federal regulations that apply to head start, · web viewthis statement must explain the factors...

Federal Regulations that apply to Head Start,with FY 2010 Monitoring Protocol notation

(not including Performance Standards of 45 CFR 1301-1311)

Prepared by Teresa Wickstrom, Senior AssociateCenter for Community FuturesPhone and Fax: 909-790-0670

Notes External links are in green text. Internal hyperlinks are in blue text. Regulation citations refer to Title 45 CFR unless otherwise noted.

Table of Contents

45 CFR:Part 1302—Policies and Procedures for Selection, Initial Funding, and Refunding of Head Start Grantees, and for Selection of Replacement Grantees (SI).............................................................2Part 1303—Appeal Procedures for Head Start Grantees and Current or Prospective Delegate Agencies (AP)..................................................................................................................................8PART 1309—Head Start Facilities Purchase, Major Renovation, and Construction (FA)...........28PART 1311—Head Start Fellows (FE).........................................................................................42Part 74: Uniform Administrative Requirements (August 25, 1994 with updates)........................44

Part 74 Appendix A—Contract Provisions................................................................................80Part 80-Nondiscrimination.............................................................................................................82

Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply........96Part 80 Appendix A Part 2.......................................................................................................103Part 80 Appendix B--Guidelines for Eliminating Discrimination...........................................105

Part 84: Nondiscrimination on the Basis of Handicap.................................................................115Part 92: Uniform Administrative Requirements..........................................................................140The Head Start Act (Reauthorized December, 2007)..................................................................176OMB Circular A-102 Grants and Cooperative Agreements with State and Local Governments.....................................................................................................................................................283OMB Circular A-133: Audits......................................................................................................291OMB Circular A-133 Compliance Supplement..........................................................................321

A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006).......322Davis-Bacon Act..........................................................................................................................326McKinney-Vento Homeless Assistance Act (January 2002) (MV)............................................329

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Part 1302—Policies and Procedures for Selection, Initial Funding, and Refunding of Head Start Grantees, and for Selection of Replacement Grantees (SI)


In FY 2010 Monitoring Protocol?45 CFR: Regulation:

1302.1 Purpose and scope. The purpose of this part is to set forth policies and procedures for the selection, initial funding and refunding of Head Start grantees and for the selection of replacement grantees in the event of the voluntary or involuntary termination, or denial of refunding, of Head Start programs. It particularly provides for consideration of the need for selection of a replacement grantee where the continuing eligibility (legal status) and fiscal capability (financial viability) of a grantee to operate a Head Start program is cast in doubt by the cessation of funding under section 519 of the Act [sic] or by the occurrence of some other major change. It is intended that Head Start programs be administered effectively and responsibly; that applicants to administer programs receive fair and equitable consideration; and that the legal rights of current Head Start grantees be fully protected.

1302.2 Definitions.As used in this part-- Act means Title V of The Economic Opportunity Act of 1964, as amended. Approvable application means an application for a Head Start program, either as an initial application or as an application to amend an approved application governing an on-going Head Start program, which, in addition to showing that the applicant has legal status and financial viability, provides for comprehensive services for children and families and for effective and responsible administration which are in conformity with the Act and applicable regulations, the Head Start Manual and Head Start policies. Community action agency means a public or private nonprofit agency or organization designated as a community action agency by the Director of the Community Services Administration pursuant to section 210(a) or section 210(d) of the Act [sic]. Community action program means a program operated by a community action agency. Financial viability means the capability of an applicant or the continuing capability of a grantee to furnish the non-Federal share of the cost of operating an approvable or approved Head Start program. Head Start grantee or grantee means a public or private nonprofit agency or organization whose application to operate a Head Start program pursuant to section 514 of the Act has been approved by the responsible HHS official. Indian tribe means any tribe, band, nation, pueblo, or other organized group or community of Indians, including any Native village described in section 3(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602 (c)) or established pursuant to such Act (43 U.S.C. 1601 et seq.) that is recognized as eligible for special programs and services provided by the United States to Indians because of their status as Indians. Legal status means the existence of an applicant or grantee as a public agency or organization under the law of the State in which it is located, or existence as a private nonprofit agency or organization as a legal entity recognized under the law of the State in which it is located. Existence as a private non-profit agency or

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organization may be established under applicable State or Federal law. Responsible HHS official means the official of the Department of Health and Human Services who has authority to make grants under the Act. [44 FR 24062, Apr. 24, 1979, as amended at 63 FR 34329, June 24, 1998]

1302.3 Consultation with public officials and consumers. Responsible HHS officials will consult with Governors, or their representatives, appropriate local general purpose government officials, and Head Start Policy Council and other appropriate representatives of communities to be served on the proposed replacement of Head Start grantees.

1302.4 Transfer of unexpended balances. When replacing a grantee, unexpended balances of funds in the possession of such grantee in the fiscal year following the fiscal year for which the funds were appropriated may be transferred to the replacement grantee if the approved application of the replacement grantee provides for the continuation of the Head Start services without significant change to the same enrollees and their parents and undertakes to offer employment to the staff of the terminating grantee. A letter of concurrence in the change should be obtained from the terminating grantee whenever possible.

1302.5 Notice for show cause and hearing.1302.5 a Except in emergency situations, the responsible HHS official will not suspend

financial assistance under the Act unless the grantee has been given an opportunity, in accordance with part 1303, subpart D, of this chapter, to show cause why such action should not be taken.

1302.5 b The responsible HHS official will not terminate a grant, suspend a grant for longer than 30 days, or deny refunding to a grantee, unless the grantee has been given an opportunity for a hearing in accordance with part 1303 of this chapter.

1302.10 Selection among applicants.1302.10 a The basis for selection of applicants proposing to operate a Head Start program

will be the extent to which the applicants demonstrate in their application the most effective Head Start program.

1302.10 b In addition to the applicable criteria at section 641 d of the Head Start Act, the criteria for selection will include:

1302.10 b 1 The cost effectiveness of the proposed program;1302.10 b 2 The qualifications and experience of the applicant and the applicant’s staff in

planning, organizing and providing comprehensive child development services at the community level, including the administrative and fiscal capability of the applicant to administer all Head Start programs carried out in the designated service area;

1302.10 b 3 The quality of the proposed program as indicated by adherence to or evidence of the intent and capability to adhere to Head Start Performance Standards (in part 1304) and program policies, including the opportunities provided for employment of target area residents and career development for paraprofessional and other staff and provisions made for the direct participation of parents in the planning, conduct and administration of the program;

1302.10 b 4 The proposed program design and option including the suitability of facilities and

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equipment proposed to be used in carrying out the program, as it relates to community needs and as the applicant proposes to implement the program in accordance with program policies and regulations; and

1302.10 b 5 The need for Head Start services in the community served by the applicant.[57 FR 41887, Sept. 14, 1992]

1302.11 Selection among applicants to replace grantee. The bases for making a selection among applicants which submit approvable applications to replace a grantee, in addition to the basis in Sec. 1302.10 of this part, shall be:

1302.11 a The extent to which provision is made for a continuation of services to the eligible children who have been participating as enrollees in the program;

1302.11 b The extent to which provision is made for continuation of services to the target area or areas served by the program; and

1302.11 c The extent to which provision is made for continued employment by the applicant of the qualified personnel of the existing program.

1302.12 Priority for previously selected Head Start agencies. Before selecting Head Start agency, the responsible HHS official, in addition to considering the factors specified in Secs. 1302.10 and 1302.11, will give priority to an agency which was receiving funds under the Act on January 4, 1975, to operate a Head Start program.

1302.20 Grantee to show both legal status and financial viability.1302.20 a Upon the occurrence of a change in the legal condition of a grantee or of a

substantial diminution of the financial resources of a grantee, or both, for example, such as might result from cessation of grants to the grantee under section 514 of the Act, the grantee is required within 30 days after the effective date of the regulations in this Part or the date the grantee has notice or knowledge of the change, whichever is later, to show in writing to the satisfaction of the responsible HHS official that it has and will continue to have legal status and financial viability. Failure to make this showing may result in suspension, termination or denial of refunding.

1302.20 b The responsible HHS official will notify the grantee in writing of the decision as to the grantee’s legal status and financial viability within 30 days after receiving the grantee’s written submittal

1302.20 c When it is consistent with proper and efficient administration, the responsible HHS official may extend a grantee’s program year to end on the date when a change in its legal condition or a substantial diminution of financial resources, or both, is scheduled to take place.

