The Office of Head Start (OHS) announced in the Federal Register a final rule updating the Designation Renewal System (DRS). In the Improving Head Start for School Readiness Act of 2007, Congress required the U.S. Department of Health and Human Services (HHS) to both establish a DRS and to periodically review the system. HHS first established the DRS through a final rule in 2011, and has been regularly analyzing data on the implementation of the system and on the grantees required to compete. OHS is confident the DRS has driven increases in the quality of Head Start services, but believes improvements can be made to the system.

This final rule includes revisions to three of the seven conditions of the DRS: the deficiency condition, the condition related to the Classroom Assessment Scoring System (CLASS^®), and the fiscal condition related to audit findings. These changes will ensure OHS identifies those grantees where competition is the most warranted and more effectively holds grantees accountable, while also making the DRS more transparent.

Key Changes from the Prior DRS Rule

Deficiency Condition

Under this final rule, the DRS no longer requires competition for grantees with a single deficiency during their project period. While all deficiencies are serious and substantial or systemic, changing the condition to require competition if a grantee receives two deficiencies during the project period better reflects significant quality failures of an agency. Additionally, the change will appropriately put the focus on grantees having systems in place to ensure health and safety incidents do not occur or are quickly identified and rectified and on financial and human resource systems that support ongoing, high-quality operations.

CLASS^® Condition

For the CLASS^® condition, the final rule facilitates the use of CLASS^® as a quality improvement tool and promotes greater transparency for grantees. To achieve this, the final rule removes the lowest 10% criterion, while simultaneously establishing quality thresholds and raising the competitive thresholds (formerly minimum thresholds) for each domain of the CLASS^®.

The quality thresholds are as follows: 6 for Emotional Support, 6 for Classroom Organization, and 3 for Instructional Support. These new thresholds represent the expectations of OHS for the quality of the learning environment in every Head Start program. These thresholds do not relate to competition, but instead reflect a quality improvement focus in teacher-child interactions, with support from OHS. For any grantee with a score below one or more of the quality thresholds, OHS will provide support for quality improvement. OHS will help ensure the grantee’s coordinated approach to training and professional development is targeting those areas of teaching practices and teacher-child interactions that most need improvements. The establishment of quality thresholds is intended to build on existing program quality improvement efforts to enhance classroom interactions beyond any set floor and will include more intentional OHS support for such efforts through training and technical assistance supports across a variety of platforms.

The final rule also sets more rigorous competitive thresholds for all three CLASS^® domains and represents the floor for quality in terms of teacher-child interactions. Any grantee with a CLASS^® score below one or more of the competitive thresholds will be designated for competition. Specifically, the competitive threshold for Classroom Organization is raised from 3 to 5 and Emotional Support is raised from 4 to 5. These competitive thresholds increase the minimum standard of quality and set the expectation for programs to work toward moving into the high-quality range. Because Instructional Support is a domain in which grantees tend to score lower, but is nonetheless important for ensuring high-quality teacher-child interactions, we take a graduated approach to increasing the threshold for this domain. More specifically, the competitive threshold for Instructional Support is initially raised from 2 to an interim threshold of 2.3, for all CLASS^® reviews conducted through July 31, 2025. For all CLASS^® reviews conducted on or after August 1, 2025, the competitive threshold for this domain raises to 2.5. This approach recognizes where most grantees currently score in this domain and will allow sufficient time for grantees to make necessary quality improvements and gradually move to higher quality.

Fiscal Condition

For the fiscal condition, the final rule retains the requirement to compete if a going concern is identified in an audit report. It also adds a second criterion that requires competition if a grantee has a total of two or more audit findings of material weakness or questioned costs related to their Head Start funds in audit reports for a financial period within the current project period. This change results in a fiscal condition that better detects risks to fiscal management and oversight.

Effective Date

The new DRS conditions will be effective on November 9, 2020. The prior DRS conditions will apply to all programs until the effective date of this final rule. In general, grantee performance before the effective date of the final rule is subject to the prior DRS conditions and grantee performance after the effective date is subject to the revised DRS conditions. There will be no retroactive implementation of the revised conditions, to ensure grantees are not designated for competition based a condition on which they did not know they would be judged.

For all grantees that have been designated for competition under the prior conditions and a funding opportunity announcement (FOA) has not been posted, OHS will reexamine the existing data to determine if they also meet the revised conditions. The new second criterion added to the fiscal condition will not be considered. These grantees will be required to compete if they would also be required to compete under the revised conditions. OHS will send redetermination letters to this group of grantees either reconfirming their competitive status or notifying them of preliminary eligibility for non-competitive funding.

Preliminary non-competitive decisions made prior to the effective date of this final rule will not be revisited under the revised DRS conditions; these grantees will continue to be eligible for a noncompetitive new grant. Only in the rare case that such a grantee receives two or more deficiencies, a license revocation, suspension, debarment from any federal or state funds, disqualification from the Child and Adult Care Food Program, or an audit finding of a going concern before receiving their non-competitive 5-year grant award would the grantee be required to compete. This would also have happened under the prior regulation, with the only difference being the number of deficiencies requiring competition.

Next Steps

Programs are urged to take the time to read the final rule in its entirety, including the preamble and the text of the regulation. OHS will continue to provide direction, guidance, and resources that support our mission to prepare Head Start children and families for school and beyond.

Thank you for the work you do on behalf of children and families.

/ Dr. Deborah Bergeron /

Dr. Deborah Bergeron
Director
Office of Head Start
Office of Early Childhood Development