Question Topics
Topic: Cost of Living Increases (COLA’s)
Question:
"Should payment be made to employees who worked after the retroactive effective date, but not employed when the payment is made? Is the COLA payment for past services or to retain current employees? Is there anything that would restrict an agency from adopting a policy to only pay COLA to employees that are employed on or after the effective date for the COLA and still employed on the date of the payment?"
Answer:
"Each Head Start grantee needs to develop its own policy as to whether or not former staff are entitled to receive cost of living increases. There is no federal policy precluding a Head Start agency from adopting a policy to only give COLAs to employees that are still employed on the actual date the COLA award is received."
Return to TopTopic: Non-Federal In-Kind
Question:
"A standard rate for valuing the donated time of members of the Board of Directors or policy council is needed. A standard rate is also needed for valuing the use of donated space in home based Head Start. (I was told that one region advises grantees that home based space is not allowable in kind.) Standard rates would reduce the amount of time that is spent by hundreds of Head Starts trying to determine their own rates. If an agency feels that a standard rate is inappropriate, they could have the option to document a higher rate.
"Why is in-kind for parents completing a structured activity in a classroom based program away from the center unallowable? (The ACF staff manual says that this is not allowable.)
"As Head Start is a program serving the family, why is in-kind for services provided to Head Start families using donated items, volunteers, etc. not allowable?"
Answer:
"The determination of the value of in kind donations needs to be made at the local level. In order for something to be allowable as match it needs to be something for which Head Start grant funds could be spent. We will be providing further clarification in the near future on the subject of non-federal share.
Question:
"Some grantees are being told by Federal representatives to stop recording non-Federal share once they have received the amount required by the notice of financial assistance. I believe that a better policy would be for a grantee to record all non-Federal received, because then they are protected if some in-kind is later disallowed or if they receive a late grant award that will require in-kind."
Answer:
"Grantees should, we think, not stop recording non-Federal share once they have reached the amount required for the 20% match. If a grantee is generating match in excess of 20%, we recommend that it be recorded.
Question:
"If a grantee operates both regular Head Start and Early Head Start programs, is there any way to combine the non Federal share, or to use excess non Federal for one program to meet the requirement of the other program? (Also, is there any way to include regular and Early Head Start on one grant award, with the same fiscal year?)"
Answer:
"Grantees operating both Head Start and Early Head Start programs must provide separate matches for each grant, as these are separate and discrete grants with different project periods. The Head Start grant must be matched for each budget period. Early Head Start grants have finite project periods and, therefore, the required match is over the course of the project period; that is match does not have to happen for each budget year, but rather must be achieved based on the total funds expended for the entire project period. However, we would certainly encourage Early Head Start grantees to make every effort to generate the required match on an annual basis as it will be increasingly difficult t make up any shortfall in non-Federal share in subsequent budget years.
Question:
"Can the fair market value of television or radio public service announcements that benefit Head Start be included as non-Federal in-kind?
Answer:
"The fair market value of television or radio public service announcements that benefit Head Start may be used as match."
Return to TopTopic: Purchase of American-Made Equipment and Products
Question:
"This was mentioned in the P.L. 103-333, the 1995 Appropriations Act. However, this requirement is not in the Head Start Act or regulations. Does it only apply to the 1995 appropriation or to all years after that? In some regions, there are standard grant conditions requiring grantees to "buy American." Is this a current requirement for Head Start? If it does apply, what does it mean and how does an agency implement "It is the sense of Congress that, to the extent practicable, all equipment and products purchased with funds made available in this Act should be American-made"?"
Answer:
"The FY 1999 appropriations contain language that it is the sense of Congress that, to the greatest extent practicable, all equipment and products purchased with funds made available in this Act (FY 1999 funds) should be American-made."
Return to TopTopic: Child Care Providers
Question:
"Clarification appears to be needed as to whether child care providers are "vendors" or "delegate agencies." This affects grant applications (delegates must be prior approved), program governance, audit and other areas."
Answer:
"The decision as to whether child care providers are vendors or delegate agencies is generally one that must be made by each Head Start grantee. However, if the grantee is basically delegating the entire Head Start program (i.e., not just the education component) to a family child care provider, our position is that this is, for all intents and purposes, a delegate agency arrangement and should be funded as such."
