Understanding and Managing Your Head Start Budget

Understanding and Managing Your Head Start Budget Presentation at NHSA Director’s Training Summit 2008 October 28, 2008 by Aubrey Nehring Head Start Director Audubon Area Community Services, Inc. Overview        Definitions & Requirements Planning Process - General Budget Development Steps Guide to Line Item Budgeting Grant Application Process Budget Management My Top Ten List for Financial Management Clarifying Definitions   ACF is the Administration for Children and Families within the U.S. Department of Health       and Human Services. Award means financial assistance that provides support or stimulation to accomplish a public purpose. Awards include grants and other agreements in the form of money or property in lieu of money by the Federal government to an eligible recipient. Budget means the budget plan of an organization's Head Start and/or EHS program. The budget plan is the financial expression of the program as approved during the award process. Budget period is the period of time (usually 12 months) into which the project period is divided for budget or funding purposes. Financial Assistance Award (FAA) is the official award document used in ACF discretionary programs. The FAA also is called a Notice of Grant Award. Funding period is the period of time when Federal funding is available for obligation by the recipient. Project period is the total time for which a Head Start or EHS grant has been approved. A project period may consist of one or more budget periods. Total approved costs means the sum of all costs of the Head Start Program approved in a given budget period as indicated on the FAA. Total approved costs consist of the Federal share plus any approved non-Federal Share. Federal Requirements        The Federal requirements for Head Start and EHS grants are found 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) (45 CFR 74 SUBPART B) 45 CFR Part 92 (Department Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule)). (45 CFR 92 SUBPART B) 2 CFR 220 (Cost Principles for Educational Institutions) 2 CFR 225 (Cost Principles for State, Local, and Indian Tribal Governments, Appendix B, Selected Items of Cost) 2 CFR 230 (Cost Principles for Non-Profit Organizations, Appendix B, Selected Items of Cost) OMB Circular A-133 Compliance Supplement Budget Development Steps  Establish Budget Planning & Development Team     Head Start Director Fiscal Officer Program Managers Selected Staff Members Budget Development Steps  Key Budget Development Questions  How will program goals and objectives define the process?       Strategic Plans Program Improvement Plans T/TA Plans Community Assessment Self-Assessment Examples? Budget Development Steps  Key Budget Development Questions  How will information from current/previous year’s performance be used?     Current Year-to-Date Expenditures Previous Year’s Expenditures Budget Items Significantly Over/Under Calculated Projected Expenditures for Budget Budget Development Steps  Key Budget Development Questions  How will factors in the program’s external environment be considered?     Community Funding sources or levels Changes in the field State and local initiatives Budget Development Steps  Key Budget Development Questions  How will factors in the program’s internal resources and capabilities be considered?      Current staff qualifications and/or retention Use or availability of physical space Condition of vehicles and equipment Increases/decreases in fixed costs Rate changes (salary, fringe, indirect) Budget Development Steps  Key Budget Development Questions  How will the program’s priority areas be factored in?     Expansion or reduction in enrollment Staff development State or Federal mandates Strategic initiatives Budget Development Steps  Budget Development Schedule  Timing of budget approval process        Program’s Planning Cycle Head Start Grant’s fiscal year Agency’s schedule & fiscal year Date due in Regional Office When is critical information to budget development available for review? Who must review prior to approval? Who must approve? Budget Development Steps  Budget Development Methods    Object Based (Line Item) Budgeting Activity-Based Budgeting Zero-Based Budgeting   Advantages/Considerations Modified Approaches Guide to Line Item Budgeting  Steps to Grant Application Budget  Local Line-Item Budget Projections   Personnel & Fringe Other Line Items    Detailed Line Item Budget Justification & Explanations GABI Line Item Budget 424B Object Class Categories Budget Audubon Line Item Budget Items (Detailed) GABI Line Item Budget (Sub-Categories) GABI Line Item Budget (Sub-Categories) Federal Object Class Budget Categories Guide to Line Item Budgeting  Project Accurate Personnel & Fringe Costs       60-80% of Typical Head Start Budget Impact: An omission of a position could be a $15,000 - $40,000 error Use Excel Spreadsheet for Calculations Import current salary information from accounting system if possible Budget for vacant positions/substitutes Have managers verify personnel hours and days Guide to Line Item Budgeting  Using Excel Spreadsheets for Personnel Budget Preparation      Demonstration Formulas Sorting & Subtotals Views (hiding columns) Projections Guide to Line Item Budgeting  Using Excel Spreadsheets for Line Item Budget Preparation     Demonstration GABI Line Item Cross-Reference Explanation/Detail Column Supporting Spreadsheets (Out-of-Area Travel; Non-Federal Share; etc.) Guide to Line Item Budgeting  Using GABI for Final Budget Preparation Guide to Line Item Budgeting  Using GABI for Final Budget Preparation        Transferring Data from Spreadsheet/Other Sources Audit Report Grant Application Report Functional Allocations Detail Report SF424, SF424A, SF424B Other Reports Grant Application Guidebook Budget Management  Financial Assistance Award Financial Assistance Award (FAA) Budget Management  Internal Controls/Risk Management   OHS Monitoring Protocol Should I Be Worried? (An Informal Risk Assessment) See Attachment. Budget Management   Budget to Actual Reports - Detailed Assign Managers’ Budgets and Hold Accountable Budget Management  Assign Managers’ Budgets   Discretionary Items Hold Accountable Audubon’s Local Area Discretionary Budget Budget Management  Board & Policy Council Financial Reports   Major Budget Categories Detail Upon Request Financial Management My Top Ten List Understand the importance of the Financial Assistance Award 2. Know the financial regulations applicable to Head Start/federal programs 3. Implement comprehensive internal control and risk-management policies and procedures 4. Regularly monitor financial reports of “Budget to Actual” 5. Assign your managers budgets and hold them accountable 6. Project accurate personnel and fringe costs in the budget 7. Provide practical financial information and reports to the Board and Policy Council 8. Create an effective filing system for grant and financial information 9. Periodically monitor and evaluate expenditures 10. Use the OHS Monitoring Protocol in a self-assessment of your agency’s fiscal management system. See Attachment. 1. Q&A  Contact Information Aubrey Nehring, Director Head Start/Early Head Start/Migrant Programs Audubon Area Community Services, Inc. P.O. Box 20004 Owensboro, KY 42304 Bus. 270 686-1625 Fax. 270 686-1656 Email: anehring@audubon-area.com Web: www.audubon-area.com PowerPoint, Handout, Sample Excel Spreadsheets Available for Download at www.aacshs.org