Edward T. Waters, Esq. May 12-13, 2015 Head Start Grants Management and Head Start Eligibility © 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved

Edward T. Waters, Esq.

May 12-13, 2015

Head Start Grants Management and

Head Start Eligibility

© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

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PRESENTER: EDWARD “TED” WATERS

• Well known for his expertise in federal grants and contracts, government reimbursement methodologies in the areas of health and social services, and the many issues that arise in managing federal programs, Ted was again selected in 2015 as a “SuperLawyer” in Washington, D.C.

• Ted has been lead counsel in many arenas: litigation, audit defense, internal investigations to name a few and focuses on practical, long-term solutions for his clients. Ted has clients across the country and has represented many Head Start programs since joining the Firm in 1992.

• He has been Managing Partner of Feldesman Tucker since 2003 and has just started his second year teaching a course in federal grants at the George Washington University School of Law.

• Contact Information: [email protected] or 202.466.8960


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DISCLAIMER

• This training has been prepared by the attorneys of Feldesman Tucker Leifer Fidell LLP. The opinions expressed in these materials are solely their views and not necessarily the view of any other organization.

• The training is designed to assist your organization in developing and implementing effective operations consistent with the expectations of the U.S. Department of Health and Human Services’ (“HHS”) Administration for Children and Families (“ACF”) for Head Start/EHS grantees.

• The materials are being issued with the understanding that the authors are not engaged in rendering legal services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information provided is only general information.

• Please do not record today’s session.


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OVERVIEW

Day 1: Head Start Grants Management• The Supercircular/Omnicircular/UGG• Time and Effort Reporting• Cost Allocation• Matching

Day 2: Head Start Eligibility Requirements• Final Rule on Head Start Eligibility


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Head Start Grants Management


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THOUGHT FOR THE DAY

"If you want a friend in Washington,

get a dog."

- Harry S. Truman

(allegedly)


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The Supercircular


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LEARNING OBJECTIVES

• What does the New Circular look like and when is it effective?

• Key elements grantees need (or may want) to know• Contracts and Subgrants• Standards of Conduct

• What to do next?


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INFLOWS/OUTFLOWS IN A FEDERALLY-FUNDED ORGANIZATION

Grantee

Sub-recipients

Direct Payments, e.g.Salary and Fringe

Procurements

Matching

Program Income

Federal funds

Other funding


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OMB AND THE WHOLE INSIDE-THE-BELTWAY ALPHABET SOUP

OMB – Office of Management and Budget

CFOC – “Chief Financial Officers Council, established pursuant to Chief Financial Officers (CFO) Act of 1990 (Public Law 101-576), is an organization of the CFOs and Deputy CFOs of the largest Federal agencies, senior officials of the Office of Management and Budget and the Department of the Treasury who work collaboratively to improve financial management in the U.S. Government.”

COFAR – Council on Financial Assistance Reform” “The COFAR, established by OMB Memorandum M-12-01, is comprised of an interagency group of Executive Branch officials to coordinate financial assistance.”


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EXISTING CIRCULARS

A-102 A-110 A-89

A-21 A-87 A-122

A-133 A-50

Grants AdministrationRequirements

FederalDomestic AssistanceRequirements

Cost Principles for Universities, State/Local/Tribal Gov’ts, & Non-Profits

Audit & Audit Follow-Up Requirements


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THE SUPERCIRCULAR: UNIFORM GRANTS GUIDANCE

A-102 A-110 A-89

A-21 A-87 A-122

A-133 A-50

Uniform Grants

Guidance


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PROCESS AND EFFECTIVE DATEOn Dec. 19, 2014 - HHS adopted (with changes) the OMB Supercircular Guidance from 2 C.F.R. Part 200 through the “Joint Interim Final Rule”

– HHS codified the text, with its HHS-specific amendments into own implementing regulations at 45 C.F.R. Part 75

– In the interest of establishing one location for each federal department’s implementing regulations, HHS provided a link to its policy implementation in 2 C.F.R. Part 300

– 45 Part 74 & 92 are superseded for new funding increments and will be rescinded

After Dec. 26, 2014 (Effective Date) – The new rules are applicable to new funds provided to your organization after this date. Current awards unchanged.


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COFAR, FAQS AND HOW TO GET IN TOUCH

“Frequently Asked Questions”

Current issuance of FAQs at: https://cfo.gov/wp-content/uploads/2013/01/2-C.F.R.-200-FAQs-2-12-2014.pdf

COFAR has promised more to come as agencies roll out their regulations:

“OMB and the COFAR will continue to engage Federal and Non-Federal stakeholders (that’s you!) over the next year to facilitate a smooth implementation process. Please submit any comments or questions to [email protected] ...”

NOTE: There are still lots of Typos so don’t be shy


https://cfo.gov/wp-content/uploads/2013/01/2-C.F.R.-200-FAQs-2-12-2014.pdf



mailto:[email protected]

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HOW IS THE GUIDANCE LAID OUT?

New 45 CFR part 75, (part 74 and 92 will be removed from CFR):

Six subparts A through F which areA. Acronyms and Definitions

B. General Provisions

C. Pre-Federal Award Requirements and Contents of Federal Awards

D. Post Federal Award Requirements

E. Cost Principles

F. Audit Requirements

Plus 11 Appendices (I-XI)


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THINGS WORTH KNOWING ABOUT THE SC

-- or –

If you fall from that tree and break your leg, don't come running to me.


1. The Goal is Uniformity

• Same set of rules apply to all Non-Federal Entities (“NFEs”) mostly

• Consistent terminology• Standardization across the board as we shall

see…..

17© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

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2. FOCUS ON PERFORMANCE OVER COMPLIANCE

One Example: Fixed Amount Awards – up to simplified acquisition threshold (currently $150,000), Criteria found at 75.201(b)

– Payment based on meeting requirements– Accountability based on performance– Cost principles are guide to setting award amount – Limits on use (but no matching share so not good for

Head Start but other funding?)– NOTE: Modified in Interim Final Rule

Renewed emphasis on performance measures


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3. STANDARDIZATION OF BUSINESS PROCESSES

Subpart A - Standard definitions throughout, e.g., contractors and subrecipients, not numerous terms for the same thing

75.203: requires standardized notices of funding opportunities

75.204-205: requires Federal awarding agency to evaluate the merit and risk associated with a potential Federal award

75.210: specifies a list of required elements including information, terms and conditions, and performance goals that Notices of Awards must contain

– Subrecipient Agreements should track same info, discussed below

We have already seen this in the DRS of course…


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4. SUBRECIPIENT RELATIONSHIPS – 75.351

• The basic difference between subrecipients and contractors stems from the purpose or the nature of the money being passed from the grantee to the sub

• Subrecipient: Take a piece of your program (programmatic decision making) must comply with all regulations

– If Subrecipient must be approved by feds– Called a Delegate in Head Start

• Contractor: Buying something to help you do your program or meet your purpose (paper and pencils or medical supplies)

– If Contractor refer to procurement standards

• Distinction leads to different requirements!– Delegate agency rights under HS Act and Performance Standards….

• You Decide what the relationship is!


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IMPORTANT CHANGES STARTING AT 75.352

• Content of Subrecipient agreement must be the same as content of federal award (or at least as close as possible). It’s a long list such as identification of funding source, record access, amount obligated.– Don’t forget the Supercircular terms flow down too!

• Recognition of indirect cost rates, negotiate a rate or provide de minimis rate

• Fixed price subawards with approval of feds.

• Must evaluate risk of noncompliance in order to determine appropriate monitoring


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75.352(d) MONITORING SUBRECIPIENTS

• Also allows grantees to impose additional specific conditions on subrecipient that materially fails to comply with general and program-specific terms and conditions

• Requires the grantee to “monitor the activities” of the subrecipient to “ensure that the subaward is used for authorized purposes”– Specifically lists what monitoring should include (financial and

programmatic reports, other items; following up to ensure subrecipient takes appropriate action; issuing management decisions for audit findings affecting pass-through entities programs)

– Allows pass-through entity to perform on-site reviews, provide T/TA, arrange for agreed-upon procedures engagements

– Allows pass-through entities to evaluate risk posed by subrecipients

• In Head Start we already had to do this…..