Return to TopTopic: Children with Disabilities
Question:
"45 CFR 1305.6(c) states that 10% of enrollment opportunities be made available to children with disabilities. 1305.2(c) defines enrollment opportunities as vacancies that exist at the beginning of the year or during the year that must be filled. Many grantees are told that they must have 10% based upon funded enrollment (slots). This becomes an issue when there are children that continue from one year to the next."
Answer:
"We believe the intent of the Congress was that all Head Start programs should strive to assure that at any given point in time at least 10 percent of their enrolled children be children with disabilities."
Return to TopTopic: Disposal of Equipment
Question:
"45 CFR 74.34 for nonprofit grantees does not provide guidance on disposal of items of equipment no longer needed with a fair market value at the date of disposition of $5,000 or less. 45 CFR 92.32(e)(1) for governments states "Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency."
Answer:
"Grantees subject to both 45 CFR Part 74 and Part 92 should follow the same procedures in regards to the disposition of supplies and equipment. In both cases, equipment with a fair market value of less than $5,000 may be disposed of with no obligation to the awarding agency."
Return to TopTopic: Audits
Question:
"Head Start program regulation, 45 CFR 1301.12, needs to be modified to comply with the Single Audit Act of 1996 and OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, and 45CFR Parts 74.26 and 92.26. This Head Start regulation states that audits based on the budget cycle be submitted within 4 months after the budget period. The Single Audit Act and A-133 require that audits be on the entity’s fiscal year (which may not be the same as the Head Start budget cycle) and submitted within 9 months after the end of the fiscal year. The 1998 Single Audit Act and revised A-133 have been incorporated into 45CFR Parts 74.26 and 92.26."
Answer:
"Head Start regulations are being made consistent with the Single Audit Act of 1996. In the meantime, the regulations dealing with audits under 45 CFR Part 74.26 or 45 CFR Part 92.26 shall be followed."
Return to TopTopic: 15% Administrative Requirement
Question:
"If this administrative limitation is to relate administrative costs to the total cost of operating the Head Start program, then shouldn’t the amount of USDA funds reimbursed for food costs be included as part of the total costs?
Answer:
"The 15% administrative cost limit applies to the total grant award; i.e., federal and non-federal. USDA reimbursements are not part of the total grant award and, therefore, are not included as part of the base against which the 15% is calculated."
Question:
"Clarification is needed that the 15% calculation is performed twice. Once as part of the grant application process based on budgeted expenditures, and at the end of the year based upon actual expenditures. Many agencies believe that they only need to analyze the 15% as part of the budget process. Agencies need to be aware that there must be documentation to support the actual calculation at the end of the year, and budgets estimates are not acceptable for the year end calculation."
Answer:
"We agree that agencies need to understand that the 15% is, ultimately, based on actual expenditures, not beginning of year estimates. We assume that is a common understanding among Head Start grantees."
Return to TopTopic: Accounting and Financial Reporting
Question:
"Generally Accepted Accounting Principles (GAAP) state that equipment acquired by non-profit organizations should be capitalized and depreciated over the estimated useful life. However, Head Start equipment is typically fully budgeted in the period of purchase and shown as an expenditure on the Form 269. At the end of the year, many auditors of Head Start programs capitalize and depreciate the equipment, resulting in the audit not agreeing with the submitted financial reports."
Answer:
"Auditors should not depreciate equipment purchased with Head Start grant funds. OMB Circular A-122, Paragraph 11.c.2. states, "The computation of use allowance will exclude any portion of the costs of buildings and equipment borne by the Federal Government."
Question:
"Also, GAAP states that financial statements should not include time of volunteers unless the volunteers are professionals (doctors, lawyers, etc). Most Head Start programs rely on unskilled labor as a significant part of their non-Federal share. If the audits do not include all volunteer time, then many programs will appear to be short of in kind. These two GAAP issues need to be clarified so that auditors will know that it is acceptable with DHHS/ACF to expense equipment and include all in kind. The explanatory comments to A-133 state that neither the Single Audit Act nor A-133 prescribe the basis of accounting that must be used to prepare financial statements, however, many auditors want to know if this is acceptable with DHHS."