1302.21 Grantee shows legal status but not financial viability.1302.21 a If a grantee shows legal status but impaired financial viability the responsible

HHS official will entertain a timely request for amendment of the grantee’s approved application which restores the grantee’s financial viability either by a reduction in the program which produces minimum disruption to services and functions, or by an amendment which incorporates essential functions and services not previously funded as part of the total cost of the Head Start program, and, therefore, requires an increase in the amount of the Head Start

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grant but which will not result in a Federal share of the total cost of the Head Start program in excess of the percentage authorized by the Act or applicable regulations. In considering such a request which includes an increase in the Head Start grant the responsible HHS official will take into account the funds available to him for obligation and whether the proposed increase is consistent with that distribution of Head Start funds which:

1302.21 a 1 Maximizes the number of children served within his area of responsibility, or in the case of experimental or demonstration programs, the experimental or demonstration benefits to be achieved, and

1302.21 a 2 Maintains approximately the same distribution of Head Start program funds to States as exist during the fiscal year in which his decision is made.

1302.21 b A request for amendment will be considered to be timely if it is included with the written submittal required by Sec. 1302.20 a of this part, submitted within 30 days after receiving the notice required by Sec. 1302.20 b of this part, or submitted as a part of a timely application for refunding.

1302.21 c The grantee will be notified in writing by the responsible HHS official within 30 days after submission of the requested amendment of the decision to approve or disapprove the requested amendment. If the requested amendment is disapproved the notice will contain a statement of the reasons for disapproval.

1302.22 Suspension or termination of grantee which shows financial viability but not legal status. If a grantee fails to show that it will continue to have legal status after the date of change even though it may show financial viability, the grant shall be suspended or terminated or refunding shall be denied as of the date of change. If it appears reasonable to the responsible HHS official that the deficiency in legal status will be corrected within 30 days he may suspend the grant for not to exceed 30 days after the date of change or the date of submission of a timely request for amendment. If such correction has not been made within the 30 day period the grant shall be terminated.

1302.23 Suspension or termination of grantee which shows legal status but not financial viability.

1302.23 a If the date of change of financial viability precedes or will precede the end of the grantee’s program year the grant will be suspended or terminated on that date, or, if a request for amendment has been submitted under Sec. 1302.21 of this part, upon written notice of disapproval of the requested amendment, whichever is later. If it appears reasonable to the responsible HHS official that the deficiency in financial viability will be corrected within 30 days he may suspend the grant for not to exceed 30 days after the date of change or notice of disapproval. If such correction has not been made within the 30 day period the grant will be terminated.

1302.24 Denial of refunding of grantee.1302.24 a If the date of change will coincide with or will come after the end of the program

year and the grantee has notice or knowledge of such change prior to the end of the program year any action taken to approve the grantee’s application for refunding for the following program year shall be subject to rescission or

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ratification depending upon the decision of the responsible HHS official on the grantee’s legal status and financial viability and on any requested amendment submitted by the grantee. If the requested amendment is disapproved the responsible HHS official may extend the program year in accordance with Sec. 1302.20 c of this part.

1302.24 b If the date of change coincides with the end of the program year and the grantee does not have notice or knowledge of the change prior thereto and the grantee’s application for refunding for the following program year has been approved, such approval shall be subject to rescission or ratification depending upon the decision of the responsible HHS official on the grantee’s legal status and viability and on any requested financial amendment submitted by the grantee.

1302.24 c If the date of change will coincide with or will come after the end of the program year and if the responsible HHS official has prior notice thereof from the grantee or other official source such as the Community Services Administration action to approve any application for refunding submitted by the grantee shall be deferred pending decision by the responsible HHS official on the grantee’s legal status and financial viability and any requested amendment submitted by the grantee.

1302.24 d When the responsible HHS official determines to approve a requested amendment for refunding he will approve it for the full term of the proposed program period, if that period as approved is no longer than a program year.

1302.25 Control of funds of grantee scheduled for change. Responsible HHS officials will place strict controls on the release of grant funds to grantees which are scheduled for change by cessation of their grants under section 519 of the Act. Specifically, the following controls will be established:

1302.25 a Funds will be released on a monthly basis regardless of the form of grant payment.

1302.25 b Funds released each month will be limited to the amount required to cover actual disbursements during that period for activities authorized under the approved Head Start program.

1302.25 c The amount of funds released must be approved each month by the responsible HHS official.

1302.30 Procedure for identification of alternative agency.1302.30 a An Indian tribe whose Head Start grant has been terminated, or which has been

denied refunding as a Head Start grantee, may identify an agency and request the responsible HHS official to designate such agency as an alternative agency to provide Head Start services to the tribe if:

1302.30 a 1 The tribe was the only agency that was receiving federal financial assistance to provide Head Start services to members of the tribe; and

1302.30 a 2 The tribe would be otherwise precluded from providing such services to its members because of the termination or denial of refunding.

1302.30 b 1 The responsible HHS official, when notifying a tribal grantee of the intent to terminate financial assistance or deny its application for refunding, must notify the grantee that it may identify an agency and request that the agency serve as

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the alternative agency in the event that the grant is terminated or refunding denied.

1302.30 b 2 The tribe must identify the alternate agency to the responsible HHS official, in writing, within the time for filing an appeal under part 1303.

1302.30 b 3 The responsible HHS official will notify the tribe, in writing, whether the alternative agency proposed by the tribe is found to be eligible for Head Start funding and capable of operating a Head Start program. If the alternative agency identified by the tribe is not an eligible agency capable of operating a Head Start program, the tribe will have 15 days from the date of the sending of the notification to that effect from the responsible HHS official to identify another agency and request that the agency be designated. The responsible HHS official will notify the tribe in writing whether the second proposed alternate agency is found to be an eligible agency capable of operating the Head Start program.

1302.30 b 4 If the tribe does not identify a suitable alternative agency, a replacement grantee will be designated under these regulations.

1302.30 c If the tribe appeals a termination of financial assistance or a denial of refunding, it will, consistent with the terms of part 1303, continue to be funded pending resolution of the appeal. However, the responsible HHS official and the grantee will proceed with the steps outlined in this regulation during the appeal process.

1302.30 d If the tribe does not identify an agency and request that the agency be appointed as the alternative agency, the responsible HHS official will seek a permanent replacement grantee under these regulations.

1302.31 Requirements of alternative agency. The agency identified by the Indian tribe must establish that it meets all requirements established by the Head Start Act and these requirements for designation as a Head Start grantee and that it is capable of conducting a Head Start program. The responsible HHS official, in deciding whether to designate the proposed agency, will analyze the capacity and experience of the agency according to the criteria found in section 641 d of the Head Start Act and Sec. 1302.10 b 1 through 5 and 1302.11 of this part.

1302.32 Alternative agency—prohibition.1302.32 a No agency will be designated as the alternative agency pursuant to this subpart if

the agency includes an employee who:1302.32 a 1 Served on the administrative or program staff of the Indian tribal grantee, and1302.32 a 2 Was responsible for a deficiency that:1302.32 a 2 i Relates to the performance standards or financial management standards

described in the Head Start Act; and1302.32 a 2 ii

Was the basis for the termination or denial of refunding described in Sec. 1302.30 of this part.

1302.32 b The responsible HHS official shall determine whether an employee was responsible for a deficiency within the meaning and context of this section.

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Part 1303—Appeal Procedures for Head Start Grantees and Current or Prospective Delegate Agencies (AP)



1303.1 Purpose and application. This part prescribes regulations based on section 646 of the Head Start Act, 42 U.S.C. 9841, as it applies to grantees and current or prospective delegate agencies engaged in or wanting to engage in the operation of Head Start programs under the Act. It prescribes the procedures for appeals by current and prospective delegate agencies from specified actions or inaction by grantees. It also provides procedures for reasonable notice and opportunity to show cause in cases of suspension of financial assistance by the responsible HHS official and for an appeal to the Departmental Appeals Board by grantees in cases of denial of refunding, termination of financial assistance, and suspension of financial assistance.

