Options for Full-Day Services for Children Participating in Head Start . Retrospective Reimbursements

03/07/1995

For six of the eight grantees we visited, payments to cover the extended portion of the Head Start day are reimbursed retrospectively (see Exhibit 4). These retrospective reimbursements often cause cash-flow problems when expenses need to be covered before funding is received. Some grantees deal with this situation by temporarily shifting funds from another part of their program until the reimbursements come in. Other grantees rely on their sponsoring agencies to bail them out. All of the directors who are subject to retrospective reimbursements feel that this situation is a continuing problem that consumes significant amounts of time and energy.

In one case, it was reported that reimbursements have been a growing problem for contracted providers. The state subsidy is paid on the basis of daily attendance. Enrollment figures are reported to the state in June but the subsidy is not paid until August. Because August is the month of large increases in enrollment and cost as parents plan for the upcoming school year, the amount received as reimbursement is significantly below costs to be incurred. The contracted providers are in the process of working out an arrangement with the state that will allow child care providers to estimate the numbers of children they will serve and get paid in advance.