Changes in Head Start program operations or in the line item budget that supports program operations occur for a variety of reasons. There may be a redefining of the scope of operations such as a change in hours of operation, location or a need for facility improvements or additional facilities. Additional funds may become available from line items in the budget such as personnel, for example, due to resignations or retirements. The program may receive an unexpected in-kind contribution that reduces the need to spend grant funds or may incur an unexpected cost due to an emergency.
Certain post-award programmatic changes and budget revisions require prior approval from the Administration for Children and Families (ACF). The Federal requirements for post award changes are contained in:
- 45 CFR Part 74 (Uniform Administrative Requirements for Awards and Subawards to Institutions of Higher Education, Hospitals, Other Nonprofit Organizations, and Commercial Organizations; and Certain Grants and Agreements with States, Local Governments and Indian Tribal Governments). (Specifically, 45 CFR 74.25)
- 45 CFR Part 92 (Department Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments). (Specifically, 45 CFR 92.30)
- Title 2 CFR Part 220 (Cost Principles for Educational Institutions, Attachment(J), General Provisions for Selected Items of Cost)
- Title 2 CFR Part 225 (Cost Principles for State, Local, and Indian Tribal Governments, Attachment B, Selected Items of Cost)
- Title 2 CFR Part 230 (Cost Principles for Non-Profit Organizations, Attachment B, Selected Items of Cost)
- OMB Circular A-102 (Grants and Cooperative Agreements with State and Local Governments)
- Title 2 CFR Part 215, (Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations) (A-110.25)
- OMB Circular A-133 (Audits of States, Local Governments and Non-Profit Organizations) (OMB Circular A-133 Compliance Supplement, Part 4 - Head Start Requirements)
All changes that require prior approval must be submitted in writing to the Grants Officer. If the change involves a budget revision, the grantee should identify the changes on the SF-424 and SF-424A.
Amendments to funding applications must be approved by the policy committee for delegate agencies prior to submission to the grantee and the policy council for the grantee prior to submission to ACF. (45 CFR 1304.50(d)(I))
Written plans for implementing services and the progress in meeting them must be reviewed and approved in advance by the policy council or policy committee. Therefore, all revisions to the budget should be discussed with the policy council or the policy committee. (45 CFR 1304.51(a)(2))
As provided in 45 CFR 74.25(k) and 45 CFR 92.30(a)(1), all approval notifications must be in writing and signed by either the Grants Officer, the ACF Regional Administrator, or the ACF Assistant Secretary. Only an authorized individual in the grantee organization (usually the official who signs the SF-424) may submit these requests. Implementing changes that require prior approval before receiving written notification may result in the disallowance of costs.
In exceptional cases, grantees may request retroactive approval. Such approvals will be granted only if the transaction would have been approved had the request been submitted in advance of the change. Also, the grantee must institute controls to ensure prior approval requirements are met in the future.
Grantees are required to review requests from their delegate agency(s) to determine if prior approval is required from the regional office. If the action requires ACF approval, the grantee must obtain that approval before giving its approval to the delegate agency(s). Similar to ACF approval, the approval for the delegate must be in writing and signed by an authorized grantee official to be valid.
ACF means the Administration for Children and Families.
Award means financial assistance that provides support or stimulation to accomplish a public purpose. Awards include grants and other agreements in the form or money or property in lieu of money by the Federal government to an eligible recipient.
Authorized official means an individual within ACF, such as a grants officer or program manager, authorized to administer grants under legislative or delegated authority.
Budget means the budget plan of an organization's Head Start program. The budget plan is the financial expression of the program as approved during the award process.
Delegate agency means a public or private nonprofit organization or agency to which a grantee has delegated all or part of its responsibility for operating a Head Start program.
Disallowed costs means those costs to an award that ACF determines to be unallowable, in accordance with the applicable Federal cost principles or other terms and conditions contained in the award.
HHS means the Department of Health and Human Services
Equipment means any article of tangible, non-expendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
Head Start Agency or "grantee" means a local public or private nonprofit agency, or Tribal government designated to operate a Head Start program by the responsible HHS official.
OMB means the Office of Management and Budget.
OMB Circular means instructions or information issued by the OMB to Federal agencies for obtaining consistency and uniformity in the administration of grants.
Prior approval means written approval by an authorized ACF official in advance of the action or expenditure.
Renovation means work required changing the interior arrangements or other physical characteristics of an existing facility or installed equipment so that it may be more effectively used for the project. Alteration or renovation may include work referred to as improvements, conversion, rehabilitation, remodeling or modernization.
Total Approved Costs means the sum of all costs of the Head Start program approved for a given budget period as indicated on the Financial Assistance Award (FAA). Total approved costs consist of the Federal share plus any approved non-Federal share.
