During grantee budget years 1992, 1993, and 1994—a period of intense growth—about two-thirds of the 1,197 grantees had unspent balances at the end of each budget year. Larger Proportion of Carryover Funds Added to Grantee Awards in Grantee Budget Year 1994

Unspent balances occur when a grantee’s total award differs from the amount the grantee spent during its budget year. In grantee budget year 1994, we found that about three-fourths of carryover funding was added to awards as TOA, and the remainder was offset as NOA. For example, for both grantee budget years 1993 and 1994, we found that about 90 percent of carryover funds added to grantee awards was 1 year old, and the remainder was from 2 to 3 years old; and from about 70 to 90 percent of carryover funds offsetting grantee awards was from 1 to 2 years old, and the remainder was 3 or more years old. On the basis of our review of Head Start grantee files, the intended use of a large proportion of Head Start carryover funds from grantee budget years 1993 and 1994 combined was to be used for expanding program enrollments and renovating or buying facilities. On the basis of Head Start files, we determined in most cases that these unspent balances resulted from (1) small differences between grantees’ budget estimates and actual expenditures; (2) grantee problems renovating or constructing facilities, which delayed planned expenditures; and (3) the receipt of supplemental funding by grantees late in their budget year, which made it difficult for grantees to spend their funds before year’s end. Of the 12 Head Start regions, 2 are operated from the Department of Health and Human Services headquarters in Washington, D.C.—1 for Native Americans and the other for migrant workers.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the: (1) amount of Head Start funding unspent by program grantees at the end of budget years 1992 to 1994 and the reasons for these unspent funds; (2) proportion of carryover funds that were added to grantee awards and that are 1 or more budget years old; and (3) grantees' intended use of carryover funds.

What GAO Found

GAO found that: (1) about two-thirds of the grantees reviewed had unspent balances of $69,000 to $177,000 during budget years 1992 through 1994; (2) most of the unspent balances resulted from small differences between grantees' budget estimates and actual expenditures, problems related to building Head Start centers, and grantees' inability to spend their awards because of the Department of Health and Human Services (HHS) disbursement problems; (3) one-half of all the carryover funds in budget year 1993 and about three-fourths of the carryover funds in budget year 1994 were added to grantee awards in subsequent budget years; (4) about one-half and one-fourth of carryover funds in grantee budget years 1993 and 1994 offset grantee awards; (5) Head Start offset 70 to 90 percent of its grantee awards with carryover funds within 2 budget years of an unspent balance; and (6) carryover funds added to grantee awards were used to expand Head Start enrollments, build new facilities, purchase capital equipment and train staff.