1303.2 Definitions. As used in this part:Act means the Head Start Act, 42 U.S.C. section 9831, et seq. ACYF means the Administration on Children, Youth and Families in the Department of Health and Human Services, and includes Regional staff. Agreement means either a grant or a contract between a grantee and a delegate agency for the conduct of all or part of the grantee’s Head Start program. Day means the 24 hour period beginning at 12 a.m. local time and continuing for the next 24 hour period. It includes all calendar days unless otherwise expressly noted. Delegate Agency means a public or private non-profit organization or agency to which a grantee has delegated by written agreement the carrying out of all or part of its Head Start program. Denial of Refunding means the refusal of a funding agency to fund an application for a continuation of a Head Start program for a subsequent program year when the decision is based on a determination that the grantee has improperly conducted its program, or is incapable of doing so properly in the future, or otherwise is in violation of applicable law, regulations, or other policies. Funding Agency means the agency that provides funds directly to either a grantee or a delegate agency. ACYF is the funding agency for a grantee, and a grantee is the funding agency for a delegate agency. Grantee means the local public or private non-profit agency which has been designated as a Head Start agency under 42 U.S.C. 9836 and which has been granted financial assistance by the responsible HHS official to operate a Head Start program. Interim Grantee means an agency which has been appointed to operate a Head Start program for a period of time not to exceed one year while an appeal of a denial of refunding, termination or suspension action is pending. Prospective Delegate Agency means a public or private non-profit agency or organization which has applied to a grantee to serve as a delegate agency. Responsible HHS Official means the official who is authorized to make No the grant of financial assistance to operate a Head Start program or his or her designee.Submittal means the date of actual receipt or the date the material was served in

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accordance with Sec. 1303.5 of this part for providing documents or notices of appeals, and similar matters, to either grantees, delegate agencies, prospective delegate agencies, or ACYF. Substantial Rejection means that a funding agency requires that the funding of a current delegate agency be reduced to 80% or less of the current level of operations for any reason other than a determination that the delegate agency does not need the funds to serve all the eligible persons it proposes to serve. Suspension of a grant means temporary withdrawal of the grantee’s authority to obligate grant funds pending corrective action by the grantee. Termination of a grant or delegate agency agreement means permanent withdrawal of the grantee’s or delegate agency’s authority to obligate previously awarded grant funds before that authority would otherwise expire. It also means the voluntary relinquishment of that authority by the grantee or delegate agency. Termination does not include: (1) Withdrawal of funds awarded on the basis of the grantee’s or delegate agency’s underestimate of the unobligated balance in a prior period; (2) Refusal by the funding agency to extend a grant or award additional funds (such as refusal to make a competing or noncompeting continuation renewal, extension or supplemental award);(3) Withdrawal of the unobligated balance as of the expiration of a grant; (4) Annulment, i.e., voiding of a grant upon determination that the award was obtained fraudulently or was otherwise illegal or invalid from its inception.Work day means any 24 hour period beginning at 12 a.m. local time and continuing for 24 hours. It excludes Saturdays, Sundays, and legal holidays. Any time ending on one of the excluded days shall extend to 5 p.m. of the next full work day.

1303.3 Right to attorney, attorney fees, and travel costs.1303.3 a All parties to proceedings under this part, including informal proceedings, have

the right to be represented by an attorney.1303.3 a 1 Attorney fees may be charged to the program grant in an amount equal to the

usual and customary fees charged in the locality. However, such fees may not exceed $250.00 per day, adjusted annually to reflect the percentage change in the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) beginning one year after the effective date of these regulations. The grantee or delegate agency may use current operating funds to pay these costs. The fees of only one attorney may be charged to the program grant with respect to a particular dispute. Such fees may not be charged if the grantee or delegate agency has an attorney on its staff, or if it has a retainer agreement with an attorney which fully covers fees connected with litigation. The grantee or delegate agency shall have the burden of establishing the usual and customary fees and shall furnish documentation to support that determination that is satisfactory to the responsible HHS official.

1303.3 a 2 A grantee or delegate agency may designate up to two persons to attend and participate in proceedings held under this Part. Travel and per diem costs of such persons, and of an attorney representing the grantee or delegate agency, shall not

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exceed those allowable under Standard Governmental Travel Regulations in effect at the time of the travel.

1303.3 b In the event that use of program funds under this section would result in curtailment of program operations or inability to liquidate prior obligations, the party so affected may apply to the responsible HHS official for payment of these expenses.

1303.3 c The responsible HHS official, upon being satisfied that these expenditures would result in curtailment of program operations or inability to liquidate prior obligations, must make payment therefore to the affected party by way of reimbursement from currently available funds.

1303.4 Remedies. The procedures established by subparts B and C of this Part shall not be construed as precluding ACYF from pursuing any other remedies authorized by law.

1303.5 Service of process. Whenever documents are required to be filed or served under this part, or notice provided under this part, certified mail shall be used with a return receipt requested. Alternatively, any other system may be used that provides proof of the date of receipt of the documents by the addressee. If this regulation is not complied with, and if a party alleges that it failed to receive documents allegedly sent to it, there will be a rebuttable presumption that the documents or notices were not sent as required by this part, or as alleged by the party that failed to use the required mode of service. The presumption may be rebutted only by a showing supported by a preponderance of evidence that the material was in fact submitted in a timely manner.

1303.6 Successor agencies and officials. Wherever reference is made to a particular Federal agency, office, or official it shall be deemed to apply to any other agency, office, or official which subsequently becomes responsible for administration of the program or any portion of it.

1303.7 Effect of failure to file or serve documents in a timely manner.1303.7 a Whenever an appeal is not filed within the time specified in these or related

regulations, the potential appellant shall be deemed to have consented to the proposed action and to have waived all rights of appeal.

1303.7 b Whenever a party has failed to file a response or other submission within the time required in these regulations, or by order of an appropriate HHS responsible official, the party shall be deemed to have waived the right to file such response or submission.

1303.7 c A party fails to comply with the requisite deadlines or time frames if it exceeds them by any amount.

1303.7 d The time to file an appeal, response, or other submission may be waived in accordance with Sec. 1303.8 of this part.

1303.8 Waiver of requirements.1303.8 a Any procedural requirements required by these regulations may be waived by the

responsible HHS official or such waiver requests may be granted by the

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Departmental Appeals Board in those cases where the Board has jurisdiction. Requests for waivers must be in writing and based on good cause.

1303.8 b Approvals of waivers must be in writing and signed by the responsible HHS official or by the Departmental Appeals Board when it has jurisdiction.

1303.8 c “Good cause” consists of the following:1303.8 c 1 Litigation dates cannot be changed;1303.8 c 2 Personal emergencies pertaining to the health of a person involved in and essential

to the proceeding or to a member of that person’s immediate family, spouse, parents, or siblings;

1303.8 c 3 The complexity of the case is such that preparation of the necessary documents cannot reasonably be expected to be completed within the standard time frames;

1303.8 c 4 Other matters beyond the control of the party requesting the waiver, such as strikes and natural disasters.

1303.8 d Under no circumstances may “good cause” consist of a failure to meet a deadline due to the oversight of either a party or its representative.

1303.8 e Waivers of timely filing or service shall be granted only when necessary in the interest of fairness to all parties, including the Federal agency. They will be granted sparingly as prompt resolution of disputes is a major goal of these regulations. The responsible HHS official or the Departmental Appeals Board shall have the right, on own motion or on motion of a party, to require such documentation as deemed necessary in support of a request for a waiver.

1303.8 f A request for an informal meeting by a delegate agency, including a prospective delegate agency, may be denied by the responsible HHS official, on motion of the grantee or on his or her own motion, if the official concludes that the written appeal fails to state plausible grounds for reversing the grantee’s decision or the grantee’s failure to act on an application.

1303.8 g The requirements of this section may not be waived.1303.10 Purpose.1303.10 a This subpart establishes rules and procedures for the suspension of a grantee,

denial of a grantee’s application for refunding, or termination of assistance under the Act for circumstances related to the particular grant, such as ineffective or improper use of Federal funds or for failure to comply with applicable laws, regulations, policies, instructions, assurances, terms and conditions or, in accordance with part 1302 of this chapter, upon loss by the grantee of legal status or financial viability.

1303.10 b This subpart does not apply to any administrative action based upon any violation, or alleged violation, of title VI of the Civil Rights Act of 1964.

1303.11 Suspension on notice and opportunity to show cause.1303.11 a After receiving concurrence from the Commissioner, ACYF, the responsible HHS

official may suspend financial assistance to a grantee in whole or in part for breach or threatened breach of any requirement stated in Sec. 1303.10 pursuant to

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notice and opportunity to show cause why assistance should not be suspended.1303.11 b The responsible HHS official will notify the grantee as required by Sec. 1303.5 or

by telegram that ACYF intends to suspend financial assistance, in whole or in part, unless good cause is shown why such action should not be taken. The notice will include:

1303.11 b 1 The grounds for the proposed suspension;1303.11 b 2 The effective date of the proposed suspension;1303.11 b 3 Information that the grantee has the opportunity to submit written material in

opposition to the intended suspension and to meet informally with the responsible HHS official regarding the intended suspension;

1303.11 b 4 Information that the written material must be submitted to the responsible HHS official at least seven days prior to the effective date of the proposed suspension and that a request for an informal meeting must be made in writing to the responsible HHS official no later than seven days after the day the notice of intention to suspend was mailed to the grantee;

1303.11 b 5 Invitation to correct the deficiency by voluntary action; and1303.11 b 6 A copy of this subpart.1303.11 c If the grantee requests an informal meeting, the responsible HHS official will fix a

time and place for the meeting. In no event will such meeting be scheduled less than seven days after the notice of intention to suspend was sent to the grantee.