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5. CHANGES TO PROCUREMENT RULES

New stuff!– Organizational conflicts of interest– Sole Sourcing rules– Simplified Acquisition Threshold updated– Micro-Purchase Threshold

Not new stuff (still there and still important)– Competition requirements– Graduated system of complexity– Documentation of cost/price analysis

AND the Grace Period if you can’t stand doing this…


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COMMON CONTRACTING ACTIVITIES FOR HEAD START PROGRAMS

Services Performed by People:– Transportation services– Food services– Cleaning services– IT support– 3 Experts on Board (if can’t find volunteers)– Legal and compliance services– Purchase of Service of Child Care Slots

Items Often Contracted For:– Classroom Equipment – New Busses– Copier Rental– Computers


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SIMPLIFIED PROCUREMENT PROCEDURES FOR SMALL PURCHASES

Simplified procurement procedures allowed under the Simplified Acquisition Threshold (see 75.329(b))

Simplified Acquisition Threshold - the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods.”

SAT is set by the FAR amount updated periodically to keep pace with inflation, 48 C.F.R. Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908” ($150,000 at the time of publication)


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75.329(F) SOLE SOURCE (OPTION)

Still requires free and open competition to the maximum amount possible.

Explicitly allows for sole source for procurements over $3,000, but only in 4 specific circumstances (uses language from State, Local and Tribal Gov’ts) at 75.329(f):

“(1) The item is available only from a single source;

(2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

(3) The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the recipient; or

(4) After solicitation of a number of sources, competition is determined inadequate.”


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NECESSARY CLAUSES: TYPE OF AGREEMENT

• Clearly articulate if the agreement is a subrecipient or vendor arrangement (See A-133 for distinctions)

• Will lead to different oversight and monitoring provisions, as well as reporting provisions

• If Sub-R: Make clear it is cost reimbursement agreement that disallowed costs will have to be returned by the sub-R, even after the period of performance.


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NECESSARY CLAUSES: SCOPE OF WORK

Poorly defined scope of work can put you at risk.– Should describe the subject of the contract, the

services and/or products at issue, with clarity and precision relevant to the program’s expectations

In describing the deliverables, include:– Quantities: hours, units, estimated page length– Deadlines (require timely delivery and be prepared to

monitor and enforce deadlines)– Name any key persons you want to perform or

supervise the work and whether they must have a particular skill, educational degree, license, credential, or permit


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NECESSARY CLAUSES: PAYMENT PROVISIONS

Poorly drafted payment provisions can be problematic– Provide for unambiguous payment provisions for both

amounts and timing– Is there a ceiling on how much the program will pay for

the service/product?– Evaluate the method of payment options in terms of what

best suits the program’s situation (i.e. paying in advance, paying at the completion of contract work, etc.)

– If pay is contingent on receipt of funds from another source, include that provision

• “subject to the availability of funds”


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NECESSARY CLAUSES: RECORDKEEPING/ACCESS TO RECORDS

• Include clear record-keeping requirements consistent with grant obligations (have not changed under Part 75)– Define what necessary records the contractor is required to

keep– Define how long contract-related records should be

retained (e.g. if contracting with a third party to assist with the performance of a grant, require the contractor to keep the records for the same period of time)

• Include a provision requiring the contractor to, upon reasonable notice, permit the grantee access to pertinent records (including personnel for interview/discussion purposes) – Federal grantors insist on this access– Note: Audit Contracts under Subpart F


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NECESSARY CLAUSES: REPORTING REQUIREMENTS

• Clearly set forth reporting requirements.– Progress Reports: used to ensure contractor is

performing satisfactorily. Determine how often they should be submitted

– Financial and Other reports: If financial and programmatic reports are required, include appropriate reporting requirements in the contract.

– Audit Reports: if a program receives a federal grant and awards of $750,000 or more, require its sub-recipients to submit their Subpart F audit reports to the program and to take prompt corrective action regarding adverse findings


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6. NEW RULES ON OVERSIGHT§ 75.112 Conflict of interest.

(a) HHS awarding agencies must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the respective HHS awarding agency or pass-through entity in accordance with applicable HHS awarding agency’s policy. As a general matter, HHS awarding agencies’ conflict of interest policies must:

1) Address conditions under which outside activities, relationships, or financial interests are proper or improper;

2) Provide for advance notification of outside activities, relationships, or financial interests, and a process of review as appropriate; and

3) Outline how financial conflicts of interest may be addressed.


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6. NEW RULES ON OVERSIGHT

What might this look like for HHS?– It is already in the HHS GPS:

“HHS requires recipients to establish safeguards to prevent employees, consultants, members of governing bodies, and others who may be involved in grant-supported activities from using their positions for purposes that are, or give the appearance of being, motivated by a desire for private financial gain for themselves or others, such as those with whom they have family, business, or other ties . . . cover, at a minimum, expected conduct in regard to financial interests, gifts, gratuities and favors, nepotism . . .”


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MORE OVERSIGHT

45 CFR 75.113 Mandatory Disclosures (NEW)• Non-Federal entities or applicants for Federal awards

must disclose, in a timely manner, in writing to the Federal awarding agency or pass-through entity all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award

• Failure to disclose can result in withholding of current awards and/or future awards, disallowance, suspension of award, debarment, or any other remedy legally available


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STILL MORE: 45 CFR 75.327(c)(2) ORGANIZATIONAL CONFLICTS OF INTEREST

In addition to the standard Code of Conduct provisions about selection, administration, and award of contracts:

“If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest.”

“Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.”


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7. INTERNAL CONTROL REQUIREMENTS BAKED IN!

75.303 Internal Controls - Requires non-Federal entity to have internal controls that:

(a) Provide “reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award”;

(b) “Comply with Federal statutes regulations and the terms and conditions of the Federal Awards”;

(c) “Evaluate and monitor the non-Federal entity’s compliance with statute, regulations and terms and conditions of Federal awards”;

(d) “Take prompt action when instances of noncompliance are identified including noncompliance in audit findings”; and

(e) “Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with Federal, state and local laws regarding privacy and obligations of confidentiality”

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COSO Internal Control Components

Control Environment

Risk Assessment

Control Activities

MonitoringInf

ormati

on &

Communication

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8. MODIFICATION TO AUDIT REQUIREMENTS

• Can’t call it A-133 anymore! • 75.110(b) -- Applies to audits of fiscal years

“beginning on or after December 26, 2014” • 75.501 – raises single audit threshold to

$750,000 from $500,000• 75.512 – Audit clearinghouse will make reports

available on the “Web” • 75.518 – Major Program Determination focuses

on internal control deficiencies


FROM A LAWYER’S PERSPECTIVE

1. Sect. 75.503(a) – “in lieu of any financial audit” required “under any other Federal statute or regulation” but see §200.503(b) which allows Fed. Agency, OIG and GAO to conduct “additional audits.”

2. Auditor Procurement --- § 75.509, “Auditor Selection” --- Follow procurement standards, “objective is to obtain high-quality audits” and if you recover more than $1.0M in indirect, auditor cannot prepare indirect cost proposal or Cost Allocation Plan. Word to wise: don’t just sign engagement agreement! It can be changed…

3. GAGAS § 75.514(a) -- Audits under subpart F (and OIG for that matter) must be conducted in accordance with GAGAS

© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 39

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Moving Past Overview:

Indirect Cost Rates and Cost Allocation Issues and Requirements Under the Supercircular


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ADVANTAGES OF AN ICRA POST SUPERCIRCULAR

• PTEs (like States!) have to follow them now– Unless statutory limitation, of course– Remember: while Block Grant generally exempt from Cost

Principles, CSBG is not…

• Purchases with Indirect dollars exempt from procurement rules – NICE for HS

• Cash management tool – Not directly tied to costs• Bid and Proposal costs allowable – HUGE for HS!• Special Rates, like Fringe Benefit rate, are possible• Pricing and Budgeting Easier in Multi-funded

Environment


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DISADVANTAGES OF ICRA

• It is an estimate and is not particularly flexible• Not good in times of rapid growth/downsizing• Negotiating with different office of your cognizant

agency may be difficult• Division of Cost Allocation now called “Cost

Allocation Services” at HHS for example• Division of Cost Determination at Labor• Another thing to worry about!


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PURPOSE OF COST PRINCIPLES

“The principles are designed to provide that Federal awards bear their fair share of cost recognized under these principles except where restricted or prohibited by statute.”

