Among the eight grantees visited, there were five variations in the ways funds from various sources were managed (Exhibit 3). It was expected that allocating costs from multiple funding sources would pose accounting complexities for the grantees. What was found, however, was that with one exception, the grantees that received funding from many sources had worked out one or another method to simplify the accounting and reporting process. Finding ways to simplify the allocation process highlights again the leadership qualities of these directors. In many cases, negotiations with state officers and regional Head Start staff were required to approve allocation procedures. Solutions were found, in large part, due to the persistence and creativity of these directors.
The first of the five methods, which is used by two grantees, involves dividing costs among collaborating agencies. Under this scenario, Head Start and its collaborators decide up front which source will pay for what functions, and those sources then pay their costs directly. The grantees use Head Start funds to cover assigned "Head Start" costs only: They manage funds from this single funding source alone. By keeping the costs separate, grantees greatly simplify the accounting process.
One grantee using this strategy (Moorhead, IA) has a written agreement with Job Corps stipulating that Job Corps will pay for all facilities-related costs and the salaries of the cook and the secretary. Job Corps pays these costs directly, and the Head Start grantee pays for the remaining costs of operating the full- day program.
[Exhibit 3 here is a chart of grantee fiscal management strategies.]
The other grantee using this strategy (Seattle, WA) has created agreements with its subcontractors — child care centers and family child care homes — so that the grantee iscies) handle monies from multiple sources.
In the other four strategies, Head Start grantees manage monies from multiple sources, but allocate the costs in different ways. One grantee (Elmsford, NY) has worked out a fiscal management strategy that does not require cost allocation of line items: All revenue is pooled into a single account from which all expenses are paid. This system has been approved by the state as well as by the Head Start regional office.
Another grantee (Christianburg, VA) has separated line items into groups: Some line items are allocated totally to one source and others to another source. In fact, Head Start funds pay for all line items but one, "child care costs." This is paid by the CCDBG grant.
Two of the grantees use a single allocation formula to assign the costs of all line items across all funding sources. In one case (Visalia, CA), the formula reflects the proportion responsible for paying a certain set of "Head Start" costs and the subcontractors (non-Head Start agen of funding from each of the sources (i.e., 63 percent of all costs are allocated to Head Start, 22 percent to general child care, and 15 percent to state preschool). In the other case (Gainesville, FL) the formula is based on the percentage of children participating in each funding source's program (65 percent Head Start and 35 percent state prekindergarten). In each case, all line items are allocated according to the formula, whether or not the funding source specifically requires that line item expenditure. For example, the cost of a social services coordinator is allocated across all sources, even though state programs may not require the services of such an individual.
Finally, two grantees use multiple allocation formulas. In one instance (Dayton, OH), some line items (e.g., teachers, supplies) are assigned wholly to one funding source, and other shared line items (e.g., food, custodial services) are allocated by formula across funding sources. In the other instance (Bowling Green, KY), each line item is allocated to funding sources according to the proportion of it benefiting children paid for by each funding source. Multiple formulas are required, and the director has carefully examined each item to determine its appropriate formula. The director maintains that, technically, wraparound programs such as hers must prorate every cost item, and she reported that the national Head Start office has not provided the degree of clarity or support on allocations for full-day costs that would allow grantees to experiment with simplified accounting methods.