRS instructions are very specific: it applies to officers, directors, trustee or key employees with total compensation of more than $100,000 “from your organization and all related organizations and more than $10,000 of this compensation was provided by the related organization.” (pg. 26, Specific Instructions for Form 990; emphasis added) Any information collected beyond Form 990, Part V or Schedule A is not public information. Thus, confidentiality of the information must be assured. Instead, HHS inaccurately claims (p. 6) that the “proposed survey includes IRS information that is already classified as ‘open to the public’ in Form 990…” HHS continues (p. 7), “Although an individual’s income and income sources may be perceived as sensitive, the information being requested, collected and reviewed is already made public under IRS [rules]…. This includes public availability of income information for individuals earning $100,000 or more from one or more sources.” This, too, is inaccurate. HHS asks for information about costs associated with out-of-town meetings and conference as well as other training and educational costs. HHS claims that such information is “reported in IRS Form 990.” (p. 3) This is inaccurate, particularly since HHS is seeking expenses associated with certain types of employees. HHS does not define the terms used in its proposed information collection. For example, on question 5, HHS asks for “travel to and participation in out-of-town meetings and conferences by the senior administrative staff, board members and consultants…” There is no definition of terms such as “senior administrative staff.” Is this information about meetings and conferences solely about Head Start or paid for with Head Start funds? Why would HHS want to know about going to meetings and conferences not paid for with Head Start funds? The HHS proposed information collection is highly selective in answering the Boehner/Castle issues. For example, Boehner/Castle asked for “the percentage of Federal Head Start funds spent on administrative expenses, the average dollar amount, and how these expenses are used.” Yet the HHS survey only asks for “what percent were administrative costs” for the last three years. It does not obtain dollar amounts or how these expenses were used. The questions asked on the HHS proposed information collection go far beyond information provided on the Form 990. For example, HHS seeks information for the past three years about specific benefits, such as health insurance, disability insurance, vacation, and sick leave. None of this detail is available through the Form 990. Moreover, none of this information is currently publicly disclosed. Finally, it is not clear what authority HHS has to collect such information outside the scope of an audit. Context to Request The request from Reps. Boehner and Castle does not provide sufficient justification for the proposed information collection, even without an emergency. So why is HHS proposing an intrusive, costly survey? Why distract the grantees from doing the work they should be doing? There is no obvious answer to these questions. The larger context for the information request should be noted. The Head Start program is in the midst of a highly contentious and controversial reauthorization process. A major study assessing the effectiveness of the Head Start “whole child” approach is underway, but the results will not be available until 2006. In the meantime, the administration is proposing a major overhaul of the program that has been vigorously opposed by Head Start advocates, including many local programs. The advocacy lead by the National Head Start Association has included press conferences, polls, lobbying, a special website (http://www.saveheaddstart.org), a virtual march on Capitol Hill, sign on letters, a full page ad in the New York Times co-sponsored by Business Leaders for Sensible Priorities, and over 100,000 emails to Congress. In May, the Head Start Bureau sent a letter to grantees that contained confusing and inaccurate information about the rules for advocacy by federal grantees. This resulted in a lawsuit filed against HHS by the National Head Start Association. That case resulted in a corrected letter sent by HHS. It is to be hoped that HHS is not using the request from Reps. Boehner and Castle as a wedge to impose this highly burdensome, expensive, unnecessary and intrusive survey on Head Start grantees as part of this ongoing reauthorization battle. Conclusion OIRA should deny this request for emergency clearance and direct HHS to use existing data to respond to the request from Congress. Yours truly, Kay Guinane Counsel and Manager Community Education Center