2 C.F.R. §200.100(c)/45 C.F.R. § 75.100(c)


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KEY CONCEPTS IN FEDERAL GRANTS

• Grants are reimbursements for “Allowable” Costs – which means among other things, the cost must be:– Reasonable

• Prudent person standard for “nature or amount”• Ordinary and necessary for the program• Sound business practices etc

• Allocable – did it benefit the program to which it was charged

• Consistent Treatment• Determined in accordance with GAAP• Adequately Documented


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Common Allocation Issues in Head Start


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1. BLENDED FUNDING – ALWAYS BE AWARE OF YOUR SCOPE OF PROJECT

• HS Grantee uses other child care funding source to “overmatch”

• Provides a full day of Head Start Services • All children are enrolled in HS and receive

services that meet the Performance Standards• HS Grantee includes in proposed budget

reimbursement from other funding source• No cost allocation required from HS perspective


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2. SHARED RESOURCES

Child Care Program Partnerships Head Start Program

• Non-HS eligible

• Performance Standards Not Required

• Cost allocations required if sharing resources with HS

• HS eligible

• Performance Standards Apply

• Cost allocation not necessarily required

• Raises cost allocation issues


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3. PARALLEL FUNDING OR FLIP A SWITCH MODEL

• Grantee has two or more funding streams• UPK or other alternative funding source serves

non-HS eligible children; HS funds used for HS eligible children

• Need cost allocation to keep HS funds separate from non-HS funds– To ensure HS funds not spent on non-HS children

or services that don’t meet the Performance Standards


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DISTINGUISH FROM PURCHASE OF SERVICES

• HS grantee purchases services through a contract with a child care provider, school district, etc., for HS eligible children at non-HS grantee location

• Contractor may also receive funds from other sources for day care services for non-HS eligible children

• Grantee must assure HS Program Performance standards are met for all HS children; not mandatory for non-HS children

• Services must be purchased at fair market value


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Focusing on “shared” or “joint” costs


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DIRECT ALLOCATION METHOD

Source: U.S. Dept. of Labor, Division of Cost Determination, Office of Acquisition Management Services Business Center, “A Guide for Indirect Cost Rate Determination.” available at: http://www.dol.gov/oasam/programs/boc/costdeterminationguide/cdg.pdf


http://www.dol.gov/oasam/programs/boc/costdeterminationguide/cdg.pdf


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DIRECT COSTS

“Direct costs are those costs that can be identified specifically with a particular final cost objective such as a Federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.”

2 C.F.R. § 200.413(a)/ 45 C.F.R. § 75.413(a)


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FAQS – IRCAS – MANDATORY?

FAQ - Indirect Cost Rates and Entities Who Do Not Have Indirect Costs

Q. 2 C.F.R. § 200.210(a)(15), 2 C.F.R. § 200.331(a)(1)(xiii) and (a)(4) all make reference to indirect cost rates as a requirement for recipients and subrecipients. Not all entities charge indirect cost rates. Will they be forced to establish such rates?

A. No. NFEs that are able to allocate and charge 100% of their costs directly may continue to do so. Claiming reimbursement for indirect costs is never mandatory; a NFE may conclude that the amount it would recover thereby would be immaterial and not worth the effort needed to obtain it.

– COFAR, Nov. 26, 2014 FAQs


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SIMPLIFIED INDIRECT ALLOCATION METHOD

Source: U.S. Dept. of Labor, Division of Cost Determination, Office of Acquisition Management Services Business Center, “A Guide for Indirect Cost Rate Determination.” available at: http://www.dol.gov/oasam/programs/boc/costdeterminationguide/cdg.pdf





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INDIRECT (F&A) COSTS DEFINITION

“Indirect (Facilities and Administration or F&A) costs means costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved…


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INDIRECT (F&A) COSTS DEFINITION, CON’T

“…To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived.” 2 C.F.R. § 200.56/ 45 C.F.R. § 75.2


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WHAT ARE INDIRECT COSTS?

“Typical” for non-profits – “depreciation on buildings and equipment, the costs of operating and maintaining facilities, and general administration and general expenses such as the salaries and expenses of executive officers, personnel administration and accounting”

But, because of “diverse characteristics and accounting practices of nonprofit organizations”, one size does not fit all!

Look to same rules as direct costs for identification - easily identified then direct, not easily identified then indirect


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A VISUAL

Facilities

General G&A

Functional e.g., ECE

Dept.

Non-Federal

Grant 1

Grant 2

Costs to be Allocated Final Cost Objectives


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What are they and do you want one?

Indirect Cost Rates


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INDIRECT COST RATE AGREEMENTS

• What are they? • It is an agreement between you and the federal

government about how you will be reimbursed for certain costs:– Binding on Both Parties– Contains detailed (kind of) agreement on how to

allocate specified costs to final cost objectives using a specified allocation method


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WHAT IS AN ICRA?

• An Indirect Cost Rate Agreement (“ICRA”) is negotiated between a grantee and its “cognizant” agency

• Purpose has always been to create uniformity of application

• Can be simple or complex – can have multiple rates such as administration, facilities, fringe benefit– But if you received more than $10M in direct federal

funding, you must have two rates: facilities and administration

• More Information: https://rates.psc.gov/


https://rates.psc.gov/

https://rates.psc.gov/

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NEGOTIATION AND APPROVAL OF RATE AGREEMENT

• Indirect cost rate proposal – within 6 months of end of fiscal year depending on type of rate

• Results of negotiation formalized in Rate Agreement

• Disputes can be appealed


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TYPES OF RATES

• Provisional – a billing rate• Final – final settlement of a provisional rate to

actual costs• Predetermined – a fixed rate based on actual

costs; not subject to adjustment except in “very unusual” circumstances

• Fixed w/carryforward – a fixed rate with adjustments in subsequent periods


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RATES CAN BE CALCULATED IN DIFFERENT WAYS:

A cost pool divided by an allocation base:

Indirect Costs ÷ Direct Salaries and Wages

Indirect Costs ÷ Direct Salaries and Wages + Fringes

Indirect Costs ÷ Modified Total Direct Costs


65

WHAT IS THE DRIVING PRINCIPLE BEHIND SELECTION OF THE BASE?

Fairness!

“The essential consideration in selecting a method or a base is that it is the one best suited for assigning the pool of costs to cost objectives in accordance with benefits received; a traceable cause and effect relationship; or logic and reason, where neither the cause nor the effect of the relationship is determinable.”

Must be “equitable” to both federal and non-federal functions


66

NEGOTIATED INDIRECT (“F&A”) RATES

• 45 C.F.R. § 75.414(c)If a grantee has a negotiated indirect cost rate, then all Federal agencies are required to accept it unless there is a statutory, regulatory, or otherwise approved reason for deviation.– Note: Pass through entities also have to recognize their subs’

negotiated indirect cost rates between the sub and the feds if one exists (200.331(a)(4))

• 45 C.F.R. § 75.414(g) Gives entities a one-time extension of current negotiated indirect cost rates for up to four years subject to approval of the indirect cost cognizant agency. – But no reopening it during the four years, so you had better like it


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200.414(F)/45 C.F.R. § 75.414(F)DE MINIMIS INDIRECT COST RATE

• Option: Take a minimum flat rate; can be a transition to a rate or may be used indefinitely

• Set rate: “[A]ny non-Federal entity that has never received a negotiated indirect cost rate … may elect to charge a de minimis rate of 10% of modified total direct costs (“MTDC”).

• Challenges: What does this pay for? Must be applied consistently


68

FAQS – LOWER RATE THAN 10%?

§200.331-6 Pass-through Entities and Indirect Cost Rate Negotiation

Q. This section states that pass-through entities are expected to honor a subrecipient’s negotiated F&A rate agreement, or use a 10% MTDC de minimis rate, or negotiate an F&A rate with the subrecipient. Is it acceptable to require a subrecipient to accept a rate lower than 10% MTDC via negotiation, or in lieu of their negotiated F&A rate? If a subrecipient requests to establish a rate via negotiation, does the pass-through entity have to establish a rate via negotiation?– Answer next slide


69

ANSWER ON MANDATING LOWER RATES

A. If the subrecipient already has a negotiated F&A rate with the Federal government, the negotiated rate must be used. It also is not permissible for pass-through entities to force or entice a proposed subrecipient without a negotiated rate to accept less than the de minimis rate. The cost principles are designed to provide that the Federal awards pay their fair share of the costs recognized under these principles. Pass-through entities may, but are not required, to negotiate a rate with a proposed subrecipient who asks to do so.– COFAR FAQs, Nov. 26, 2014


70

Final Thoughts on Direct Allocation – VERY Common in HS!


