The Head Start program provides child development services primarily to low-income families and their children. Federal law allows up to 10 percent of families to have incomes above 130 percent of the poverty line--GAO refers to them as over-income families. Families with incomes below 130 percent of the poverty line, or that meet certain other criteria, are referred to as under-income families. Nearly 1 million children a year participate in Head Start, and the American Recovery and Reinvestment Act provided an additional $2.1 billion. GAO received hotline tips alleging fraud by grantees. In response, GAO investigated the allegations, conducted undercover tests to determine if other centers were committing fraud, and documented instances where potentially eligible children were put on Head Start wait lists. On May 18, 2010 GAO testified on the preliminary results of the ongoing investigation. This report reiterates the findings disclosed in GAO's May testimony, and discusses new findings related to specific fraud allegations at two Head Start grantees. Since GAO's May testimony, HHS has taken a number of actions to address identified weaknesses, such as implementing a fraud hotline. HHS also indicated that it has moved expeditiously to begin a rule making process to strengthen the regulations on the eligibility verification process.
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