1303.11 d The responsible HHS official may at his or her discretion extend the period of time or date for making requests or submitting material by the grantee and will notify the grantee of any such extension.

1303.11 e At the time the responsible HHS official sends the notice of intention to suspend financial assistance to the grantee, the official will send a copy of it to any delegate agency whose activities or failures to act are a substantial cause of the proposed suspension, and will inform such delegate agency that it is entitled to submit written material in opposition and to participate in the informal meeting with the responsible HHS official if one is held. In addition, the responsible HHS official may give such notice to any other Head Start delegate agency of the grantee.

1303.11 f Within three days of receipt of the notice of intention to suspend financial assistance, the grantee shall send a copy of such notice and a copy of this subpart to all delegate agencies which would be financially affected by the proposed suspension action. Any delegate agency that wishes to submit written material may do so within the time stated in the notice. Any delegate agency that wishes to participate in the informal meeting regarding the intended suspension, if not otherwise afforded a right to participate, may request permission to do so from the responsible HHS official, who may grant or deny such permission. In acting upon any such request from a delegate agency, the responsible HHS official will take into account the effect of the proposed suspension on the particular delegate agency, the extent to which the meeting would become unduly complicated as a

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result of granting such permission, and the extent to which the interests of the delegate agency requesting such permission appear to be adequately represented by other participants.

1303.11 g The responsible HHS official will consider any timely material presented in writing, any material presented during the course of the informal meeting as well as any showing that the grantee has adequately corrected the deficiency which led to the suspension proceedings. The decision of the responsible HHS official will be made within five days after the conclusion of the informal meeting, or, if no informal meeting is held, within five days of receipt by the responsible HHS official of written material from all concerned parties. If the responsible HHS official concludes that the grantee has failed to show cause why financial assistance should not be suspended, the official may suspend financial assistance in whole or in part and under such terms and conditions as he or she specifies.

1303.11 h Notice of such suspension will be promptly transmitted to the grantee as required in Sec. 1303.5 of this part or by some other means showing the date of receipt, and shall become effective upon delivery or on the date delivery is refused or the material is returned. Suspension shall not exceed 30 days unless the responsible HHS official and the grantee agree to a continuation of the suspension for an additional period of time. If termination proceedings are initiated in accordance with Sec. 1303.14, the suspension of financial assistance will be rescinded.

1303.11 i New obligations incurred by the grantee during the suspension period will be not be allowed unless the granting agency expressly authorizes them in the notice of suspension or an amendment to it. Necessary and otherwise allowable costs which the grantee could not reasonably avoid during the suspension period will be allowed if they result from obligations properly incurred by the grantee before the effective date of the suspension and not in anticipation of suspension or termination. At the discretion of the granting agency, third-party in-kind contributions applicable to the suspension period may be allowed in satisfaction of cost sharing or matching requirements.

1303.11 j The responsible HHS official may appoint an agency to serve as an interim grantee to operate the program until the grantee’s suspension is lifted.

1303.11 k The responsible HHS official may modify the terms, conditions and nature of the suspension or rescind the suspension action at any time on his or her own initiative or upon a satisfactory showing that the grantee has adequately corrected the deficiency which led to the suspension and that repetition is not threatened. Suspension partly or fully rescinded may, at the discretion of the responsible HHS official, be re-imposed with or without further proceedings, except that the total time of suspension may not exceed 30 days unless termination proceedings are initiated in accordance with Sec. 1303.14 or unless the responsible HHS official and the grantee agree to continuation of the suspension for an additional period of time. If termination proceedings are initiated, the suspension of financial assistance will be rescinded.

1303.12 Summary suspension and opportunity to show cause.1303.12 a After receiving concurrence from the Commissioner, ACYF, the responsible HHS

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official may suspend financial assistance in whole or in part without prior notice and an opportunity to show cause if it is determined that immediate suspension is necessary because of a serious risk of:

1303.12 a 1 Substantial injury to property or loss of project funds; or1303.12 a 2 Violation of a Federal, State, or local criminal statute; or1303.12 a 3 If staff or participants’ health and safety are at risk.1303.12 b The notice of summary suspension will be given to the grantee as required by Sec.

1303.5 of this part, or by some other means showing the date of receipt, and shall become effective on delivery or on the date delivery is refused or the material is returned unclaimed.

1303.12 c The notice must include the following items:1303.12 c 1 The effective date of the suspension;1303.12 c 2 The grounds for the suspension;1303.12 c 3 The extent of the terms and conditions of any full or partial suspension;1303.12 c 4 A statement prohibiting the grantee from making any new expenditures or

incurring any new obligations in connection with the suspended portion of the program; and

1303.12 c 5 A statement advising the grantee that it has an opportunity to show cause at an informal meeting why the suspension should be rescinded. The request for an informal meeting must be made by the grantee in writing to the responsible HHS official no later than five workdays after the effective date of the notice of summary suspension as described in paragraph b of this section.

1303.12 d If the grantee requests in writing the opportunity to show cause why the suspension should be rescinded, the responsible HHS official will fix a time and place for an informal meeting for this purpose. This meeting will be held within five workdays after the grantee’s request is received by the responsible HHS official. Notwithstanding the provisions of this paragraph, the responsible HHS official may proceed to deny refunding or initiate termination proceedings at any time even though financial assistance of the grantee has been suspended in whole or in part.

1303.12 e Notice of summary suspension must also be furnished by the grantee to its delegate agencies within two workdays of its receipt of the notice from ACYF by certified mail, return receipt requested, or by any other means showing dates of transmittal and receipt or return as undeliverable or unclaimed. Delegate agencies affected by the summary suspension have the right to participate in the informal meeting as set forth in paragraph d of this section.

1303.12 f The effective period of a summary suspension of financial assistance may not exceed 30 days unless:

1303.12 f 1 The conditions creating the summary suspension have not been corrected; or1303.12 f 2 The parties agree to a continuation of the summary suspension for an additional

period of time; or

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1303.12 f 3 The grantee, in accordance with paragraph d of this section, requests an opportunity to show cause why the summary suspension should be rescinded, in which case it may remain in effect in accordance with paragraph h of this section; or

1303.12 f 4 Termination or denial of refunding proceedings are initiated in accordance with Sec. 1303.14 or Sec. 1303.15.

1303.12 g Any summary suspension that remains in effect for more than 30 days is subject to the requirements of Sec. 1303.13 of this part. The only exceptions are where there is an agreement under paragraph f 2 of this section, or the circumstances described in paragraph f 4 or h 1 of this section exist.

1303.12 h 1 If the grantee requests an opportunity to show cause why a summary suspension should be rescinded, the suspension of financial assistance will continue in effect until the grantee has been afforded such opportunity and a decision has been made by the responsible HHS official.

1303.12 h 2 If the suspension continues for more than 30 days, the suspension remains in effect even if it is appealed to the Departmental Appeals Board.

1303.12 h 3 Notwithstanding any other provisions of these or other regulations, if a denial of refunding occurs or a termination action is instituted while the summary suspension is in effect, the suspension shall merge into the later action and funding shall not be available until the action is rescinded or a decision favorable to the grantee is rendered.

1303.12 i The responsible HHS official must consider any timely material presented in writing, any material presented during the course of the informal meeting, as well as any other evidence that the grantee has adequately corrected the deficiency which led to the summary suspension.

1303.12 j A decision must be made within five work days after the conclusion of the informal meeting with the responsible HHS official. If the responsible HHS official concludes, after considering the information provided at the informal meeting, that the grantee has failed to show cause why the suspension should be rescinded, the responsible HHS official may continue the suspension, in whole or in part and under the terms and conditions specified in the notice of suspension.

1303.12 k New obligations incurred by the grantee during the suspension period will not be allowed unless the granting agency expressly authorizes them in the notice of suspension or by an amendment to the notice. Necessary and otherwise allowable costs which the grantee could not reasonably avoid during the suspension period will be allowed if they result from obligations properly incurred by the grantee before the effective date of the suspension and not in anticipation of suspension, denial of refunding or termination.