The approved budget satisfies any requirements for advance approval of costs within general budget categories listed. However, a grantee still must document that a cost charged to a grant was actually incurred, is properly allocated to the grant, and is reasonable. Therefore, even though prior approval is not required in all cases, the grantee must ensure that all costs charged to the grant are allowable, allocable, and reasonable when making budget revisions.
The document that verifies the approved budget categories is the Financial Assistance Award (FAA). Upon receipt of this document, the grantee should verify that the approved budget categories match the submitted budget document for possible changes or adjustments. Changes will generally be noted in the "Comments" section. For example, indirect costs may not have been approved if the negotiated indirect cost plan was not included in the application. There may be notification of items that have been categorized incorrectly in the application such as supplies categorized as equipment.
Except for changes requiring prior approval, grantees may transfer funds between and among the line item categories of the grantee/delegate agency approved budget(s), provided the funds are used for allowable program costs. In other words, where there is no specific prior approval requirement, a grantee has the flexibility to shift funds among budget categories (as long as such shifts do not result in under funding of critical program activities or changes to the scope of proposed operations).
No transfers may be made that would cause the funds to be used for purposes other than those intended even though the cost is allowed by the circulars.
HHS did not adopt the prior approval requirement for
transfers among direct cost categories that exceed or are expected to exceed 10
percent of the total approved budget. Therefore, the 10 percent provision cited
in 2 CFR 215 does not apply to HHS grants.
At times a grantee agency may incur a type of cost that was not listed in the original budget. Even though the approved budget does not include the cost, prior approval is not required unless the cost would require prior approval.
Changes Requiring Prior Approval
Budget Changes:
The following budget changes require prior approval:
- No cost extensions, when an extension of time to a project period and/or budget period is needed to complete the work of the grant under that period, without additional Federal funds or competition.
- Travel to foreign countries must be specifically approved. Foreign travel is defined as any travel outside Canada and the United States and its territories and possessions.
- Equipment purchases
- Construction or purchase of facilities
- Renovations that exceed $5,000
- Increases to the indirect cost category that requires additional Federal funds are subject to prior approval and the 15 percent administrative cost limitation.
Prior approval is required for budget revisions if the shift in funding within the budget is for anticipated costs that require prior approval. For example, the grantee wants to use surplus personnel funds to purchase a piece of equipment or spend more than $5,000 to renovate a kitchen.
Certain grant funds such as supplemental or one-time funds are to be used for specific purposes approved by ACF. Grantees may not shift all or part of these funds to other categories within the total approved budget even though the funds would be used for allowable costs. Normally, the FAA is explicit in limiting the use of the funds. The grantee is advised that no other expenditures with these funds would be allowed. If all of the funds are not used for the stated purpose, the grantee must obtain prior approval to use excess funds for other allowable program costs even if the cost does not require prior approval. Funds for Cost of Living Adjustments (COLA) and Quality Increases (QI) are examples of funds that have specific requirements for their expenditure.
Non-federal cash and third party in-kind used to meet the non-Federal share are part of the approved budget. Changes to the amount used for the non-Federal share would require a budget amendment. (45 CFR 74.23(a)(6))
Grantees must obtain prior approval to transfer of funds that have been allotted for training allowances (direct payments to trainees).
Major Program Changes:
Grantees must obtain prior approval for a change to the scope or objective of the approved application. Changing the scope or objective may result from redesigning the program or the nature of service delivery including changes in hours or days of service, service area, target population, program option, reductions in enrollment or adding/discontinuing a delegate agency.
Other program changes requiring prior approval include a change in the structure of the management staff positions or the Head Start director. Grantees must receive approval from ACF prior to implementing any changes.
The grantee must obtain prior approval if the Head Start Director will be absent or will not actively be involved in managing the program for more than three months. Also, a reduction of 25 percent or more in time devoted to the program by the Head Start Director requires prior approval.
Summary of Changes Requiring Prior Approval:
- No cost extensions.
- Travel to foreign countries.
- Equipment purchases.
- Construction or purchase of facilities.
- Renovations exceeding $5,000.
- Increased funding for indirect costs.
- Adding or revising budget line items that require prior approval.
- Using supplemental funds for other than specified purposes.
- Need for additional funds.
- Changes in non-Federal share.
- Transfer of training allowances.
- Change in the scope or design of the program.
- Changes in management staff positions or Head Start Director.
- Head Start Director absent for more than three months.
- A reduction in the Head Start Director's time by 25 percent or more.
This section is not applicable to Post Award Changes. Neither OMB Circular A-133 nor the OMB Circular A-133 Compliance Supplement deals with this topic.