71

OUR VIEW

• YOU MUST HAVE (or in all probability) a Cost Allocation Plan . . .

• Statement of Purpose• General approach to costs (direct costs

charged directly, utilization of indirect cost rate, etc.)

• Describe sources of funding so that relationship to costs is clearly understandable

• Remember – A CAP is not a budget, but a process for charging costs.


72

OUR VIEW, CON’T.

What needs to be in a Cost Allocation Plan?Address specific items of cost and their allocation base such as:

– G&A or other shared Staff – salaries, leave, other fringe benefits

– Facilities– Professional services– Travel– Supplies– Utilities


73

OUR VIEW, CON’T.

What needs to be in a Cost Allocation Plan?Describe allocation base (methodology)Common allocation bases:

– Direct Labor– Modified Total Direct Costs– Useable Square Feet– Number of Children Enrolled– Attendance– Hours of Service

Frequency of Charges, biweekly, monthly, quarterlyRemember: Real (Actual) not Budgeted #s for your Base too!


74

OUR VIEW – ADDITIONAL CONSIDERATIONS

Collection of Data– Accurate?– Easily Accessible?– Kept in Real time?

Functionality– Ease of Use– Is the program driving the train or the

accounting?

Explainability (yes, I made this word up!)


75

Questions?


76

Dawn of a New Day:

Time and Effort Under the Final Uniform Grants Guidance

LEARNING OBJECTIVES

• Review Changes in the Supercircular • The Goal of Time and Effort Reporting –

determining source of funds to pay salary and fringe benefits

• Urban Myths – woven throughout• How to do it and When to do it – Nuts and

Bolts• Compliance Strategies


78

Comments on T&E …


79

WHY YOU CARE . . .

Time and Effort findings have been common in OIG audits

Oversight of federal grant programs continues to increase, programmatic reviews now common occasionally using outside accounting firms – not to mention the OIG!

Financial consequences of non-compliance are substantial (can send you cases if you want!)

– i.e., give all the money back!


80

BASICS OF TIME & EFFORT

You are sending a bill to Uncle Sam for work by your employees and he wants to know what he is paying for…..


81

THREE DIFFERENT PIECES OF THE PUZZLE

1. Payroll – What it costs to have employees (salaries, fringe benefits, employment taxes etc.)

2. Time and Effort - “Personnel Activity Reports” or other documentation showing which intermediate or final cost objective is being charged (or accumulating) payroll costs

3. Charging Costs to Your Grant – When you go to Payment Management and drawdown federal funds to pay allowable costs


82

FIRST QUESTION – REFER BACK TO INDIRECT COST VISUAL…

How are these T&E reports going to be used?• Is it going to be used to charge costs to

intermediate or final cost objectives, e.g., are grants going to pay for their share of an employee’s salary and fringes based on the report?

-- OR –• Is it going to be used to charge all of the

employee’s S & FB to a single cost objective?


83

The Old Rules


COMPARE AND CONTRAST – OLD A-122 RULES

Four Required Elements for any employee charged “in whole or in part” to a federal award:

1. Actual Activity not budgeted; reasonable estimate of actual work performed

2. Account for the Total Activity of employee

3. Signature Requirements (employee or immediate supervisor with first-hand knowledge)

4. Frequency Requirements – at least monthly, coinciding with payroll


What Does An Old Personnel Activity Report Look Like?

Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14Hours(Emp.)

% of Time(Attg.)

Head Start

Administration

WIC

???

Vacation

Sick

Holiday

Other Leave

Total Total

Total Hours 100%

Employee Name: Bi-Weekly Time Sheet: April 1 to 14, 2014

Employee Signature: (OR) Supervisor Signature:

Date: Date:


86

EXCEPTION FOR GOVERNMENTS UNDER A-87

OMB Circ. A-87, (2 CFR part 225), App. B, ¶ 8(h)(3).

“Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee.”


87

Time and Effort Under the Supercircular


88

NEW RULES FOR DOCUMENTATION OF T&E (75.430(I)(1))

Documentation must “accurately reflect the work performed”

Records must:

“(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;

(ii) Be incorporated into the official records of the non-Federal entity;

(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities;


89

MORE ON NEW T&E DOCUMENTATION SYSTEMS…

“(iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy;

“(v) Comply with the established accounting policies and practices of the non-Federal entity; and”

[Yes, the Supercircular is missing number vi…]


90

MORE ON NEW T&E DOCUMENTATION SYSTEMS…

“(vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee

Works on more than one federal award; A federal award and non-federal award; An indirect cost activity and a direct cost activity; Two or more indirect activities which are allocated using

different allocation bases; Or an unallowable activity and a direct or indirect cost

activity.”


91

NEW TIME AND EFFORT, CONT.

“(viii) Budget estimates (i.e. estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided:”…

“(A) The system produces reasonable approximations of activity;

(B) Significant changes in the corresponding work activity are identified and entered into the records in a timely manner. Short term changes need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and

(C) Internal controls include processes to review after-the-fact interim charges made to a Federal award.”


92

ALTERNATIVES OR SUBSTITUTE SYSTEMS

For State, Tribal and Locals – still can use old RMTS and similar, statistically valid systems

For Everyone – two options:a) With federal approval “alternative proposals based on

outcomes and milestones for program performance where these are clearly documented”

b) Use “performance plans” to “incorporate funds from multiple federal awards and account for their combined use based on performance-oriented metrics, provided that such plans are approved in advance by all federal awarding agencies”


PRACTICAL APPLICATIONS

93

94

A PROPOSED APPROACH:

• Employees who charge all of their time to one funding source or cost objective, use semi-annual certifications

• Employees who “distribute” their time to two or more funding sources or cost objectives use traditional “Personal Activity Reports”


95

SUMMARY

• Records must be kept for every employee charged to your federal awards– Even employees who work solely under one federal

award

• Records must reflect the total activity for employees and actual activity, including both federally-assisted work and all other activities

• Default measurement is still how much time the employee spent working on the grant


SO ESSENTIAL ELEMENTS OF A TIME AND EFFORT SYSTEM

Written Policies and Procedures that set out:– Purpose– Requirements

• Good Faith, “reasonable” Estimate• Frequency• Employees must use Independent Judgment

– Penalties for Non-compliance

Monitoring – Start with a simple checklist, did everyone turn in their time

sheets?– Internal integrity?

Training


97

Questions?


98

Non-Federal Share (“Match”)


99

LEARNING OBJECTIVES

– Distinguish what items and services your program can count as match;

– Recognize how to document matching share;– Reinforce why showing "overmatch" makes

sense; and– Consider common and not-so-common pitfalls

to avoid.


100

COST SHARING OR MATCHING DEFINITION

45 CFR §75.2:

“Cost sharing or matching means the portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute). This may include the value of allowable third party in-kind contributions, as well as

expenditures by the recipient.”


101

YOUR FAVORITE SOURCES OF MATCH?

1._____________________________

2._____________________________

3._____________________________


102

COMMON AND UNCOMMON SOURCES

Common Sources of Match:– Volunteer Labor– Governance Functions– Free Space– State Funding

Uncommon Sources of Match– Donated Services from Specialists– Unrecovered Indirect Costs– Medicaid Payments


103

HEAD START ACT §640

“(b) Financial assistance extended under this subchapter for a Head Start program shall not exceed 80 percent of the approved costs of the assisted program or activities, except that the Secretary may approve assistance in excess of such percentage if the Secretary determines that such action is required in furtherance of the purposes of this subchapter.” 80%

20%

Non-FederalShare

Federal Award 80%


104

STATUTE: HEAD START ACT §640 (B), CON’T.

“Non-Federal contributions may be in cash or in kind, fairly evaluated, including plant, equipment, or services. The Secretary shall not require non-Federal contributions in excess of 20 percent of the approved costs of programs or activities assisted under this subchapter.”

We will discuss waivers at the end!


105

KEY CONCEPTS

Cash Match – grantee spending its own funds (however derived, such as a cash donation, income from a state program, etc.) to buy goods and services that benefit grantee’s Head Start program during the period match is claimed.

In-kind Match – (traditionally) grantee receives goods or services at little or no cost that it uses in its Head Start program during the period the match is claimed.

