GAO Report Recommends Changes in Head Start Funding Formula

A study published by the U.S. Government Accountability Office (GAO) earlier this year found that Head Start availability varies widely by state and county and doesn’t closely align with child poverty. Almost all Head Start funding is allocated according to a congressionally mandated formula that doesn’t account for changes in state population or poverty rates. As a result, Head Start has less flexibility to shift funding to areas most in need. Jackie Nowicki, a Director in GAO’s Education, Workforce, and Income Security team, spoke with Spotlight recently about the report. The transcript of that conversation has been lightly edited for length and clarity.

Why don’t we start with what got you interested in this topic? What were you looking to do with Head Start?

Great question. So, as with almost all of GAO’s work, we undertake work either in response to requests that we get from congressional leadership or committees or there are mandates or directives written into law or committee reports. In this case, there was a directive in a committee report for GAO to review how Head Start resources are distributed across the nation and to make any recommendations about how to better align funding with need.

For this particular study, we were specifically looking at how Head Start resources align geographically with child poverty. We looked at the statutory provisions that support or don’t support the alignment of funding with child poverty. And we looked at how the Office of Head Start uses the authority that it has to better align resources with need.

And I want to get into how that those resources are allocated, but why don’t we first talk about what you found—which was essentially that these resources are not being allocated as well as they could be?

I’d say the bottom-line finding is that Head Start availability varies widely by state and by county and does not closely align with child poverty. Almost all Head Start funding is allocated, as you probably know, through a congressionally mandated formula and what we found is that that formula does not account for changes in state population or poverty rates within states. So as a result, there’s less flexibility to shift funding to areas in need as population and poverty changes over time.

How does that formula work?

Essentially, each grantee receives the same amount of funding that they received in the previous year, so it’s an additive formula. Congress may appropriate additional funding for cost-of-living adjustments or for quality improvements, so there’s additional funding year to year around the edges. But essentially each grantee within each state gets a certain amount of funding, which means the state level of funding over time just kind of gradually increases and doesn’t necessarily fluctuate based off of population or poverty changes.

And how are you suggesting Congress change that?

What we suggested to Congress was that they should review and revise and basically make sure that the funding formula is still meeting congressional priorities. We explained all the ways that it does not appear to be targeting shifts in poverty and basically said Congress should take a look at the formula and if it is not meeting their intent or needs, that they should revise it. We didn’t specify specifically how to change it. We just explained it’s not really designed to keep up with changes in either poverty or population.

And did you find this is impacting rural states more urban areas?

I don’t know that we looked at it by urbanicity, but we did find that there was a wide variation across states in general. So, for example, the number of Head Start seats for every 100 young children in poverty ranged from nine seats in Nevada to 53 in Oregon, based on 2022 data. It was just such a high degree of variability.

And has this allocation formula been something that has been the topic of conversation in Head Start circles for a while?

That’s a complicated question. Obviously, it’s a topic of conversation within Congress because they directed GAO to take a look at it. From the stakeholders that we talked to, people are paying a lot of attention to the fact that there are not currently enough Head Start resources to serve everyone. It’s a bit like pie. You can change how you divide it, but there’s always going to be winners and losers. As an agency that pays attention to how federal resources, which are always scarce, are allocated, GAO would make the point that because resources are limited, it’s really important to target them as effectively as you can. While people in the Head Start community don’t disagree with that, they also recognize that when you have money that’s distributed a certain way and you start shifting it, you’re going to see winners and losers, and there isn’t enough money to serve everybody. It becomes a nuanced conversation depending on who you’re talking to.

What’s been the response from Congress thus far?

We have not heard a lot other than from the Appropriations committees, which is where this mandate came from. I think they learned some things they perhaps didn’t know before about the funding formula and as always, they appreciated the work and the robustness of the analysis.

Is there anything else about the report that we should note?

There was a story around expansion funding that surprised me. So, there’s the main annual funding formula, but there’s also this sort of expansion funding where periodically Congress provides additional money to help expand Head Start’s reach. And for that formula, the provisions in law are intended to target expansion funds to states that have relatively low access. But what we found was that if that formula was applied today, it would result in nearly all states qualifying to receive that funding. That was a particular point of interest for me personally, that a portion of the grant that was meant to expand access in areas that had low access really was not going to achieve that goal.