1F. Program: Making the Match: Head Start In-Kind

1F. Program: Making the Match: Head Start In-Kind

CAPLAW 2015 National Training Conference

Wednesday, June 10, 2015 3 pm – 4:45 pm

Portland Marriott Downtown Waterfront

Handouts:

PowerPoint Slides

Janet Johnson, CPA, CMA Senior Manager Wipfli, LLP [email protected] 608.274.1980

CAPLAW 2015 National Training Conference

June 10 – 12, 2015 | Portland, OR | Portland Marriott Downtown Waterfront

NONPROFIT AND GOVERNMENT PRACTICE

www.wipfli.com/ngp | 888.876.4992

Reproduction or use of any training materials in this manual, except within a participant’s agency without express written permission is prohibited by copyright law. © Wipfli LLP

Making the Match: Head Start In-Kind

Wednesday, June 10, 2015 3:00 pm – 4:45 pm

Presented by:

Denes L. Tobie, CPA, Partner

Making the Match: Head Start In-Kind 1

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Making the Match:Head Start In-Kind

Trainer: Denes L. Tobie, CPA, Partner

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Materials/Disclaimer

Please note that these materials are incomplete without the accompanying oral comments by the trainer(s).

These materials are informational and educational in nature and represent the speakers' own views. These materials are for the purchasing agency’s use only and not for distribution outside of the agency or publishing on a public website.

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Why We’re Here

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Purpose and Goal

Purpose• Understand why in-kind is required

• Understand what is allowable in-kind

• Understand how to value in-kind

Goal• Help agencies understand and comply with in-

kind requirements

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Our Agenda

• General In-kind

• Space

• Volunteers

• Other In-kind

• Problems & Solutions

• Waivers

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Acceptable In-Kind

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Ref. Program Category Amount Reason Questioned

(1) Full-Year, Part-Day NonfederalOther

$35,620 This amount represents 52 graveplots donated to the grantee. The Grave plots, which were valued at $685 each, do not appear to be of benefit to the Head Start Program.

Also, the grantee does not have independent third party appraisals to support the valueclaimed for the grave plots.

HEAD START PROGRAMGRANT NO. _________

________, StateSCHEDULE E - QUESTIONED COSTSFor the Year Ended August 31, 1983


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General

Reasons for Non-Federal In-Kind

• Required by the Head Start Act – Signed into law in 1964

• Local community participation in the Head Start Program

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General

Definitions – 45 CFR Part 75.2

• “Cost sharing or matching means the portion of project costs not paid by Federal funds” (also see 45 CFR 75.306)

• “Third party in-kind contributions means the value of non-cash contributions (i.e., property or services) that benefit a federally assisted project or program; and are contributed by non-Federal third parties, without charge, to a non-Federal entity under a Federal award.”

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General

Basics• Costs that are reasonable and necessary to a

Head Start program from a non-Federal source in accordance with an approved application and component plans – required to disclose your sources of non-Federal share in your application

• Non-Federal in-kind costs are no different than costs charged to the Federal share (Would your agency pay out of Federal funds for those items that you are claiming as non-Federal share? And would you pay the amount in cash that you are claiming as non-Federal share?)

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General

Criteria for Acceptable Non-Federal In-Kind• Are verifiable from the recipient’s records

• Are not included as a cost or match to any other Federally-funded program

• Are necessary and reasonable for accomplishment of program objectives

• Are allowable under grant conditions and cost principles – 45 CFR Part 75, Subpart E Cost Principles

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General

Criteria for Acceptable Non-Federal In-Kind (cont.)

• Are not financed by any other Federal program, unless authorized by Federal statute – there are 2 exceptions to this

• Are provided for in the approved component plan/budget

• Benefits the program during the project period

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General

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Computing

Federal $’s = $1,000,000 = 80%Non-Federal = $ 250,000 = 20%Total Funding = $1,250,000 = 100%

20% of Total Funding OR 25% of Federal Funding

Easy equation:For every $1 you spend of Federal Funds, you must have $.25 non-Federal match


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General

Reasons for Accounting for all Non-Federal In-Kind

• To be able to match additional funding (expansion, one-time, etc.)

• To replace some in-kind that is later questioned or disallowed

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General

Consequences of Not Meeting In-Kind Requirements

• Repayment of Federal funds expended that were not properly matched

• Reduction in future Head Start funding, if unable to provide sufficient non-Federal share

• Inability to qualify for expansion or one-time funding

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General

Not Meeting In-Kind CalculationFailure to meet the non-Federal share requirement without an approved waiver can have a severe impact on the grantee agency.

