Head Start Inc

Criteria or Specific Requirement: The Head Start Act stipulates that the federal share of the total costs of the Head Start program will not exceed 80 percent of the total grantee budget unless a waiver has been requested and granted. If the grantee agency fails to obtain and document the required 20 percent, or other approved match, a disallowance of federal funds may be taken. The required non-federal match for a budget period is calculated at the close of the period based upon the federal funds expended. Condition: Head Start Inc. had an inadequate amount of non-federal match for the amount of federal funds spent. Repeat: No Context: We calculated the required match based on the ending federal funds expended of $4,368,935 and allowable non-federal match of $394,622. Combined this results in an actual grant amount of $4,763,555. This amount times 80% results in the max federal share of $3,810,844. Subtracting this from the federal funds expended results in $558,091 in non allowable costs. Questioned Costs: $558,091. Effect: The net disallowance may need to be repaid by the grantee agency from agency funds. Cause: Head Start Inc. has historically received a waiver for a portion of the non-federal funds required. In 2025 a waiver request has been submitted, but due to delays at HHS, the waiver has not been processed and granted. Auditor's Recommendations: While the current situation of not receiving a waiver before the audit deadline is very unusual, Head Start Inc. should have a procedure in place in case of such an occurrence. Repeat: No Auditor's Recommendations: While the current situation of not receiving a waiver before the audit deadline is very unusual, Head Start Inc. should have a procedure in place in case of such an occurrence. View of Responsible Officials: Head Start Inc. acknowledges the finding related to the non-federal share (match) requirement and the timing of waiver approval at the federal level. The organization submitted a waiver request in May 2025 in accordance with federal requirements; however, due to federal administrative delays and changes in the approval process following the October government shutdown, the waiver has not yet been approved.

Head Start Inc. acknowledges the finding related to the non-federal share (match) requirement and the timing of waiver approval at the federal level. The organization submitted a waiver request in May 2025 in accordance with federal requirements; however, due to federal administrative delays and changes in the approval process following the October government shutdown, the waiver has not yet been approved. While this delay was outside of the agency’s control, we are committed to strengthening internal processes to mitigate risk and ensure compliance moving forward. Corrective action: 1. Waiver Timing Alignment and Compliance • Head Start Inc. will align its non-federal share waiver submission with updated federal guidance, allowing submission at the end of September when the full grant expenditures are finalized. • This adjustment ensures the waiver request reflects complete and accurate financial data, reducing the risk of miscalculation or premature submission. 2. Enhanced Federal Communication and Oversight • The Fiscal Director will actively participate in monthly meetings with the Regional Office alongside the Executive Director to discuss waiver status, expectations, and any regulatory updates. • Ongoing communication will be maintained with federal representatives to monitor the progress of submitted waivers and address delays in a timely manner. 3. Waiver Monitoring and Documentation: • A formal tracking process will be maintained for all waiver submissions, including submission date, supporting documentation, and status updates. • Documentation of all correspondence and guidance received from federal officials will be retained to demonstrate due diligence and compliance efforts. 4. Non-Federal Share Monitoring: • The organization will continue to monitor non-federal share contributions throughout the fiscal year, with increased review toward the end of the grant period to ensure accuracy prior to waiver submission. • Internal reviews will be conducted to confirm all allowable match is captured before determining the final waiver need. 5. Policy and Procedure Updates: • Fiscal policies will be updated to reflect the revised waiver submission timeline and enhanced communication procedures with the Regional Office. • Procedures will include guidance for documenting external delays and demonstrating good faith efforts to comply with non-federal share requirements. Anticipated Completion Date: June 30th, 2026 Contact person: Tamara Mitchell

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