A Fiscal Systems View of Program Management

1. A Fiscal Systems View of Program Management Virginia Head Start Association June 20, 2012 Belinda Rinker, JD Senior Advisor to the Office of Head Start belinda.rinker@acf.hhs.org

3. Families Community Children

4. Head Start Early Head Start Grantee Organization

6. Coordinated Data Informed Effectively Communicated

7. Coordinated Data Informed Effectively Communicated

8. Fiscal System Elements Non-federal Share Cost Allocation

9. Financial Management Systems45 CFR 74.21 or 45 CFR 92.20 • Accurate, current and complete disclosure of program finances. • Records that adequately identify the source and application of funds. • Effective control over and accountability for funds, property and program assets. • Separation of fiscal duties • Board member with fiscal management or accounting expertise • Annual Financial Audit • Comparison of actual outlays (amounts spent) with budgeted costs. • Written procedures to minimize the time between drawdown and expenditure (payment) of costs and expenses. • Written procedures for determining the reasonableness, allocability and allowability of costs (cost principles and the terms and conditions of the award). • Accounting records supported by source documentation.

10. Recordkeeping and Reporting • Personnel files. • Volunteer files. • Food service and menu records. • USDA Nutrition Assistance Programs • Facilities and equipment records. • Property inventory and facilities records • Valid licenses and registrations required by Federal, State or local law • Insurance records. • General liability, property, student accident, title insurance (facilities) • Fiscal records. • Status of grant funds (budget, projected and actual) • Cost are reasonable, allocable and allowable (cost principles) • Fiscal reports. • Internal: Board, Policy Council (monthly), budgets, aged payables • External: Community, OHS, IRS, workers compensation, USDA

11. Procurement45 CFR 74.42, 74.44 or 45 CFR 92.36 • Written procurement procedure applicable to goods and services purchased. • Complies with all Federal, State and local regulations: bid process, Davis-Bacon Act compliance • Includes written code of conduct for employees engaged in awarding or administering contracts: related parties, conflicts of interest • Contracts are accurate, complete, signed and up to date. • Purchases of goods: supplies, equipment, vehicles • Personal service contracts: nutrition consultant, mental health professional • Delegate agency agreements

12. Compensation • Compensation for all employees meets the cost principle requirements: necessary, allocable and reasonable. • Wages, benefits, bonus and incentives • Executive Level II limitation is met ($179,700) • Adequate records are available to support compensation. • Time records for all non-exempt employees • Payroll records for all employees • Personnel activity reports • Compensation costs for employees whose services benefit more than one program are property allocated. • Compensation reporting (external) is timely, complete and accurate: IRS, state taxes, workers compensation, unemployment insurance. • Future compensation benefit obligations are funded.

13. Cost Principles2 CFR Part 220, 2 CFR Part 225 or 2 CFR Part 230 • Written procurement procedures to determine that all expenses are allowable, necessary and allocable. • Adequate documentation supports expenditure. • Allowable: • Reasonable for performance of the award (see below) • Consistent with policies and procedures and treated consistently • Not charged to another program • Adequately documented • Cost limitations and exclusions are followed • Reasonable: does not exceed what a prudent person would pay under similar circumstances at the time the decision was made. • Generally recognized as ordinary and necessary • Complies with sound business practices: arms length transactions • Prudence was exercised in light of responsibilities • Follows established practices and does not unjustifiably increase cost

14. Cost Principles (Continued)2 CFR Part 220, 2 CFR Part 225 or 2 CFR Part 230 • Allocable: A cost is allocable (can be charged) to a particular grant if it is charged in accordance with the benefit to the grant: • The cost is incurred specifically (100%) for the charged grant, or • The cost benefits both the award and grant(s) and can be distributed between or among programs in reasonable proportion to the benefits received, or • The expense is necessary to the overall operation of the organization, although a direct relationship to any particular grant cannot be shown. • Costs may not be shifted from one grant to another to cover deficiencies in funding or avoid restrictions. • The cost principles also apply to costs and expenses which are charged in accordance with a cost allocation plan (shared costs) and to costs which are claimed as non-federal share.

15. Non-federal Share • The grantee agency must provide 20 percent of the total costs of the Head Start program unless a waiver has been granted. • For every federal Head Start dollar received the grantee must provide twenty-five cents (absent a waiver) • Criteria for application for waiver (written) are lack of community resources, initial costs, unanticipated cost increases, major disaster and community impact (See ACF-PI-HS-12-02) • Allowable non-federal share costs meet applicable cost principles: necessary, reasonable and prudent. • Adequate documentation is required to support non-federal share costs. • Except where specifically authorized by statute, other federal funds cannot be used as non-federal share.

16. Cost Allocation • Cost allocation is required when costs are shared by two or more programs. • Includes costs shared between Head Start and Early Head Start • Includes costs shared between either Head Start or Early Head Start and programs or services from another funding source • Exception is either Head Start or Early Head Start and its associated USDA Nutrition Assistance Program • Shared costs must be fairly allocated between or among the programs that benefit from those costs in accordance with a cost allocation plan. • Grantees have the option to apply for a negotiated indirect cost rate or allocate indirect costs. • Administrative costs (direct and/or indirect) cannot exceed 15% of the grantee’s overall Head Start grant.

17. Facilities and Property45 CFR Part 1309, 45 CFR Part 74 or 45 CFR Part 92 • Special requirements apply to all facilities which are purchased (initially or through mortgage payments), constructed or undergo major renovations using Head Start funds (in whole or in part). • Special notices must be filed in the official (real property) records to protect federal funds used for facilities activities. • Personal property (worth at least $5,000) must be included on a detailed inventory prepared every two years. • Permission is required before a program can use any property purchased in whole or in part with Head Start funds as collateral for a loan, including lines of credit. • Permission is required before any property worth $5,000 or more purchased in whole or in part with Head Start funds is sold or transferred. • Detailed facilities and property records are required, including proof of insurance.

18. Virginia 2012 Monitoring Results • No written procedures to determine reasonableness, allowability and allocability. • Reporting to governing body and policy council. • Credit card expenditures not included • USDA meals and snacks not reported • Training not provided to governing body and policy council for understanding and effective oversight. • Inadequate equipment records. • Repair, safety and security of materials, equipment and facilities. • Failure to conduct criminal records checks.

19. Questions and Comments