1303.12 l The responsible HHS official may appoint an agency to serve as an interim grantee to operate the program until either the grantee’s summary suspension is lifted or a new grantee is selected in accordance with subpart B of this part.

1303.12 m At the discretion of the funding agency, third-party in-kind contributions applicable to the suspension period may be allowed in satisfaction of cost sharing

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or matching requirements.1303.12 n The responsible HHS official may modify the terms, conditions and nature of the

summary suspension or rescind the suspension action at any time upon receiving satisfactory evidence that the grantee has adequately corrected the deficiency which led to the suspension and that the deficiency will not occur again. Suspension partly or fully rescinded may, at the discretion of the responsible HHS official, be re-imposed with or without further proceedings.

1303.13 Appeal by a grantee of a suspension continuing for more than 30 days.1303.13 a This section applies to summary suspensions that are initially issued for more than

30 days and summary suspensions continued for more than 30 days except those identified in paragraph Sec. 1303.12 g of this part.

1303.13 b After receiving concurrence from the Commissioner, ACYF, the responsible HHS official may suspend a grant for more than 30 days. A suspension may, among other bases, be imposed for the same reasons that justify termination of financial assistance or which justify a denial of refunding of a grant.

1303.13 c A notice of a suspension under this section shall set forth:1303.13 c 1 The reasons for the action;1303.13 c 2 The duration of the suspension, which may be indefinite;1303.13 c 3 The fact that the action may be appealed to the Departmental Appeals Board and

the time within which it must be appealed.1303.13 d During the period of suspension a grantee may not incur any valid obligations

against Federal Head Start grant funds, nor may any grantee expenditure or provision of in-kind services or items of value made during the period be counted as applying toward any required matching contribution required of a grantee, except as otherwise provided in this part.

1303.13 e The responsible HHS official may appoint an agency to serve as an interim grantee to operate the program until either the grantee’s suspension is lifted or a new grantee is selected in accordance with subparts B and C of part 1302.

1303.13 f Any appeal to the Departmental Appeals Board must be made within five days of the grantee’s receipt of notice of suspension or return of the notice as undeliverable, refused, or unclaimed. Such an appeal must be in writing and it must fully set forth the grounds for the appeal and be accompanied by all documentation that the grantee believes is relevant and supportive of its position. All such appeals shall be addressed to the Departmental Appeals Board, and the appellant will send a copy of the appeal to the Commissioner, ACYF, and the responsible HHS official. Appeals will be governed by the Departmental Appeals Board’s regulations at 45 CFR part 16, except as otherwise provided in the Head Start appeals regulations. Any grantee requesting a hearing as part of its appeal shall be afforded one by the Departmental Appeals Board.

1303.13 g If a grantee is successful on its appeal any costs incurred during the period of suspension that are otherwise allowable may be paid with Federal grant funds. Moreover, any cash or in-kind contributions of the grantee during the suspension

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period that are otherwise allowable may be counted toward meeting the grantee’s non-Federal share requirement.

1303.13 h If a grantee’s appeal is denied by the Departmental Appeals Board, but the grantee is subsequently restored to the program because it has corrected those conditions which warranted the suspension, its activities during the period of the suspension remain outside the scope of the program. Federal funds may not be used to offset any costs during the period, nor may any cash or in-kind contributions received during the period be used to meet non-Federal share requirements.

1303.13 i If the Federal agency institutes termination proceedings during a suspension, or denies refunding, the two actions shall merge and the grantee need not file a new appeal. Rather, the Departmental Appeals Board will be notified by the Federal agency and will automatically be vested with jurisdiction over the termination action or the denial of refunding and will, pursuant to its rules and procedures, permit the grantee to respond to the notice of termination. In a situation where a suspension action is merged into a termination action in accordance with this section, the suspension continues until there is an administrative decision by the Departmental Appeals Board on the grantee’s appeal.

1303.14 Appeal by a grantee from a termination of financial assistance.1303.14 a After receiving concurrence from the Commissioner, ACYF, the responsible HHS

official may terminate financial assistance to a grantee. Financial assistance may be terminated in whole or in part.

1303.14 b Financial assistance may be terminated for any or all of the following reasons:1303.14 b 1 The grantee is no longer financially viable;1303.14 b 2 The grantee has lost the requisite legal status or permits;1303.14 b 3 The grantee has failed to comply with the required fiscal or program reporting

requirements applicable to grantees in the Head Start program;1303.14 b 4 The grantee has failed to timely correct one or more deficiencies as defined in part

1304;1303.14 b 5 The grantee has failed to comply with the eligibility requirements and limitations

on enrollment in the Head Start program, or both;1303.14 b 6 The grantee has failed to comply with the Head Start grants administration

requirements set forth in part 1301;1303.14 b 7 The grantee has failed to comply with the requirements of the Head Start Act;1303.14 b 8 The grantee is debarred from receiving Federal grants or contracts;1303.14 b 9 The grantee fails to abide by any other terms and conditions of its award of

financial assistance, or any other applicable laws, regulations, or other applicable Federal or State requirements or policies.

1303.14 c A notice of termination shall set forth:1303.14 c 1 The legal basis for the termination under paragraph b of this section, the factual

findings on which the termination is based or reference to specific findings in

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another document that form the basis for the termination (such as reference to item numbers in an on-site review report or instrument), and citation to any statutory provisions, regulations, or policy issuances on which ACF is relying for its determination.

1303.14 c 2 The fact that the termination may be appealed within 30 days to the Departmental Appeals Board (with a copy of the appeal sent to the responsible HHS official and the Commissioner, ACYF) and that such appeal shall be governed by 45 CFR part 16, except as otherwise provided in the Head Start appeals regulations, and that any grantee that requests a hearing shall be afforded one, as mandated by 42. U.S.C. 9841.

1303.14 c 3 That the appeal may be made only by the Board of Directors of the grantee or an official acting on behalf of such Board.

1303.14 c 4 That, if the activities of a delegate agency are the basis, in whole or in part, for the proposed termination, the identity of the delegate agency.

1303.14 c 5 That the grantee’s appeal must meet the requirements set forth in paragraph d of this section.

1303.14 c 6 That a failure by the responsible HHS official to meet the requirements of this paragraph may result in the dismissal of the termination action without prejudice, or the remand of that action for the purpose of reissuing it with the necessary corrections.

1303.14 d A grantee’s appeal must:1303.14 d 1 Be in writing;1303.14 d 2 Specifically identify what factual findings are disputed;1303.14 d 3 Identify any legal issues raised, including relevant citations;1303.14 d 4 Include an original and two copies of each document the grantee believes is

relevant and supportive of its position (unless the grantee has obtained permission from the Departmental Appeals Board to submit fewer copies);

1303.14 d 5 Include any request for specifically identified documents the grantee wishes to obtain from ACF and a statement of the relevance of the requested documents, and a statement that the grantee has attempted informally to obtain the documents from ACF and was unable to do so;

1303.14 d 6 Grantees may submit additional documents within 14 days of receipt of the documentation submitted by ACF in response to the grantee’s appeal and initial submittals. The ACF response to the appeal and initial submittals of the grantee shall be filed no later than 30 days after ACF’s receipt of the material. In response to such a submittal, ACF may submit additional documents should it have any, or request discovery in connection with the new documents, or both, but must do so within 10 days of receipt of the additional filings;

1303.14 d 7 Include a statement on whether the grantee is requesting a hearing; and1303.14 d 8 Be filed with the Departmental Appeals Board and be served on the responsible

HHS official who issued the termination notice and on the Commissioner of

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ACYF. The grantee must also serve a copy of the appeal on any delegate agency that would be financially affected at the time the grantee files its appeal.

1303.14 e The Departmental Appeals Board sanctions with respect to a grantee’s failure to comply with the provisions of paragraph d of this section are as follows:

1303.14 e 1 If in the judgment of the Departmental Appeals Board a grantee has failed to substantially comply with the provisions of the preceding paragraphs of this section, its appeal must be dismissed with prejudice.

1303.14 e 2 If the Departmental Appeals Board concludes that the grantee’s failures are not substantial, but are confined to one or a few specific instances, it shall bar the submittal of an omitted document, or preclude the raising of an argument or objection not timely raised in the appeal, or deny a request for a document or other “discovery” request not timely made.

1303.14 e 3 The sanctions set forth in paragraphs e 1 and 2 of this section shall not apply if the Departmental Appeals Board determines that the grantee has shown good cause for its failure to comply with the relevant requirements. Delays in obtaining representation shall not constitute good cause. Matters within the control of its agents and attorneys shall be deemed to be within the control of the grantee.

