Overview of Requirements

The Head Start Act stipulates that the Federal share of the total costs of the Head Start program will not exceed 80 percent of the total grantee budget unless a waiver has been granted (Head Start Act Section 640(b)). If the grantee agency fails to obtain and document the required 20 percent, or other approved match, a disallowance of Federal funds may be taken. Non-Federal share must meet the same criteria for allowability as other costs incurred and paid with Federal funds.

Clarifying Definitions

Allowable Cost: Third party in-kind contributions shall count toward satisfying a cost-sharing or matching requirement only where, if the party receiving the contribution were to pay for them, they would be an allowable cost. Allowable costs are determined by the tests of reasonableness, necessity and allocability as defined in Office of Management and Budget (OMB) Circulars A-21, A-87 and A-122.

Cash Contributions: The grantee's cash outlay, which is generated by the grantee or donated by a third party, and is expended to fund allowable program costs. Cash match counts toward the non-Federal share requirement when expended, not when donated to or generated by the grantee.

Disallowance: A cost determined during an audit, or other review conducted by the funding agency, to be unallowable under the OMB Cost Principles and/or the Terms and Conditions of the grant award that may require subsequent repayment to the Head Start Bureau. A cost can be disallowed whether paid for by Federal or non-Federal sources.

Documentation: Written proof that a service has been provided or a donation has been received. Examples include receipts, timecards and invoices or proof of payment.

In-Kind: Property or services that benefit a grant supported project or program and are contributed by non-Federal third parties without charge to the grantee. In-kind contributions may consist of the value of real property and equipment and the value of goods and services directly benefiting the grant program and specifically identifiable to it. In-kind match is counted for the period when the services are provided or when the donated goods are received and used.

Non-Federal Share: That portion of the total costs of the program provided by the grantee agency in the form of in-kind donations or cash match received from third parties or contributed by the agency. In-kind contributions must be provided and cash expended during the project period along with Federal funds to satisfy the matching requirements.

Total Costs: All allowable costs of a program incurred by a grantee including the Federal and non-Federal share. Total costs do not include those paid by other sources that are not part of the approved budget such as the U. S. Department of Agriculture (USDA). Total costs are net of applicable credits such as refunds and rebates.

Volunteer: An individual providing a service that is necessary to the operation of the Head Start program at no cost to a grantee agency.

Waiver: A reduction in the required amount of grantee non-Federal share that is authorized by a Federal official in writing. A waiver is justified if it meets one of five criteria defined in the Head Start Act Section 640(b)(1)-(5).

Source: Fiscal Assistant