Answer:
"Auditors should be referred to 45 CFR Part 74.23 or 45 CFR Part 92.24 which puts no restrictions as to the type of volunteers whose time may be counted as in kind for match purposes."
Question:
"There should be a standard procedure for recording and reporting in the audit of items that are purchased toward the end of the year, but not received and used in the program for that year (i.e. buses ordered and renovation contracts). These situations need to be clearly distinguished from ordering items at yearend just to spend out grant money (stockpiling to avoid loosing funds)."
Answer:
No answer provided
Question:
"45 CFR parts 74 and 92 state that all obligations must be liquidated within 90 days after the end of the budget cycle, to coincide with filing Final Form 269. Normally, this is not a problem with routine purchases, however, many agencies allow carryover of unused vacation which is also an obligation. If vacation must be used or paid within 90 days after the end of the budget cycle, this will affect many programs."
Answer:
"Unused accrued leave for Head Start programs becomes an obligation to the program at the time it is paid to the employee. HHS does not require that vacation time be used within 90 days of the end of a grantee’s budget period. However, Head Start grantees may, at their discretion, have personnel policies, approved by the Policy Council, which contain such a requirement."
Return to TopTopic: Standard Form 269
Question:
"There is variation among the regions on the submission of Form 269. Most regions require it semiannually, plus a final 90 days after yearend. Atlanta only requires an annual report, plus a final one. I have been told, that one region requires that the Form 269 be submitted quarterly (I do not know which region or if this is still true.) Also, Region V requires a supplement to the Final 269, signed by the agency and CPA, certifying equipment purchases and construction costs."
Answer:
"The normal protocol is for grantees to submit semi-annual SF 269s. However, on a case by case basis, because of concerns about the grantee; i.e., high risk, more frequent SF 269s can be required."
Return to TopTopic: Refunds of Grant Expenditures Received in Subsequent Years
Question:
"On occasion grantees receive refunds of amounts expended in prior years. The most common example of this relates to insurance refunds, especially workers compensation. I have been told by many Federal representatives that these amounts should be used as a reduction to current year expenditures, rather than submitting revised final reports etc for the year in which the payment was originally made. I agree with reducing current year expenses. It needs to be officially stated that this approach is acceptable."
Answer:
"Refunds received in future years should be reported as Program Income for the year in which the refund is received. Such funds must be reported on line 10(b) of the SF-269."
Return to TopTopic: Interest Expense
Question:
"On October 6, 1995, OMB Circular A-122, Cost Principles for Non-Profit Organizations, was revised to allow interest expense. Although there are some limitations, A-122 does not require prior approval of interest expense. Many grantees are being informed by Federal representatives, that because the 1992 amendments to the Head Start Act directed the Secretary of HHS to develop regulations for the purchase of buildings, that this means that grantees must receive prior approval for interest expenses. Is this correct? Will the 45 CFR 1309 facility regulations clarify this issue when they are finalized?"
Answer:
"Prior approval is required before using grant funds to purchase, construct, or undertake a major renovation of a Head Start facility, regardless of whether or not interest will be charged to the Head Start grant. Interest expenses, in and of themselves, do not require prior approval."
Return to TopTopic: Indirect Cost Rate
Question:
"First, many grantees have been told that they must obtain and use an Indirect Cost Rate (ICR). It is my understanding that an ICR is one way for a grantee to recover administrative cost under Federal awards, but not the only way. Although there are advantages to ICR’s, there are many situations where treating all costs as direct costs is more appropriate. In fact, the DHHS/ACF Staff Manual (Section 2.14.406 B. 2. E.) states that "…an approved ICR is needed for all awards…," except for six situations. The fifth exception states "…e. The organization consistently treats all costs as direct costs and can properly support and account for them as such."
"Second, some DHHS cost negotiators are requiring that grantees include the value of volunteers in the base when calculating an ICR. OMB Circular A-122, attachment B, selected item of cost 12. Donations, states:
"(2) The value of donated services utilized in the performance of a direct cost activity shall be considered in the determination of the organization's indirect cost rate(s) and, accordingly, shall be allocated a proportionate share of applicable indirect costs when the following circumstances exist:
"(a) The aggregate value of the services is material;
"(b) The services are supported by a significant amount of the indirect costs incurred by the organization;
"(c) The direct cost activity is not pursued primarily for the benefit of the Federal Government
"Normally, in-kind is all handled at the program level and little, if any, support is provided by the indirect costs incurred by the organization. Thus, it does not appear that in-kind should be considered in an indirect cost rate. Could this be clarified between the ACF Head Start Bureau and the DHHS Office of Cost Determination?"