1303.14 f 1 During a grantee’s appeal of a termination decision, funding will continue until an adverse decision is rendered or until expiration of the then current budget period. At the end of the current budget period, if a decision has not been rendered, the responsible HHS official shall award an interim grant to the grantee until a decision is made.

1303.14 f 2 If a grantee’s funding has been suspended, no funding shall be available during the termination proceedings, or at any other time, unless the action is rescinded or the grantee’s appeal is successful. An interim grantee will be appointed during the appeal period.

1303.14 f 3 If a grantee does not appeal an administrative decision to court within 30 days of its receipt of the decision, a replacement grantee will be immediately sought. An interim grantee may be named, if needed, pending the selection of a replacement grantee.

1303.14 f 4 An interim grantee may be sought even though the grantee has appealed an administrative decision to court within 30 days, if the responsible HHS official determines it necessary to do so. Examples of circumstances that warrant an interim grantee are to protect children and families from harm and Federal funds from misuse or dissipation or both.

1303.14 g If the Departmental Appeals Board informs a grantee that a proposed termination action has been set down for hearing, the grantee shall, within five days of its receipt of this notice, send a copy of it to all delegate agencies which would be financially affected by the termination and to each delegate agency identified in the notice. The grantee shall send the Departmental Appeals Board and the responsible HHS official a list of all delegate agencies notified and the dates of notification.

1303.14 h If the responsible HHS official initiated termination proceedings because of the

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activities of a delegate agency, that delegate agency may participate in the hearing as a matter of right. Any other delegate agency, person, agency or organization that wishes to participate in the hearing may request permission to do so from the Departmental Appeals Board. Any request for participation, including a request by a delegate agency, must be filed within 30 days of the grantee’s appeal.

1303.14 i The results of the proceeding and any measure taken thereafter by ACYF pursuant to this part shall be fully binding upon the grantee and all its delegate agencies, whether or not they actually participated in the hearing.

1303.14 j A grantee may waive a hearing and submit written information and argument for the record. Such material shall be submitted within a reasonable period of time to be fixed by the Departmental Appeals Board upon the request of the grantee. The failure of a grantee to request a hearing, or to appear at a hearing for which a date had been set, unless excused for good cause, shall be deemed a waiver of the right to a hearing and consent to the making of a decision on the basis of written information and argument submitted by the parties to the Departmental Appeals Board.

1303.14 k The responsible HHS official may attempt, either personally or through a representative, to resolve the issues in dispute by informal means prior to the hearing. [57 FR 59264, Dec. 14, 1992, as amended at 61 FR 57226, Nov. 5, 1996; 65 FR 4768, Feb. 1, 2000]

1303.15 Appeal by a grantee from a denial of refunding.1303.15 a After receiving concurrence from the Commissioner, ACYF, a grantee’s

application for refunding may be denied by the responsible HHS official for circumstances described in paragraph c of this section.

1303.15 b When an intention to deny a grantee’s application for refunding is arrived at on a basis to which this subpart applies, the responsible HHS official will provide the grantee as much advance notice thereof as is reasonably possible, in no event later than 30 days after the receipt by ACYF of the application. The notice will inform the grantee that it has the opportunity for a full and fair hearing on whether refunding should be denied.

1303.15 b 1 Such appeals shall be governed by 45 CFR part 16, except as otherwise provided in the Head Start appeals regulations. Any grantee which requests a hearing shall be afforded one, as mandated by 42 U.S.C. 9841.

1303.15 b 2 Any such appeals must be filed within 30 days after the grantee receives notice of the decision to deny refunding.

1303.15 c Refunding of a grant may be denied for any or all of the reasons for which a grant may be terminated, as set forth in Sec. 1303.14 b of this part.

1303.15 d Decisions to deny refunding shall be in writing, signed by the responsible HHS official, dated, and sent in compliance with Sec. 1303.5 of this part or by telegram, or by any other mode establishing the date sent and received by the addressee, or the date it was determined delivery could not be made, or the date delivery was refused. A Notice of Decision shall contain:

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1303.15 d 1 The legal basis for the denial of refunding under paragraph c of this section, the factual findings on which the denial of refunding is based or references to specific findings in another document that form the basis for the denial of refunding (such as reference to item numbers in an on-site review report or instrument), and citation to any statutory provisions, regulations or policy issuances on which ACF is relying for its determination.

1303.15 d 2 The identity of the delegate agency, if the activities of that delegate agency are the basis, in whole or in part, for the proposed denial of refunding; and

1303.15 d 3 If the responsible HHS official has initiated denial of refunding proceedings because of the activities of a delegate agency, the delegate agency may participate in the hearing as a matter of right. Any other delegate agency, person, agency or organization that wishes to participate in the hearing may request permission to do so from the Departmental Appeals Board. Any request for participation, including a request by a delegate agency, must be filed within 30 days of the grantee’s appeal.

1303.15 d 4 A statement that failure of the notice of denial of refunding to meet the requirements of this paragraph may result in the dismissal of the denial of refunding action without prejudice, or the remand of that action for the purpose of reissuing it with the necessary corrections.

1303.15 e The appeal may be made only by the Board of Directors of the grantee or by an official acting on behalf of such Board.

1303.15 f If the responsible HHS official has initiated denial of refunding proceedings because of the activities of a delegate agency, that delegate agency may participate in the hearing as a matter of right. Any other delegate agency, person, agency or organization that wishes to participate in the hearing may request permission to do so from the Departmental Appeals Board. Any request for participation, including a request by a delegate agency, must be filed within 30 days of the grantee’s appeal.

1303.15 g Paragraphs i, j, and k of 1303.14 shall apply to appeals of denials of refunding.1303.15 h The Departmental Appeals Board sanctions with respect to a grantee’s appeal of

denial of refunding are as follows:1303.15 h 1 If in the judgment of the Departmental Appeals Board a grantee has failed to

substantially comply with the provisions of the preceding paragraphs of this section, its appeal must be dismissed with prejudice.

1303.15 h 2 If the Departmental Appeals Board concludes that the grantee’s failure to comply is not substantial, but is confined to one or a few specific instances, it shall bar the submittal of an omitted document, or preclude the raising of an argument or objection not timely raised in the appeal, or deny a request for a document or other “discovery” request not timely made.

1303.15 h 3 The sanctions set forth in paragraphs h 1 and 2 of this section shall not apply if the Departmental Appeals Board determines that a grantee has shown good cause for its failure to comply with the relevant requirements. Delays in obtaining representation shall not constitute good cause. Matters within the control of its

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agents and attorneys shall be deemed to be within the control of the grantee. [57 FR 59264, Dec. 14, 1992, as amended at 65 FR 4769, Feb. 1, 2000]

1303.16 Conduct of hearing.1303.16 a The presiding officer shall conduct a full and fair hearing, avoid delay, maintain

order, and make a sufficient record of the facts and issues. To accomplish these ends, the presiding officer shall have all powers authorized by law, and may make all procedural and evidentiary rulings necessary for the conduct of the hearing. The hearing shall be open to the public unless the presiding officer for good cause shown otherwise determines.

1303.16 b Communications outside the record are prohibited as provided by 45 CFR 16.17.1303.16 c Both ACYF and the grantee are entitled to present their case by oral or

documentary evidence, to submit rebuttal evidence and to conduct such examination and cross-examination as may be required for a full and true disclosure of all facts bearing on the issues. The issues shall be those stated in the notice required to be filed by paragraph g of this section, those stipulated in a pre-hearing conference or those agreed to by the parties.

1303.16 d Prepared written direct testimony will be used in appeals under this part in lieu of oral direct testimony. When the parties submit prepared written direct testimony, witnesses must be available at the hearing for cross-examination and redirect examination. If a party can show substantial hardship in using prepared written direct testimony, the Departmental Appeals Board may exempt it from the requirement. However, such hardship must be more than difficulty in doing so, and it must be shown with respect to each witness.

1303.16 e In addition to ACYF, the grantee, and any delegate agencies which have a right to appear, the presiding officer may permit the participation in the proceedings of such persons or organizations as deemed necessary for a proper determination of the issues involved. Such participation may be limited to those issues or activities which the presiding officer believes will meet the needs of the proceeding, and may be limited to the filing of written material.

1303.16 f Any person or organization that wishes to participate in a proceeding may apply for permission to do so from the Departmental Appeals Board. This application must be made within 30 days of the grantee’s appeal in the case of the appeal of termination or denial of refunding, and as soon as possible after the notice of suspension has been received by the grantee. It must state the applicant’s interest in the proceeding, the evidence or arguments the applicant intends to contribute, and the necessity for the introduction of such evidence or arguments.

