On August 28, 2020, the Office of Head Start (OHS) published a Final Rule, which updated the Designation Renewal System (DRS). Originally established in 2011, the DRS, which is comprised of seven conditions, holds Head Start and Early Head Start agencies accountable for delivering high-quality and comprehensive services while meeting programmatic and financial requirements.

The Final Rule updated three of the seven DRS conditions, including the (1) deficiency condition, (2) condition related to the Classroom Assessment Scoring System (CLASS®), and (3) fiscal condition related to audit findings.

1. Removes Single Deficiency Condition

DRS no longer requires competition for grantees with a single deficiency during their respective project period and instead requires re-competition in the event a program receives two deficiencies during the five-year grant cycle.

2. Eliminates Moving Target CLASS® Condition

According to the OHS, “the aspect of the CLASS® condition that requires grantees scoring in the lowest 10 percent of any of the three domains of the tool to compete creates a moving target for grantees.” As a result, the Final Rule eliminates the bottom ten percent threshold and establishes fixed quality thresholds while raising the bar for competitive thresholds (previously known as minimum thresholds) for each domain of the CLASS®. The thresholds are designed to support CLASS® as a quality improvement tool in the DRS.

3. Adds new Fiscal Condition

The Final Rule added a second fiscal provision, which provides that any grantee that has a total of two or more audit findings of material weakness or questioned costs related to their Head Start funds in audits for a financial period within the current project period will be required to compete.

So, what does this mean for your program?

These new conditions will become effective on October 27, 2020. Based on our interpretation, if your program would have been subject to re-competition based on a single deficiency during the current five-year grant cycle, you may be able to qualify for a new five-year cycle without competition. Also, there will be no analysis based on the lowest ten percent of CLASS® scores going forward. In addition, if you have two or more audit findings of material weakness or questioned costs prior to October 27, 2020, you will not be subject to re-competition on that basis.

The OHS has published guidance on these updates and will be hosting a webinar to address these updates on Monday, August 31, 2020, at 1:00 pm ET. Please see the following link to register.