Answer:
"Grantees doe not have to use an indirect cost rate; all costs may be billed as direct costs if the grantee so chooses."
Return to TopTopic: Member of a Policy Council on a Grantee Board of Directors
Question:
"I recently received an email from a grantee stating that their Regional Office had informed them that the Policy Council Representative to their Grantee Board was a liaison only to the board without a vote. Assuming that the agency’s policies do not provide for nonvoting members, I could not find anything in the Head Start Regulations, OMB circulars, or DHHS administrative regulations that even mentioned nonvoting board or policy council members. Is there any basis for this?"
Answer:
"Each grantee must develop its own policies in the matter of Policy Council members also being members of the grantee’s Board. There is no prohibition against having a Policy Council member also be a voting member of the grantee’s board. We believe dual membership can, if used judiciously, help improve program communications."
Return to TopTopic: Documentation of Income Eligibility
Question:
"45 CFR 1305.4(c), (d), & (e) states:
"(c) The family income must be verified by the Head Start program before determining that a child is eligible to participate in the program.
"(d) Verification must include examination of any of the following: Individual Income Tax Form 1040, W-2 forms, pay stubs, pay envelopes, written statements from employers, or documentation showing current status as recipients of public assistance.
"(e) A signed statement by an employee of the Head Start program, identifying which of these documents was examined and stating that the child is eligible to participate in the program, must be maintained to indicate that income verification has been made.
"However, many auditors, Federal staff, and review teams inform grantees that they must photocopy and maintain detailed income eligibility documentation, in addition to the signed statement required by the regulations."
Answer:
"Grantees are not required to photocopy and maintain detailed income eligibility documentation. As you note, a signed statement by an employee of the Head Start program identifying which documents were used to determine eligibility must be kept as well as a statement that the program has determined the child is eligible to participate in the Head Start program.
However, it seems to us to be prudent for grantees to, in fact, maintain a copy of the documentation they used to confirm eligibility."
Return to TopTopic: Hiring and Firing
Question:
"Program governance regulations (45 CFR 1304.50(d)(1)(x) states that the policy council "…must work in partnership with key management staff and the governing body to develop, review, and approve or disapprove the following policies and procedures:
…(xi) Decisions to hire or terminate any person who works primarily for the Early Head Start or Head Start program of the grantee or delegate agency;…"
"Does this mean that each hiring and firing must be approved by the policy council? For example, if a written personnel policy has been approved by the governing board and policy council that a particular action will result in immediate dismissal, does an agency need approval of the policy council before the decision to terminate an individual is implemented? If this is correct, then it is very important that grantees be informed of the need to have written personnel policies providing for suspension of employees, until the policy council can approve termination."
"Also, can an agency routinely (not emergency situations) hire staff subject to later approval by the policy council?"
Answer:
"Policy council concurrence is required for firing of all Head Start staff. Exceptions to this may include staff who work on an occasional basis such as substitute teachers."
Return to TopTopic: Records
Question:
"Are there any guidelines for how an agency responds to a request for agency records from someone outside of the organization? The Federal Freedom of Information Act applies to Federal agencies and not grantees and delegate agencies. This is especially important if the request for records relates to a specific Head Start family or personnel records of a Head Start staff member. Obviously, if state or local requirements apply to a particular grantee, those requirements would have to be complied with."
Answer:
"Grantees, as recipients of Federal funds, should make available as much of their records as is possible without jeopardizing the confidentiality of enrolled children and families. Information on staff salary rates, however, is not within the public’s right to know."
Return to TopTopic: NHSA Membership
Question:
"Is a Head Start grantee’s membership in NHSA an allowable use of Head Start grant funds?"
Answer:
"OMB Circular A-122, "Cost Principles for Non-Profit Organizations" says that "…costs of the organization’s membership in civic, business, technical, and professional organizations are allowable." That is, in this situation, a Head Start grantee’s membership in NHSA is an allowable use of Head Start grant funds."
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