1303.16 g The presiding officer shall permit or deny such participation and shall give notice of his or her decision to the applicant, the grantee, and ACYF, and, in the case of denial, a brief statement of the reasons therefor. Even if previously denied, the presiding officer may subsequently permit such participation if, in his or her opinion, it is warranted by subsequent circumstances. If participation is granted, the presiding officer shall notify all parties of that fact and may, in appropriate cases, include in the notification a brief statement of the issues as to which participation is permitted.

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1303.16 h The Departmental Appeals Board will send the responsible HHS official, the grantee and any other party a notice which states the time, place, nature of the hearing, and the legal authority and jurisdiction under which the hearing is to be held. The notice will also identify with reasonable specificity and ACYF requirements which the grantee is alleged to have violated. The notice will be served and filed not later than ten work days prior to the hearing. [57 FR 59264, Dec. 14, 1992, as amended at 65 FR 4769, Feb. 1, 2000]

1303.17 Time for hearing and decision.1303.17 a Any hearing on an appeal by a grantee from a notice of suspension, termination,

or denial of refunding must be commenced no later than 120 days from the date the grantee’s appeal is received by the Departmental Appeals Board. The final decision in an appeal whether or not there is a hearing must be rendered not later than 60 days after the closing of the record, i.e., 60 days after the Board receives the final authorized submission in the case.

1303.17 b All hearings will be conducted expeditiously and without undue delay or postponement.

1303.17 c The time periods established in paragraph a of this section may be extended if:1303.17 c 1 The parties jointly request a stay to engage in settlement negotiations,1303.17 c 2 Either party requests summary disposition; or1303.17 c 3 The Departmental Appeals Board determines that the Board is unable to hold a

hearing or render its decision within the specified time period for reasons beyond the control of either party or the Board. [65 FR 4770, Feb. 1, 2000]

1303.20 Appeals to grantees by current or prospective delegate agencies of rejection of an application, failure to act on an application or termination of a grant or contract.

1303.20 a A grantee must give prompt, fair and adequate consideration to applications submitted by current or prospective delegate agencies to operate Head Start programs. The failure of the grantee to act within 30 days after receiving the application is deemed to be a rejection of the application.

1303.20 b A grantee must notify an applicant in writing within 30 days after receiving the application of its decision to either accept or to wholly or substantially reject it. If the decision is to wholly or substantially reject the application, the notice shall contain a statement of the reasons for the decision and a statement that the applicant has a right to appeal the decision within ten work days after receipt of the notice. If a grantee fails to act on the application by the end of the 30 day period which grantees have to review applications, the current or prospective delegate agency may appeal to the grantee, in writing, within 15 work days of the end of the 30 day grantee review period.

1303.20 c A grantee must notify a delegate agency in writing of its decision to terminate its agreement with the delegate agency, explaining the reasons for its decision and that the delegate agency has the right to appeal the decision to the grantee within ten work days after receipt of the notice.

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1303.20 d The grantee has 20 days to review the written appeal and issue its decision. If the grantee sustains its earlier termination of an award or its rejection of an application, the current or prospective delegate agency then may appeal, in writing, to the responsible HHS official. The appeal must be submitted to the responsible HHS official within ten work days after the receipt of the grantee’s final decision. The appeal must fully set forth the grounds for the appeal.

1303.20 e A grantee may not reject the application or terminate the operations of a delegate agency on the basis of defects or deficiencies in the application or in the operation of the program without first:

1303.20 e 1 Notifying the delegate agency of the defects and deficiencies;1303.20 e 2 Providing, or providing for, technical assistance so that defects and deficiencies

can be corrected by the delegate agency; and1303.20 e 3 Giving the delegate agency the opportunity to make appropriate corrections.1303.20 f An appeal filed pursuant to a grantee failing to act on a current or prospective

delegate agency’s application within a 30 day period need only contain a copy of the application, the date filed, and any proof of the date the grantee received the application. The grantee shall have five days in which to respond to the appeal.

1303.20 g Failure to appeal to the grantee regarding its decision to reject an application, terminate an agreement, or failure to act on an application shall bar any appeal to the responsible HHS official.

1303.21 Procedures for appeal by current or prospective delegate agencies to the responsible HHS official from denials by grantees of an application or failure to act on an application.

1303.21 a Any current or prospective delegate agency that is dissatisfied with the decision of a grantee rendered under Sec. 1303.20 may appeal to the responsible HHS official whose decision is final and not appealable to the Commissioner, ACYF. Such an appeal must be in writing and it must fully set forth the grounds for the appeal and be accompanied by all documentation that the current or prospective delegate agency believes is relevant and supportive of this position, including all written material or documentation submitted to the grantee under the procedures set forth in Sec. 1303.20, as well as a copy of any decision rendered by the grantee. A copy of the appeal and all material filed with the responsible HHS official must be simultaneously served on the grantee.

1303.21 b In providing the information required by paragraph a of this section, delegate agencies must set forth:

1303.21 b 1 Whether, when and how the grantee advised the delegate agency of alleged defects and deficiencies in the delegate agency’s application or in the operation of its program prior to the grantee’s rejection or termination notice;

1303.21 b 2 Whether the grantee provided the delegate agency reasonable opportunity to correct the defects and deficiencies, the details of the opportunity that was given and whether or not the grantee provided or provided for technical advice, consultation, or assistance to the current delegate agency concerning the

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correction of the defects and deficiencies;1303.21 b 3 What steps or measures, if any, were undertaken by the delegate agency to correct

any defects or deficiencies;1303.21 b 4 When and how the grantee notified the delegate agency of its decision;1303.21 b 5 Whether the grantee told the delegate agency the reasons for its decision and, if

so, how such reasons were communicated to the delegate agency and what they were;

1303.21 b 6 If it is the delegate agency’s position that the grantee acted arbitrarily or capriciously, the reasons why the delegate agency takes this position; and

1303.21 b 7 Any other facts and circumstances which the delegate agency believes supports its appeal.

1303.21 c The grantee may submit a written response to the appeal of a prospective delegate agency. It may also submit additional information which it believes is relevant and supportive of its position.

1303.21 d In the case of an appeal by a delegate agency, the grantee must submit a written statement to the responsible HHS official responding to the items specified in paragraph b of this section. The grantee must include information that explains why it acted properly in arriving at its decision or in failing to act, and any other facts and circumstances which the grantee believes supports its position.

1303.21 e 1 The responsible HHS official may meet informally with the current or prospective delegate agency if such official determines that such a meeting would be beneficial to the proper resolution of the appeal. Such meetings may be conducted by conference call.

1303.21 e 2 An informal meeting must be requested by the current or prospective delegate agency at the time of the appeal. In addition, the grantee may request an informal meeting with the responsible HHS official. If none of the parties requests an informal meeting, the responsible HHS official may hold such a meeting if he or she believes it would be beneficial for a proper resolution of the dispute. Both the grantee and the current or prospective delegate agency may attend any informal meeting concerning the appeal. If a party wishes to oppose a request for a meeting it must serve its opposition on the responsible HHS official and any other party within five work days of its receipt of the request.

1303.21 f A grantee’s response to appeals by current or prospective delegate agencies must be submitted to the responsible HHS official within ten work days of receipt of the materials served on it by the current or prospective delegate agency in accordance with paragraph a of this section. The grantee must serve a copy of its response on the current or prospective delegate agency.

1303.21 g The responsible HHS official shall notify the current or prospective delegate agency and the grantee whether or not an informal meeting will be held. If an informal meeting is held, it must be held within ten work days after the notice by the responsible HHS official is mailed. The responsible HHS official must designate either the Regional Office or the place where the current or prospective

25



delegate agency or grantee is located for holding the informal meeting.1303.21 h If an informal meeting is not held, each party shall have an opportunity to reply in

writing to the written statement submitted by the other party. The written reply must be submitted to the responsible HHS official within five work days after the notification required by paragraph g of this section. If a meeting is not to be held, notice of that fact shall be served on the parties within five work days of the receipt of a timely response to such a request or the expiration of the time for submitting a response to such a request.

1303.21 i In deciding an appeal under this section, the responsible HHS official will arrive at his or her decision by considering:

1303.21 i 1 The material submitted in writing and the information presented at any informal meeting;

1303.21 i 2 The application of the current or prospective delegate agency;1303.21 i 3 His or her knowledge of the grantee’s program as well as any evaluations of his or

her staff about the grantee’s program and current or prospective delegate agency’s application and prior performance; and

1303.21 i 4 Any other evidence deemed relevant by the responsible HHS official.1303.22 Decision on appeal in favor of grantee.1303.22 a If the responsible HHS official finds in favor of the grantee, the appeal will be

dismissed unless there is cause to remand the matter back to the grantee.1303.22 b The grantee’s decision will be sustained unless it is determined by the responsible

HHS official that the grantee acted arbitrarily, capriciously, or otherwise contrary to law, regulation, or other applicable requirements.