– But also can be – grantee donates supplies, equipment, property, etc. and uses it in the grantee’s Head Start program


106

WHAT ABOUT HS AND EHS TOGETHER?

“OHS – PC – A – 034

If a program operates both a Head Start and an Early Head Start program, is the 20% non-federal share requirement and the 15% administrative cap applied to both programs separately or to just the total program’s grant?

Head Start programs should strive to assure an equitable allocation of both non-federal share and administrative costs among Head Start and Early Head Start. However, grantees will be assessed for compliance with these requirements only against their total grant award (i.e. Head Start and Early Head Start).”

Just a reminder, though: Match is still counted towards or limited by 15% Administrative Cap.


107

KEY ISSUES FOR COUNTING MATCHING SHARE

Cost allowability

Valuation

Documentation

Three main considerations:


108

Allowability of Costs for Match


109

BASIC RULES . . . (MUST MEET ALL OF THESE)

1. Allowable under the Cost Principles including:– Ordinary and Necessary – “necessary and reasonable

for accomplishment of project or program objectives”– Verifiable “from the non-federal entity’s records” §

75.306(b)

2. No Fed to Fed: Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching.

3. No Double Count: i.e., are not included as contributions for any other federal award.

4. Included in approved Budget.

5. Conform to other provisions of the rules


110

BOILED DOWN

A cost is allowable if it is incurred in furtherance of program objectives

– For example, is this cost helping me meet one of the requirements under the Head Start Performance Standards?

Rule of Thumb: If I could spend Head Start money on X, but instead got X for free or I paid for it myself, then I can count the cost as match

PS: Unrecovered indirect costs can be counted if you have an indirect cost rate agreement.


111

Side Note: Program Income


112

WHAT IS PROGRAM INCOME?

Defined as “gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award . . . Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded projects . . . Interest earned on advances of Federal funds is not program income.”

“With prior approval of the [federal agency], program income may be used to meet the cost sharing or matching requirements of the Federal award.” 45 CFR 75.307(e)(3)

Can you generate Program Income? And get approval to use as match?


113

INTERESTING NOTE FROM HHS GPS

“Unless restricted by statute or regulation, matching or cost sharing may be provided as direct and/or indirect costs, consistent with the recipient’s accounting system—and its usual method of charging for similar items—and any restrictions or limitations in the applicable cost principles. Recipient contributions may be derived from any non-Federal source; from Federal sources if received as fees, payments, or reimbursements for the provision of a specific service, such as patient care reimbursements received under Medicare or Medicaid; or from other program income, if authorized by the OPDIV (see Part II). Otherwise, unless there is specific statutory authority, Federal funds may not be used to match HHS grant funds.”


114

IN-KIND MATCH


115

CONSIDERATIONS FOR WHICH RULES TO APPLY…

Who is contributing?– Recipient (i.e., you are)– Volunteer/3rd Party

What is the contribution?– Services– Supplies – Equipment– Facilities

What is the purpose of the grant?– Acquisition– Operations


116

IF THE GRANT RECIPIENT IS DONATING SERVICES

§75.306(d) says “Values for non-Federal entity contributions of services and property must be established in accordance with the cost principles in Subpart E.”

So, for staff this means salary and fringe properly documented with time and effort reports.

Anything else, what did you pay for it? Is it expensed or capitalized/depreciated?


117

IF ANOTHER IS DONATING SERVICES

Is an individual making the donation of time or another organization?

If an individual donates his or her time:– Rates for volunteer services shall be consistent with those

paid for similar work in the recipient’s organization. – In those instances in which the required skills are not found …

use local labor rates for similar services.– In either case, paid fringe benefits that are reasonable,

necessary, allocable, and otherwise allowable may be included.”

– But, can count only “if the service is an integral and necessary part of an approved project or program.”

– See § 75.306(e)


118

IF ANOTHER IS DONATING SERVICES:

If another organization donates the time of its employees while they are being paid by that organization:

– services must be valued at the “employee’s regular rate of pay” plus allowable, allocable, reasonable and necessary “fringe benefits” and “indirect costs” (at either the other org’s approved federally negotiated indirect cost rate or a rate otherwise in accordance with the provisions of the Supercircular, i.e. de minimis rate) § 75.306(f).

– “[P]rovided these services employ the same skills for which the employee is normally paid.”

– If not, value according to previous slide.

– But, word of caution, service included in indirect subject to admin. Cap and must be accounted for in rate proposal…


119

COST ALLOWABILITY OF VOLUNTEER TIME

Board member time for participating in training or board meetings?

Allowable or Unallowable ?


120

POLICY CLARIFICATION OHS-PC-A-078

“Head Start agencies may claim [as] non-federal match the value of volunteer services of governing body and policy council members.”


121

WHAT ABOUT VALUATION AND ALLOCATION?

The value of governing bodies and advisory boards should be set internally based upon a reasonable value for the services provided. For example, Policy Council time might be valued using the Director’s salary as a rate. See Head Start Fiscal Assistant, 5/31/2007

“Policy Council time would be considered to be programmatic, however, Board or Tribal Council time could be considered an administrative match that is subject to the 15 percent limitation” See Non-Federal Share Narrative


122


Activities between an enrolled Head Start child and that child’s parent either at home or at the center.



123


“A parent involvement activity that primarily benefits the parent and their child is not considered an allowable cost for an in-kind match.”

– Home visits including pre-natal, newborn or postpartum visits; – Staff-teacher conferences; – Socialization activities; – Parent education, orientation, or training; – Meetings and activities related to family goal setting with the

family partnership agreement; – Participation in specific activities that are related to a child’s

developmental or educational plan, Individualized Family Service Plan or Individualized Education Plan;

– Field trips; or – Transition meetings.


124

POLICY CLARIFICATION OHS-PC-A-077, CON’T.

“An activity that provides a good or service to benefit the program is considered an allowable cost for an in-kind match.”

– Participation in a health services advisory committee or other advisory committee;

– Participating in outreach efforts for recruitment; – Participating in community partnerships with other

parents or community members; – Supporting a lending library, health fair or other program

activity; – Providing assistance in a classroom or on a field trip; – Reviewing menus for the program; or – Participating in an employment interview.


125


Parent Volunteer Activities at Home “If a Head Start child’s teacher (or home visitor) provides the child’s parents with written plans or guidance as to the types of activities that need to be done with the child at home in order to support the child’s Head Start experience these activities may, when fairly valued, be counted as non-federal share. The "countability" of the parent’s efforts hinge on doing things with the enrolled child that support the child’s Head Start experience, that are articulated by the teacher (or home visitor) and that support the curriculum used by the program. General parenting duties do not constitute activities that can be counted as non-federal share, unless these activities meet the requirements noted above. The valuation of the parent’s time should, unless a program can demonstrate otherwise, be valued at the rate of a teacher’s assistant.”


126


Staff member volunteering for a Head Start related activity during non-paid time?



127


Staff member volunteering for a Head Start-related activity during non-paid time?

Just don’t do it!!!


128

DONATIONS

Discounts from vendors?Allowable or Unallowable ?


129

POLICY CLARIFICATIONS OHS – PC – A – 014

When a program has a vendor who gives discounts for their products to a Head Start program, can these discounts be used as non-federal share?

“This Policy Clarification is currently under review.”

But who cares b/c Philadelphia case (PPCC I, Dec. 31, 2009)

Good rule of Thumb, see old§ 92.24(b)(7)(iii)– More services for no more money or– Demonstrable “Cost Savings”


130

IF ANOTHER IS DONATING SUPPLIES

Supplies (including classroom supplies)

–Remember: Under federal definition of “supplies,” anything with an acquisition cost of less than $5,000 or useful life of less than a year is a supply.

–Use Fair Market Value • “at time of donation” 45 CFR 75.306(g)


131

IF ANOTHER IS DONATING EQUIPMENT

Use of Equipment – If loaned, may not exceed “fair rental value”

45 CFR 75.306(i)(4)

A Piece of Equipment – Must comply with prior approval requirements

($25,000 or more threshold) – FMV for same age and condition at the time of

donation


132

IF ANOTHER IS DONATING FACILITY

Land and Building – What is the purpose of grant?