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Federal share: $800,000 Federal share expended: $ 800,000

Required non-Federal share: 200,000 Allowable non-Federal share: 180,000

Total grant award: $1,000,000 Actual grant amount: $ 980,000

An example of the impact of a disallowance of non-Federal share follows:

Recalculated maximum Federal share: $980,000 x 80% = $784,000 (80% of Actual grant amount)

Amount of disallowance: $800,000 - $784,000 = $16,000

ActualFunded

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General

Not Meeting In-Kind

The amount of disallowance must be repaid by the grantee agency from AGENCY funds. Federal funds may not be used to repay the disallowance.

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General

Main Issues for All Head Start In-Kind

• Benefit to an approved Head Start activity

• Value

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General

Three Main Types of In-Kind• Donated use of space

• Volunteers

• All other

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Space

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Question

Landlord tells you the square footage value of the space you are occupying is $2,000 per month but is only going to charge you $1,200 per month. An agency can record $800 per month in space in-kind.

True or False?

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Space

Use of Space – Arms Length Transaction• Fair market value

• Appraisal – required by regulations – rule of thumb update every 3-5 years

• Include everything being donated (utilities, maintenance, playground, lunchroom, etc.)

• Part donated and part paid – document part of space donated

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Space

Appraisals – 45 CFR 75.306(i)(1)&(3)

• (3) 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.”

• NOTE: “…independent appraiser (e.g., certified real property appraiser or General Services Administration representative)” –NOT a real estate agent

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Space

Use of Space – You Own the Building• Cannot be purchased with Federal Funds

• Calculate a depreciation

• Calculation should be adjusted for square footage occupied by the Head Start program

• Donated land for a Head Start building –amortize over the useful life of the building

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Volunteers

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Question

At what rate would you value an attorney who donates 16 hours of time painting walls in a Head Start classroom?

A. Attorney’s rate of $200/hr

B. Union painter’s rate of $40/hr

C. Lowest rate from the agency’s pay schedule or unskilled labor rate

D. None of the above

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Volunteers

Requirements• Services provided

• Qualifications

• Rate comparable to paid employees

• Fringe benefits

• Documentation

**Responsibility should be on classroom staff, not fiscal**

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Volunteers

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45 CFR 1306.20 Program Staffing Pattern“(c) Grantees operating center-based program options must employ two paid staff persons (a teacher and a teacher aide or two teachers) for each class. Whenever possible, there should be a third person in the classroom who is a volunteer.”

45 CFR 1306.22 Volunteers “(a) Head Start programs must use volunteers to the fullest extent possible. Head Start grantees must develop and implement a system to actively recruit, train, and utilize volunteers in the program.

(b) Special efforts must be made to have volunteer participation, especially parents, in the classroom and during group socialization activities.”

45 CFR 1304.3“Volunteer means an unpaid person who is trained to assist in implementing ongoing program activities on a regular basis under the supervision of a staff person in areas such as health, education, transportation, nutrition, and management.”

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Volunteers

Example from a Head Start Program

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Total Classrooms = 32

Total Volunteer Hours (One month) = 1,805

Average Hours Per Classroom = 56

Average Hours Per Day (20 days/month) = 2.8

Lowest Hours (4 classrooms) = 0

Most Hours (1 classroom) (12 hrs/day) = 238

Dollar Value of In-Kind (Rate+Fringe = $8) = $14,400


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Volunteers

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1 Volunteer/Day (4 hrs. x 20 days x 32 classrooms x $8) = $20,500

2 Volunteers/Day(4 hrs. x 20 days x 32 classrooms x $8 x 2) = $41,000

3 Volunteers/Day(4 hrs. x 20 days x 32 classrooms x $8 x 3) = $61,500

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Classroom Volunteers Worksheet

1 Volunteer/Day(4 hrs. x 20 days x __ classrooms x $__) = $_________

2 Volunteers/Day (4 hrs. x 20 days x __ classrooms x $__ x 2) = $_________

3 Volunteers/Day (4 hrs. x 20 days x __ classrooms x $__ x 3) = $_________

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Volunteers

Documentation• Donated Time

Volunteer’s name The dates the volunteer provided services, including

the year The duration of time of services the volunteer

provided to the program The volunteer’s supervisor’s signature The volunteer’s signature The volunteer activity The rate applied to this activity Total valuation for the time period

Source: Head Start Fiscal Assistant

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Volunteer – Rate Calculation

Cost Sharing or Matching 45 CFR Part 74.306 “(e) Volunteer services furnished by third-party professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for third-party volunteer services must be consistent with those paid for similar work by the non-Federal entity. In those instances in which the required skills are not found in the non-Federal entity, rates must be consistent with those paid for similar work in the labor market in which the non-Federal entity competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, necessary, allocable, and otherwise allowable may be included in the valuation.”

