As a Head Start trainer with years of experience, the WKUCCC director believes that under current Head Start regulations, individual budget line items must be allocated separately in determining the costs of a wraparound program to Head Start. (Exhibits 1 and 2 provide cost allocation strategies that her TASC recommends.) She maintains that wraparound programs must prorate every program cost "from pest control to property liability insurance." Below, we describe how WKUCCC allocates costs in a number of different areas.
Staff salaries. All WKUCCC teacher salaries are governed by one unified classification system, which does not technically recognize differences in salary between preschool teachers (those who teach Head Start) and others (those who do not teach Head Start). However, Federal sources that fund non-Head Start salaries, such as JOBS, SSBG (Title XX), and CCDBG, pay significantly less per slot than does Head Start. Therefore, when the director is able, she assigns less experienced teachers with lower salary rates to non-Head Start classrooms. She can then legitimately pay preschool (Head Start) teachers more, because they are more experienced and have more responsibilities (e.g. home visits) than the other center teachers. She thus avoids resentment from non-Head Start teachers who work in the same center. She says the parent fees that supplement the Federal funding sources also help to even out the per-slot difference between Head Start and other Federal payments. Fortunately, the cost-of-living adjustments (COLAs) for all Federal programs have thus far been the same.
Since the salaries of administrators and teachers are funded by more than one source, all staff are required to keep time sheets that allocate their hours accurately to each of the grants under which they are paid. For instance, if a teacher is scheduled in the infant classroom, her or his salary would be charged to the CCDBG grant. If he or she worked in the preschool classroom, time would be allocated among the Head Start, CCDBG, and parent fee accounts.16 Time sheets, though, cause administrative complexities, because the payroll system is run by a separate university office that must be notified every time staff time sheets differ from budgeted staff time distributions.
Staff training. Head Start pays for much of the staff training, whether or not preschoolers are taught by the staff being trained. The director draws on both her TASC and HSTC staffs to provide this training; and, by paying a registration fee for her own program, she can pay for training out of her CCDBG resource and referral grant, which provides training for all Western Kentucky providers that are receiving CCDBG funds.
Teachers' time while in training (if compensated) is paid for out of the grants that fund the individual teachers' salaries. In other words, the training time for a teacher who teaches both Head Start and non-Head Start children in the same classroom would be allocated proportionately to both the Head Start and CCDBG grants. An infant teacher's time would be allocated to the CCDBG grant.
Materials and equipment. The cost of preschool classroom materials and equipment is absorbed entirely by the Head Start budget. Technically, however, the director feels she should prorate these costs, because they are used by Head Start and non- Head Start children alike, and by Head Start children for more than five hours per day. Because she does not currently do this, she feels she risks noncompliance. In addition, she notes that equipment costs are a problem for wraparound programs. Even though equipment wears out faster in a full-day program than in a half-day program, under Head Start regulations the full-day equipment cannot be depreciated.
Non-Federal share. The Head Start director and her fiscal administrator debate about whether non-Federal share in-kind income should be prorated or not. For example, they report the full in-kind value of free nursing services, volunteers, rent- free space, and university administrative support services as Head Start non-Federal share, even though these in-kind donations technically benefit both Head Start and non-Head Start children. The director pointed out that prorating in-kind facilities donations would cost the program a great deal, since free rent represents a significant portion of their total in-kind.17 Instead, therefore, they argue that Head Start Performance Standards are being followed for the full-day program, and that no other funding source the program draws upon requires non- Federal share matches. However, Head Start has not ruled on this issue, so they are unsure whether or not they are in compliance with regulations. In addition, inasmuch as parents who pay full child care fees are technically subsidizing the Head Start program, they are unsure whether these revenues should also be reported as non-Federal share.
Because of the way the director believes the regulations should be interpreted, allocating costs among multiple funding streams is one of the greatest challenges of running a full-day Head Start program, she says. In her particular case, however, she said she is blessed with an extremely supportive regional Office of Fiscal Operations (OFO) that will respond favorably to audit questions regarding cost allocation strategies to support full-day service. The OFO director has assisted her in providing national and regional Head Start training on the subject of cost allocation. He, like the director, believes strongly that "fiscal rules should serve program operations" — that the rules should make it easy for programs to provide important services such as full-day wraparound.
The director feels that the national Head Start office has not provided nearly this degree of clarity or support regarding full-day cost allocation issues. She and her program's fiscal administrator feel that fiscal regulations regarding cost allocation are too restrictive and "minutiae-oriented." In addition, they feel that most fiscal officers interpret the regulations very narrowly. As a result, they believe that all but the most entrepreneurial directors hesitate to launch wraparound programs in which they will have to "go out on a limb" to justify each detail of their cost allocation procedures.
Last year, the director, with the encouragement of her regional OFO director, reported the WKUCCC program as "a full-day (10 hour) Head Start program supplemented by other funding sources." Using this logic, the program did not allocate costs at all among different funding sources, in an effort to encourage the national Head Start office to rule on the legality of this kind of cost allocation plan. However, neither the regional office nor the WKUCCC director received any word from the national office about the appropriateness of their reporting procedures. As a result, there is still uncertainty about what Head Start will tolerate regarding cost allocation methods.
According to the program's fiscal administrator, the marginal costs and effort of managing multiple funding streams at WKUCCC are not great once appropriate automated systems are in place. However, designing an adequate system in the first place took her a great deal of time. She feels that the initial budgeting process was particularly difficult, since so many funding streams were involved, and that it took her years to become adept at this function. Of course, whenever funding streams change, she must rework the program's budget. She feels that Head Start could improve this situation by providing intensive and individualized training for grantee fiscal and administrative staffs.
The fiscal administrator has not found off-the-shelf software packages to perform this job properly; she has had to design her own program using LOTUS 1-2-3. She notes that none of the program's grants or funding sources, including Head Start, provide adequate resources for funding supervision and management; as a result, she has donated many hours of her free time to the program, even though the university performs all of the program's fiscal reporting, payroll, and indirect cost accounting for her. In addition, she is certain that other university accounts have in the past picked up some of the cost of administering the Head Start program.
Overall, the director feels that current Head Start fiscal policy represents an impediment to optimal service delivery to Head Start families. She feels that preoccupation with determining which Federal funding source pays for family benefits is misguided in the face of the pressing and obvious need for full-day services she has encountered across the country. However, she feels that current regulations will continue to deter most programs from providing full-day service until the regulations are substantially rewritten and the mentality of fiscal auditors changes.