If acquisition of Facilities (rare), then:

– “Aggregate value of the donated property may be claimed as cost sharing of matching”• 45 CFR 75.306(h)(1)

– BUT NOTE: Rincon San Luiseno Band of Mission Indians (DAB No. 1826): “fundamental principle of grants management that a grantee is required to document its costs”


133

IF ANOTHER IS DONATING FACILITY & TITLE PASSES TO GRANTEE

Land and Building

If purpose of grant is to operate a program that needs facilities (like most of you), then:

– “Normally only deprecation charges… may be made.”– “However, the… fair rental charges for land may be

allowed provided that the Federal awarding agency has approved the charges.”

– 45 CFR 75.306(h)(2)Value: can’t exceed FMV at time of donation as established by independent appraiser


134

FACILITIES WHERE TITLE IS HELD BY GRANTEE

HS Narrative: “Depreciation may be computed following any generally accepted method and is to be based on the acquisition cost of the building.” – see e.g., § 92.24 (e)(2)(ii) “based on property’s market value at the time it was donated.”

Now, what if Grantee owns property (no federal help in purchasing)?

– depreciation or use allowance plus operating costs

– Basis for depreciation or use calculation is purchase price of facility per cost principles


135

IF ANOTHER IS DONATING SPACE

The value of donated space must not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.”

–45 CFR 75.306(i)(3)What is an independent appraisal?


136

DOCUMENTATION OF IN-KIND CONTRIBUTIONS

45 CFR § 75.434(d)

“To the extent feasible, services donated to the non-Federal entity will be supported by the same methods used to support the allocability of regular personnel costs.”


137

The Over / Under


138

WHAT IS AN OVERMATCH?

Central Piedmont Action Council, Inc.; DAB No. 1916 (April 16, 2004)

“The Board has recognized that a grantee may reduce or offset a disallowance by documenting that it incurred unclaimed, allowable and allocable costs that it paid for with its own funds. Campesinos Unidos, Inc.; Seminole Nation of Oklahoma. In effect, a grantee may substitute, for unallowable costs, allowable costs for which it did not claim federal funding. Additionally, because the Head Start statute requires a Head Start grantee to pay for 20% of its total approved Head Start costs with non-federal funds, a grantee seeking to reduce a disallowance by identifying unclaimed costs would have to establish that the unclaimed costs were distinct from and in addition to the 20% of total approved Head Start costs that grantees are required to pay with non-federal funds. 42 U.S.C. § 9835(b); 45 C.F.R. § 1301.20.”


139

SO…

• If you reach your 20%, don’t stop counting!• In-kind overmatch is protection against a

disallowance of some of your documentation for other In-kind;

• Cash overmatch is protection against a disallowance of federal funds; and

• Don’t promise to overmatch in your grant application.


140

REMINDER: NON-FEDERAL SHARE TIPS

Ask the following 3 questions:1. Would this expenditure be allowable if we were using

federal dollars? Reasonable? Ordinary? Necessary?

2. How much federal money would we spend to purchase the same goods or services?

What is the fair market value of the goods or services?3. How would we document this expenditure if we were

using federal funds? Documentation should be detailed and include receipts

and other verification if available (don’t just summarize!!!) Use the “same methods used by the recipient for its

own employees.” For example, use sign-in/sign-out sheet

Time should be recorded on a real-time basis after the fact


141

Questions?

Edward T. Waters, Esq.

May 12-13, 2015

Washington State Head Start Association – Day 2

Eligibility and Enrollment under New Regulations


143

Head Start Eligibility Final Rule


144

LEGAL FRAMEWORK

• Statute – Head Start Act takes priority over Regulations (e.g., the Performance Standards)

• Regulations – Eligibility and Enrollment (45 CFR Part 1305) Regulations untouched for 23 years until now

• Upshot: HS Act contained many changes that were not in regulations

• One last point – Notice and Comment Rulemaking, i.e., how regulations are issued is important context…


145

WHAT’S NEW? WHAT’S NOT?• New:

• Definitions• IVD• Record Retention• Training Requirements

• Same Old, Same Old• Eligibility Categories (mostly)• Age of Children (mostly)• Residency• Automatic Enrollment in future year or years

• Confusion – Lots Left to Clarify/Explain but we will do our best….


146

IMPLEMENTATION DEADLINES

• Revise and apply policies and procedures on or after March 12, 2015

• Train all staff “who determine eligibility” within 90 days of effective date or June 10, 2015

• Train all Board and Policy Council within 180 days of effective date or Sept. 8, 2015

• Will address what is in training and continuing obligations at end….


147

OVERVIEW OF PART 1305

1305.1 Purpose and scope

1305.2 Definitions (Note: Applies to all of Part 1305)

1305.3 Determining community strengths and needs

1305.4 Age of Children and family income eligibility

Determining, verifying and documenting eligibility

1305.5 Recruitment of children

1305.6 Selection process

1305.7 Enrolment and re-enrollment

1305.8 Attendance

1305.9 Policy on fees

1305.10 Compliance


148

1305.2 DEFINITIONS


149

NEW/REVISED DEFINITIONS

“. . . we added new definitions for: accepted, enrolled, foster care, homeless children, Migrant or

Seasonal Head Start Program, participant, relevant time period, and verify. We also revised these current definitions: enrollment, family, and

Head Start eligible. We believe our efforts here make the regulation easier to understand…”

80 Fed. Reg. 7369 (Feb. 10, 2015).


150

DEFINITIONS NOT INCLUDED

• “We did not define the phrase ‘‘is eligible for or, in the absence of child care, would be potentially eligible for public assistance.’’ We took the phrase directly from section 645(a)(1)(B)(i) of the Act. As always, we expect programs to continue to enroll the neediest families first.

• “We did not define average daily attendance because attendance is beyond the scope of this regulation. This regulation focuses on eligibility. It does not address attendance, which is addressed in another section of 45 CFR 1305.”

• We did not define eligibility period, but we clarified how long a participant remains eligible in §1305.4(k).”

• 80 Fed. Reg. 7370 (Feb. 10, 2015)© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

151

COMMENT ON ENROLLMENT

“Comment: One commenter asked why we require a child to attend at least one day of classes to be considered enrolled when the current definition for enrollment does not mention anything about attendance.

Response: In light of this comment, we redefined enrollment. And we defined enrolled and accepted. We referred to the PIR for guidance. In the PIR, a child or a pregnant woman is enrolled once they have attended class or received a service. A child or pregnant woman is considered accepted when they have met the eligibility criteria and have completed the process for enrolling in the program. Consequently, persons on Head Start waiting lists have been accepted but are not yet enrolled.”

80 Fed. Reg. 7370 (Feb. 10, 2015).


152

FIXED! ENROLLED AND ENROLLMENT

• New “Enrolled means a child has been accepted and attended at least one class, has received at least one home visit, or has received at least one direct service” “pending” completion of paperwork per state and local law. For EHS a pregnant woman who “has been accepted and received at least one direct service.”

• New “Accepted” means child or pregnant woman who meets eligibility criteria and has completed enrollment process. Persons on a waiting list, therefore, have been accepted but not yet enrolled

• Revised “Enrollment” means number of participants• New “Participant” means pregnant woman or child who is

enrolled and receives services


153

WHAT IS A DIRECT SERVICE?

Examples:• Screenings• Dental services• Mental health services• Any other service that is directly charged to

the grant…. • These services might be provided before the

child ever comes to class or receives a home visit


154

DISTINGUISH NEW ENROLLMENT DEFINITION FROM “ENTRY”

• 1304.20(a): “ entry means the first day that Early Head Start or Head Start services are provided to the child.”

• “In accordance with 45 CFR 1304.20(b), Head Start programs, in collaboration with parents, are required to begin completing screenings within 45 days of the child’s entry into the program. Entry into the program is defined as the first day the child enters the Head Start classroom, or begins to participate in a home based or family child care program.” OHS – PC – B – 018


155

RELATIONSHIP BETWEEN ENTRY AND ENROLLMENT

Enrolled

Entry


156

KNOWN UNKNOWNS

• What happens if an “enrolled” child does not show up for class? When can you withdraw acceptance?

• When do you count a slot as vacant? 1305.8(c) vacancy based on attendance:• “In circumstances where chronic absenteeism persists

and it does not seem feasible to include the child in either the same or a different program option, the child's slot must be considered an enrollment vacancy.”