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Fringe Benefits – 45 CFR Part 75.431(a)

“(a) Fringe benefits are allowances and services provided by employers to their employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave (vacation, family-related, sick or military), employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, non-Federal entity-employee agreement, or an established policy of the non-Federal entity.”

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Fringe Benefits – 45 CFR Part 75.431(b)

“(b) Leave. The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable if all of the following criteria are met:

(1) They are provided under established written leave policies;(2) The costs are equitably allocated to all related activities, including Federal awards; and,(3) The accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the non-Federal entity or specified grouping of employees.”

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Fringe Benefits – 45 CFR Part 75.431(c)

“(c) The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in §75.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity's accounting practices.”

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OHS-PC-A-048 When determining how to value a volunteer’s time for purposes of non-Federal share, can a Head Start program include the average fringe benefit rate for the program in addition to the volunteer’s salary?

Yes. A volunteer’s rate should be determined based on the nature of the work being done and the experience and education brought to the job by the volunteer. A program may include, in this valuation, a fringe benefit rate for the volunteer that is comparable to the grantee’s average fringe benefit rate.

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Basic Calculation

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Base Rate – $10.00 X 2,080 = $20,800

Fringe Rate – 25% X $20,800 = $5,200

Total Compensation = $26,000

Rate per Hour – $26,000/2,080 = $12.50

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Do your employees have holiday, vacation and sick time benefits?

Adjust your rate accordingly!!!

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Total hours per year (40 hours, 52 weeks) = 2,080

Average holiday, vacation and sick hoursused during the year = 216

Actual hours working (2080-216) = 1,864

Adjusted rate per hour - $26,000/1,864 = $13.95


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Volunteer Rate Summary

Base rate $10.00 per hour3rd party benefits $ 2.50 Internal benefits $ 1.45Total volunteer rate $13.95 per hour

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Volunteers

Reduced Rates

• “Consultants and other individuals may provide their services to a program at a reduced rate. The difference between this reduced rate and the amount normally charged by the individual may be used as in-kind. The grantee should have a written agreement with the individual, which will document the reduction, and documentation should be maintained of the services provided. This may be in the form of an invoice or other grantee developed form.”

Source: Head Start Fiscal Assistant

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Other In-kind

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Other In-Kind

Supplies• Fair market value

• Used in the program (i.e., not sent home)

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Other In-Kind

Fund raising – 45 CFR Part 75.442

“(a) Costs of organized fund raising, including financial campaigns, endowment drives, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions are unallowable. Fund raising costs for the purposes of meeting the Federal program objectives are allowable with prior written approval from the Federal awarding agency. Proposal costs are covered in §75.460.”

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Other In-Kind

Cash Contributions• In-kind when spent on an allowable cost that is

part of an approved Head Start activity

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Other In-Kind

Use of Federal Funds as In-KindFederal funds from other programs are allowable match for an ACF program. These determinations are based on specific requirements of ACF programs and language in applicable statutes. Specifically:

1. USDA funds are of Federal origin and, therefore, cannot be countedas match.

2. Bureau of Indian Affairs – Indian Self-Determination and Education Assistance Act (P.L. 93-638, as amended). The Act authorizes the use of funds for matching purposes as long as the identified use is specifically related to the approved grant activities.

3. Development Act of 1974, P.L. 93-383 may count as allowable matchfor a Head Start program for renovation of a building. The determination is dependent on whether or not the Head Start grant is included as part of the "Community Development Program," as required by the Housing and Community Development Act.

Source: ACF In-Kind Chapter from ACF Staff Manual45

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Regulations and Conclusion

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Policy Clarifications

OHS-PC-A-077 (May 15, 2009)

Is the value of parent involvement in a HS program an allowable cost for in-kind match?

• Two types of parent involvement:1. Primarily benefit the parent and their child

– Not Allowable

2. Provide a good or service to benefit the program – Allowable

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OHS-PC-A-077 (May 15, 2009)• Examples of primarily benefiting the parent and

child which are unallowable:– Parent orientation

– Home visits

– Staff-Teacher conferences

– Socialization activities

– Parent education or training

– Meetings and activities related to family goal setting with the family partnership agreement

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OHS-PC-A-077 (May 15, 2009) • Examples of primarily benefiting the parent and

child which are unallowable:

• Participation in specific activities that are related to the child’s development or education plan, Individual Family Service Plan or IEP– Field trips

– Transition meetings

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OHS-PC-A-077 (May 15, 2009)• Examples of providing a good or service to benefit

the program which are allowable:– Participation in a health services advisory committee or

other advisory committee

– Participating in outreach effort for recruitment

– Participating in community partnership with other parent 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

– Participating in an employment interview

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OHS-PC-A-006 (April 25, 2007)What types of activities between an enrolled Head Start child and that child’s parent(s) or guardian(s) can be conducted in the child’s home and counted, by the Head Start program, as non-Federal share?