• Tip: Policies and procedures should designate a window of time when the child or pregnant woman must come in to receive services and maintain slot


157

ERSEA TIMELINE BASED ON NEW DEFINITIONS

Recruitment/Outreach

Eligibility Determination

Acceptance

Selection

Enrollment or Waitlist

Entry

Attendance


158

1305.4 Determining, verifying and documenting eligibility.


159

LAYOUT OF NEW 1305.4 AS FOLLOWS:

a) Process overview

b) Age Eligibility

c) Income Eligibility

d) Additional Allowances

e) Additional Allowances for Indian Tribes

f) Categorical Eligibility requirements

g) Migrant or Seasonal eligibility requirements

h) Verifying age

i) Verifying income

j) Verifying categorical eligibility

k) Eligibility duration

l) Records

m) Program Policies and Procedures on violating eligibility determinations regulations

n) Training


160

WHO IS ELIGIBLE FOR HEAD START AND EARLY HEAD START?


161

TYPES OF ELIGIBILITY

INCOME ELIGIBILITY

Low IncomeA. Below 100% FPLB. Eligible for Public

Assistance

Over Income A. 100% - 130 % FPL or

“alternative criteria”B. Above 130% FPL

CATEGORICAL ELIGIBILITY

Homeless

Foster Care


162

PROCESS OVERVIEW – NEW SECT. 1305.4(A)

Remember: “IVD”• Interview

• In-person • Telephonic as backup

• Verify• Determine Eligibility


163

TOPICS TO COVER IN THE INTERVIEW

• Child’s age?• Family Size and income?• Family receiving “public assistance”• Foster care?• Homelessness?


164

Age Eligibility


165

AGE ELIGIBILITY 1305.4(b)

“(1) For Early Head Start, except when the child is transitioning to Head Start, a child must be an infant or a toddler younger than three years old. A pregnant woman may be any age. [seriously?]

(2) For Head Start, a child must:

(i) be at least three years old; or,

(ii) turn three years old by the date used to determine eligibility for public school in the community in which the Head Start program is located; and,

(iii) not be older than compulsory school age.

(3) For Migrant or Seasonal Head Start, a child must be younger than compulsory school age by the date used to determine public school eligibility for the community in which the program is located.”


166

NEW! AGE VERIFICATION 1305.4(h)

“Program staff must verify a child’s age according to program policies and procedures. A program’s policies and procedures cannot require staff to collect documents that confirm a child’s age, if doing so creates a barrier for the family to enroll the child.”


167

DOCUMENTS TO VERIFY AGE

Examples:

• Birth certificates• Baptism records• Medical records• Other?


168

Income Eligibility


169

TWO COMPONENTS TO DETERMINE INCOME ELIGIBILITY

Step 1: Determine size of family

Step 2: Calculate household income


170

NEW BIFURCATED DEFINITION OF “FAMILY”

45 CFR §1305.2 states for CHILDREN:

“Family, for a child, means all persons living in the same household who are:

(1) Supported by the child’s parent(s)’ or guardian(s)’ income; and

(2) Related to the child’s parent(s) or guardian(s) by blood, marriage, or adoption; or

(3) The child’s authorized caregiver or legally responsible party.”


171

NEW BIFURCATED DEFINITION OF “FAMILY”

45 CFR §1305.2 states for Pregnant Women:

“Family, for a pregnant woman, means all persons who financially support the pregnant woman.”


172

INCOME ELIGIBILITY 1305.4(c)

Income Eligible -

“(1) A pregnant woman or a child is eligible, if:

(i) the family’s income is equal to or below the poverty line; or,

(ii) the family is eligible or, in the absence of child care, would be potentially eligible for public assistance.”

We still don’t know what “potentially eligible” means!


173

PUBLIC ASSISTANCE 1305.4(i)(1)(ii)

• (Previously considered categorical eligibility)• Children eligible for public assistance • “Public assistance includes TANF and SSI. We

believe this is consistent with longstanding Head Start guidance…we have narrowly construed public assistance in the past and believe that our interpretation of public assistance is consistent with the overall thrust of the eligibility requirements, which emphasize serving children from families in the lowest income brackets.” Federal Register at 7372


174

INCOME ELIGIBILITY 1305.4(c) (CON’T)

Over-Income -

“(2) If the family’s income is above the poverty line, a program may enroll a pregnant woman or a child who would benefit from services. These participants can only make up to 10 percent of a program’s enrollment in accordance with (d).”

• Note: Special income eligibility rules for tribal grantees See 1305.4(e). No significant changes here


175

NEWISH ADDITIONAL ALLOWANCES 1305.4(d)

• Called in Preamble “Over-income” or “Alternate Criteria”

• You call it what you want!

“(1) A program may enroll an additional 35 percent of participants whose families are neither income nor categorically eligible and whose family incomes are below 130 percent of the poverty line, if the program…”


176

ADDITIONAL ALLOWANCES 1305.4(d)

• “(1)(i) establishes and implements outreach, and enrollment policies and procedures to ensure it is meeting the needs of income or categorically eligible pregnant women, children, and children with disabilities, before serving ineligible pregnant women or children”

• Don’t forget the rest of the required “Seven Habits” Reporting elements


177

Income VerificationWhere the Rubber Hits the Road


178

GENERAL RULE - FORMAL DOCUMENTATION 1305.4(i)

“(1) If the family can provide all W-2 forms, pay stubs, or pay envelopes for the relevant time period, program staff must:

– (i) use all family income for the relevant time period to determine eligibility according to income guidelines;

– (ii) state the family income for the relevant time period; and

– (iii) state whether the pregnant woman or child qualifies as low-income.”


179

INCOME VERIFICATION NO FORMAL DOCUMENTATION

“(2) If the family cannot provide all W-2 forms, pay stubs, or pay envelopes for the relevant time period, program staff may accept written statements from employers for the relevant time period and use information provided to calculate total annual income with appropriate multipliers.”


180

SO WHAT IS THE “RELEVANT TIME PERIOD”

§1305.2 Definition:

“(A) the 12 months preceding the month in which the application is submitted; or (B) during the calendar year preceding the calendar year in which the application is submitted, whichever more accurately reflects the needs of the family at the time of application.”

• But - - - under §1305.4(i)(5) “If the family can demonstrate a significant change in income for the relevant time period, program staff may consider current income circumstances.”

• So no real change here


181

WHERE ARE THE CHANGES?

• Determination of Family Size

• Documentation of Zero Income

• The Known Unknown– Families Paid in Cash– Public Assistance


182

FAMILY EXAMPLE

Question: What size is the family?

Mom and her three kids Mom’s boyfriend and his kid


183

INCOME VERIFICATIONNO INCOME

“(3) If the family reports no income for the relevant time period, a program may:

(i) accept the family’s signed declaration to that effect, if program staff:

(A) describes efforts made to verify the family’s income; and,

(B) explains how the family’s total income was calculated; or,

(ii) seeks information from third parties about the family’s eligibility, if the family gives written consent. If a family gives consent to contact third parties, program staff must adhere to program safety and privacy policies and procedures and ensure the eligibility determination record adheres to paragraph (l)(2)(ii)(C) in this section.”


184

PUBLIC ASSISTANCE –

“Some commenters asked us to explain how programs can determine a family’s potential eligibility for public assistance.”

Response:

“If a family gives written consent, the program could verify the family’s potential eligibility for public assistance with third parties, like TANF or SSI officials. Moreover, if a family does not have proof of income, the program can accept a family member’s written declaration that states the family is potentially eligible for public assistance. In these instances, program staffs are required to verify the family’s eligibility.”

Page 7372 of Federal Register Notice


185

OHS – PC – I – 016

How is eligibility for Head Start based on SSI determined?

If anyone in a prospective Head Start child’s family is receiving SSI, that child is considered income eligible for Head Start, irrespective of the child’s family’s income. Family members include the child, the child’s parent(s) or guardian(s) and any other person living in the child’s household who is supported by the income of the child’s parent(s) or guardian(s) and is related to the child’s parent(s) or guardian(s) by blood, marriage or adoption.

Requirement

Sec. 645(a) of the Head Start Act


186

INCOME VERIFICATIONNOTHING NEW HERE 1305.4(i)

“(4) If a child moves from an Early Head Start program to a Head Start program, program staff must verify the family’s income again.”


187

Categorical Eligibility- An independent reason for enrollment


188

NEW CATEGORICAL ELIGIBILITY 1305.4(f)

“(1) A family is categorically eligible for Head Start, if:

(i) the child is homeless, as defined in §1305.2; or,

(ii) the child is in foster care, as defined in §1305.2.

(2) If a program determines a child is categorically eligible under (1)(i) in this paragraph, it must allow the child to attend a Head Start program, without immunization and other medical records, proof of residency, birth certificates, or other documents. The program must give the family reasonable time to present these documents.”


189

NEW FOSTER CARE DEFINITION 1305.2

“Foster care means • 24-hour substitute care for children placed away from their

parents or guardians and for whom the state agency has placement and care responsibility.

• This includes, but is not limited to, placements in foster

family homes, foster homes of relatives, group homes, emergency shelters, residential facilities, child care institutions, and pre-adoptive homes... ”


190

FOSTER CARE (CON’T)

• “…A child is in foster care in accordance with this definition regardless of whether the foster care facility is licensed and payments are made by the state or local agency for the care of the child, whether adoption subsidy payments are being made prior to the finalization of an adoption, or whether there is Federal matching of any payments that are made.”


191

NEW HOMELESS DEFINITION 1305.2

“Homeless children means the same as homeless children and youths in section 725(2) of the McKinney-Vento Homeless Assistance Act at 42 U.S.C. 11434a(2). The definition in this regulation also applies to Migrant or Seasonal Head Start programs.”


192

MCKINNEY-VENTO: “HOMELESS CHILDREN AND YOUTHS”

(a) Means individuals who “lack a fixed, regular, and adequate nighttime residence” . . . and

(b) Includes -

“i) Children and youths who are sharing the housing of other persons due to loss of housing, economic hardship, or a similar reason; are living in motels, hotels, trailer parks, or camping grounds due to lack of alternative adequate accommodations; are living in emergency or transitional shelters; are abandoned in hospitals; or are awaiting foster care placement;

ii) Children and youths who have a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings. . .;

iii) Children and youths who are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; and

iv) Migratory children . . . who qualify as homeless because they are living in circumstances described in clauses (i) through (iii) above.”


193

HOMELESS ELIGIBILITY DETERMINATIONS

Sample questions (cont.)

Regular – Do you stay in the same place every night?– Do you have a key to the place where you are

living?– Do you move around a lot?– How long have you been at that place? How

long do you plan to stay?– How long did you live in your last place?


194

HOMELESS ELIGIBILITY DETERMINATIONS

Sample questions (cont.)Adequate

– Are you and your children sharing a room? How many people are staying in one room?

– Are you and your children sleeping in a bedroom, or in a public area, like a dining room?

– Does the home have heat/electricity/running water?– What condition is the home in? Does it keep out rain

and wind? Is it safe? Is it warm and dry?– Can you come and go as you please?


195

CATEGORICAL VERIFICATION 1305.4 (j)FORMAL DOCUMENTATION

(1) A family can prove categorical eligibility, with:

(i) a court order or other legal or government-issued document or a written statement from a government child welfare official demonstrating the child is in foster care;


196

CATEGORICAL VERIFICATIONSERVICE PROVIDERS ETC.

“(ii) a written statement from a homeless services provider, school personnel, or other service agency attesting that the child is homeless or any other documentation that indicates homelessness, including documentation from a public or private agency, a declaration, information gathered on enrollment or application forms, or notes from an interview with staff to establish the child is homeless, as defined in §1305.2 or,

(iii) any other document that establishes categorical eligibility.”


197

CATEGORICAL VERIFICATION 1305.4 (j)NO DOCUMENTATION

“(3) If a family cannot provide one of the documents described in (j)(1) to prove the child is homeless, a program may accept the family’s signed declaration to that effect, if, in a written statement, program staff:

(i) describes the efforts made to verify that a child is homeless, as defined in §1305.2;and,

(ii) describes the child’s living situation, including the specific condition described in §1305.2 under which the child was determined to be homeless. “ © 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

198

CATEGORICAL VERIFICATION 1305.4 (j)THIRD PARTIES

“(4) Program staff may seek information from third parties who have first-hand knowledge about a family’s categorical eligibility, if the family gives consent. If the family gives consent to contact third parties, program staff must adhere to program safety and privacy policies and procedures and ensure the eligibility determination record adheres to paragraph (l) (2)(ii)(C) in this section.”


199

MIGRANT OR SEASONAL HEAD START PROGRAM 1305.2

“(A) with respect to services for migrant farmworkers, a Head Start program that serves families who are engaged in agricultural labor and who have changed their residence from one geographic location to another in the preceding 2-year period; and

(B) with respect to services for seasonal farmworkers, a Head Start program that serves families who are engaged primarily in seasonal agricultural labor and who have not changed their residence to another geographic location in the preceding 2-year period.”


Eligibility Duration

© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 200

201

ELIGIBILITY DURATION 1305.4(k)

• Same as Head Start Act§645(a)(1)(B)(v)• “(1) If a child is determined eligible under this section

and is participating in a Head Start program, he or she will remain eligible through the end of the succeeding program year.”

• (2) If a program operates both an Early Head Start and a Head Start program, and the parents wish to enroll their child who has been enrolled in the program’s Early Head Start, the program must ensure, whenever possible, the child receives Head Start services until enrolled in school.”


202

Verification Records


203

RECORDS 1305.4 (l)

(1) “A program must keep eligibility determination records for each participant and on-going training records for program staffs. A program may keep these records electronically.

(2) Each eligibility determination record must include:

(i) copies of any documents or statements, including declarations, that are deemed necessary to verify eligibility under paragraphs (h) - (j) of this section;”


204

RECORDS (CON’T)

“(ii) a statement that program staff has made reasonable efforts to verify information by:

(A) conducting either an in-person, or a telephonic interview with the family as described under paragraph (a) of this section;

(B) describing efforts made to verify eligibility, as required under paragraphs (h) - (j) of this section; and,

(C) collecting documents required for third party verification under paragraphs (i)(3)(ii) and (j)(4) of this section, that includes:

(1) the family’s written consent to contact each third party;

(2) the third parties’ names, titles, and affiliations; and,

(3) information from third parties regarding the family’s eligibility.”


205

RECORDS (CON’T)

“(iii) a statement that identifies whether:

(A) the family’s income is below income guidelines for its size, and lists the family’s size;

(B) the family is eligible for or, in the absence of child care, potentially eligible for public assistance;

(C) the child is homeless child, as defined at §1305.2 including the specific condition described in §1305.2 under which the child was determined to be homeless;

(D) the child is in foster care;

(E) the family meets the over-income requirement in paragraph (c)(2) of this section; or,

(F) the family meets alternative criteria under paragraph (d) of this section.”


206

RECORDS (CON’T)

“(3) A program must keep eligibility determination records:

(i) for those currently enrolled, as long as they are enrolled; and,

(ii) for one year after they have either stopped receiving services; or,

(iii) are no longer enrolled.”


207

PROGRAM POLICIES AND PROCEDURES1305.4 (m)

“Program policies and procedures on violating eligibility determination regulations. A program must establish policies and procedures that describe all actions taken against staff who intentionally violate federal and program eligibility determination regulations and who enroll pregnant women and children that are not eligible to receive Early Head Start or Head Start services.”


208

TRAINING REQUIREMENTS

(i) “include methods on how to collect complete and accurate eligibility information from families and third party sources;

(ii) incorporate strategies for treating families with dignity and respect and for dealing with possible issues of domestic violence, stigma, and privacy; and,

(iii) explain program policies and procedures that describe actions taken against staff, families, or participants who intentionally attempt to provide or provide false information.”

45 C.F.R. §1305.4(n)© 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

209

• Thing 1: What is our Business Process?– Ps & Ps– Training– Implementation– Monitoring

• Thing 2: Guiding Principles– Rule of Reason– What did you do?– Why did you do it?– Create your Legacy – Audit Trail?– Consistency – Like to Like

THE CAT IN THE HAT


210

BUILDING BLOCKS FOR A COMPLIANT SYSTEM

• Intake Form• Intake Procedures• Code of Conduct• Training• Monitoring System


211

Questions?



CONTACT INFORMATION

Edward (Ted) Waters(202) 466-8960

[email protected]

mailto:[email protected]

http://www.ftlf.com/

Documents

Edward T. Waters, Esq. May 12-13, 2015 Head Start Grants Management and Head Start Eligibility © 2015 Feldesman Tucker Leifer Fidell LLP. All rights reserved