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.

Regulation:2 CFR 215.23 (a); 45 CFR 92.24 (a); 45 CFR 1304.40 (e)(1); 45 CFR 1304.40 (e)(3)

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OHS-PC-A-078 (May 26, 2009)

May HS agencies claim non-Federal match for the value of the volunteer services of governing body and policy council members?

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Relating to In-Kind

Policy Clarifications Relating to In-Kind

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PC # Question Answer

A-003 Staff IK Yes, tricky calculation (FLSA)

A-004 Grantee owned facility as IK Depreciation or use allowance

A-006 Activities at home as IK Written plan or curriculum

A-013 Valuing parent time (D-006) Equal to cost of employee

A-014 Grantee owned land as IK (H-002) Amortized

A-022 Description volunteer activities D-013, G-006 and J-007

A-023 Donations No, sent home; Yes, used in HS/EHS

A-033 Walking to school (D-019, L-014) No

A-034 Combining HS/EHS for admin & IK Include all

A-038 Blended state funding as IK Yes, if not tied to Federal funds

A-040 Home-based activities between visits (D-021) Curriculum

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Relating to In-Kind

Policy Clarifications Relating to In-Kind (cont.)

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PC # Question AnswerA-041 Total cost & admin cost limit Include allA-043 Recording excess IK May record excessA-044 Receipts for purchased donated Reasonably documentsA-047 Vendor discounts as IK Good shopper is not IKA-048 Including fringe benefits in volunteer IK YesA-049 Transportation to group socialization YesA-050 Wage comparability differences as IK NoA-051 Transportation costs of children NoA-054 State scholarship as IK No, benefits the individualA-057 Foster grandparent volunteers as IK Subtract stipendA-058 Transportation home-based to socialization YesA-059 Books given to children at year end Yes


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Relating to In-Kind

Policy Clarifications Relating to In-Kind (cont.)

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PC # Question Answer

A-060 Parents having lunch w/children as IK No

A-063 Time spent by PC at training conferences Yes

A-075 Special Ed provided by local school dist. Yes

A-076 Babysitting while parent is volunteering Yes

A-077 Parent involvement in program Yes

A-078 Governing body and Policy Council time Yes

G-010 Teaching certificate another country (J-010) No

L-001 Parent transportation as IK No

L-002 Transportation by school district as IK Yes, if meets transportation regs

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Waivers

Head Start Act Section 640Financial 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. For the purpose of making such determination, the Secretary shall take into consideration with respect to the Head Start program involved:

• (1) the lack of resources available in the community that may prevent the Head Start agency from providing all or a portion of the non-Federal contribution that may be required under this subsection;

• (2) the impact of the cost the Head Start agency may incur in initial years it carries out such program;

• (3) the impact of an unanticipated increase in the cost the Head Start agency may incur to carry out such program;

• (4) whether the Head Start agency is located in a community adversely affected by a major disaster; and

• (5) the impact on the community that would result if the Head Start agency ceased to carry out such program.

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Waivers

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• In order to receive a waiver the grantee agency must provide ACF Regional Office written documentation of need.

• Request may be submitted with the grant proposal document or during the budget period if a situation arises that will make it impossible to meet the requirement.

• Approval of the waiver cannot be assumed by the grantee agency without written notice from the ACF Regional Office.

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Problems

Monitoring Protocol and Audit Findings Related to Non-Federal In-Kind

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Insufficient in-kind

Lack of documentation

Overvaluation of volunteer time

Lack of appraisals for donated use of third party space

Unallowable costs (fund-raising, parenting, etc.)

Improper valuation of space owned by the grantee (actual costs vs. fair market value)

Sources of in-kind not included in application and approved grant award

In-kind from previous grant years


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Solutions

Solving In-Kind Problems Monitor monthly

Treat non-Federal in-kind as a “real” cost

Document all non-Federal in-kind

Assign responsibility for non-Federal in-kind, and train staff on in-kind

Include in job descriptions

Include in-kind in staff evaluation criteria

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In Review

Why is In-Kind Important?

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For Information on How We Can Help

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1F. Program: Making the Match: Head Start In-Kind