1303.22 c The decision will be made within ten workdays after the informal meeting. The decision, including a statement of the reasons therefore, will be in writing, and will be served on the parties within five workdays from the date of the decision by the responsible HHS official.

1303.22 d If the decision is made on the basis of written materials only, the decision will be made within five workdays of the receipt of the materials. The decision will be served on the parties no more than five days after it is made.

1303.23 Decision on appeal in favor of the current or prospective delegate agency.1303.23 a The responsible HHS official will remand the rejection of an application or

termination of an agreement to the grantee for prompt reconsideration and decision if the responsible HHS official’s decision does not sustain the grantee’s decision, and if there are issues which require further development before a final decision can be made. The grantee’s reconsideration and decision must be made in accordance with all applicable requirements of this part as well as other relevant regulations, statutory provisions, and program issuances. The grantee must issue its decision on remand in writing to both the current or prospective delegate agency and the responsible HHS official within 15 workdays after the date of receipt of the remand.

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1303.23 b If the current or prospective delegate agency is dissatisfied with the grantee’s decision on remand, it may appeal to the responsible HHS official within five workdays of its receipt of that decision. Any such appeal must comply with the requirements of Sec. 1303.21 of this part.

1303.23 c If the responsible HHS official finds that the grantee’s decision on remand is incorrect or if the grantee fails to issue its decision within 15 work days, the responsible HHS official will entertain an application by the current or prospective delegate agency for a direct grant.

1303.23 c 1 If such an application is approved, there will be a commensurate reduction in the level of funding of the grantee and whatever other action is deemed appropriate in the circumstances. Such reduction in funding shall not be considered a termination or denial of refunding and may not be appealed under this part.

1303.23 c 2 If such an application is not approved, the responsible HHS official will take whatever action he or she deems appropriate under the circumstances.

1303.23 d If, without fault on the part of a delegate agency, its operating funds are exhausted before its appeal has been decided, the grantee will furnish sufficient funds for the maintenance of the delegate agency’s current level of operations until a final administrative decision has been reached.

1303.23 e If the responsible HHS official sustains the decision of the grantee following remand, he or she shall notify the parties of the fact within 15 work days of the receipt of final submittal of documents, or of the conclusion of any meeting between the official and the parties, whichever is later.

1304.24 OMB control number. The collection of information requirements in sections 1303.10 through 1303.23 of this part were approved on January 22, 1993, by the Office of Management and Budget and assigned OMB control number 0980-0242. [58 FR 13019, Mar. 9, 1993]

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PART 1309—Head Start Facilities Purchase, Major Renovation, and Construction (FA)

PART 1309—Head Start Facilities Purchase, Major Renovation, and Construction (FA) In FY 2010 Monitoring Protocol?45 CFR: Regulation:

1309 Head Start Facilities Purchase, Major Renovation, and Construction

1309.1 Purpose and application. This part prescribes regulations implementing sections 644 c, f and g and 645A b 9 of the Head Start Act, 42 U.S.C. 9801 et seq., as they apply to grantees operating Head Start programs (including Early Head Start grantees) under the Act. It prescribes the procedures for applying for Head Start grant funds to purchase, construct, or make major renovations to facilities in which to operate Head Start programs. It also details the measures which must be taken to protect the Federal interest in such facilities purchased, constructed or renovated with Head Start grant funds. [68 FR 23219, May 1, 2003]

1309.2 Approval of previously purchased facilities. Head Start grantees (including Early Head Start grantees) which purchased facilities after December 31, 1986, and which are continuing to pay costs of purchasing those facilities, may apply to receive Head Start funds to meet those costs by submitting applications which conform to the requirements of this part and the Act. A grantee may only use grant funds to pay facility purchase costs incurred after the responsible HHS official approves its application. [68 FR 23219, May 1, 2003]

1309.3 Definitions. As used in this part,ACF means the Administration for Children and Families in the Department of Health and Human Services, and includes the Regional Offices.Acquire means to purchase or construct in whole or in part with Head Start grant funds through payments made in satisfaction of a mortgage agreement (both principal and interest), as a down payment, and for professional fees, closing costs and any other costs associated with the purchase or construction of the property that are usual and customary for the locality.Act means the Head Start Act, 42 U.S.C. section 9801, et seq.ACYF means the Administration on Children, Youth and Families, a component of the Administration for Children and Families in the Department of Health and Human Services.Construction means new buildings, and excludes renovations, alterations, additions, or work of any kind to existing buildings.Facility means a structure such as a building or modular unit appropriate for use by a Head Start grantee to carry out a Head Start program.Grant funds means Federal financial assistance received by a grantee from ACF to administer a Head Start or Early Head Start program pursuant to the Head Start Act.Grantee means any agency designated to operate a Head Start program (including an agency designated to operate an Early Head Start program) pursuant to section 641 or 645A of the Head Start Act.Head Start center or a direct support facility for a Head Start program means a facility used primarily to provide Head Start services to children and their families, or for administrative or other activities necessary to the conduct of the Head Start program.Incidental alterations and renovations means improvements to facility which do

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http://eclkc.ohs.acf.hhs.gov/hslc/Program%20Design%20and%20Management/Head%20Start%20Requirements/Head%20Start%20Requirements/1309




not meet the definition of major renovation.Major renovation means a structural change to the foundation, roof, floor, or exterior or load-bearing walls of a facility, or extension of an existing facility to increase its floor area. Major renovation also means extensive alteration of an existing facility, such as to significantly change its function and purpose, even if such renovation does not include any structural change to the facility. Major renovation also includes a renovation of any kind which has a cost exceeding the lesser of $200,000, adjusted annually to reflect the percentage change in the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) beginning one year after June 2, 2003, or 25% of the total annual direct costs approved for the grantee by ACF for the budget period in which the application is made.Modular unit means a portable prefabricated structure made at another location and moved to a site for use by a Head Start grantee to carry out a Head Start program.Purchase means to buy an existing facility, either outright or through a mortgage. Purchase also refers to an approved use of Head Start funds to continue paying the cost of purchasing facilities begun after December 31, 1986 as permitted by the Head Start Act and by Sec. 1309.2.Real property means land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment.Responsible HHS official means the official who is authorized to make the grant of financial assistance to operate a Head Start program, or such official’s designee.Suitable facility means a facility which is large enough to meet the foreseeable needs of the Head Start program and which complies with local licensing and code requirements and the access requirements of the Americans with Disabilities Act (ADA), if applicable, and section 504 of the Rehabilitation Act of 1973. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23219, May 1, 2003]

1309.4 Eligibility--Construction. Before submitting an application under Sec. 1309.10 for construction of a facility, the grantee must establish that:

1309.4 a The Head Start program serves an Indian Tribe; or is located in a rural or other low-income community; and

1309.4 b There is a lack of suitable facilities (including public school facilities) in the grantee’s service area which will inhibit the operation of the program, as demonstrated by a statement that neither the grantee’s current facility nor any facility available for lease in the service area is suitable for use by the Head Start program. This statement must explain the factors considered, how it was determined that there is a lack of suitable facilities and be supported whenever possible by a written statement from a licensed real estate professional in the grantee’s service area. [68 FR 23219, May 1, 2003]

1309.5 Eligibility--Major Renovations. Before submitting an application under Sec. 1309.10, the grantee must establish that:

1309.5 a The Head Start program serves an Indian Tribe, or is located in a rural or other low-income community; and

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1309.5 b There is a lack of suitable facilities (including public school facilities) in the grantee’s service area which will inhibit or prevent the operation of the program, as demonstrated by a statement that neither the grantee’s current facility nor any facility available for lease or purchase in the service area is suitable or could be made suitable without major renovation. This statement must explain the factors considered, how it was determined that there is a lack of suitable facilities and be supported, whenever possible, by written statement from a licensed real estate professional in the grantee’s service area. [68 FR 23220, May 1, 2003]

1309.10 Applications for the purchase, construction and major renovation of facilities. A grantee which proposes to use grant funds to purchase a facility, or a grantee found eligible under Sec. 1309.4 to apply for funds to construct a facility, or Sec. 1309.5 to undertake major renovation of a facility, including facilities purchased for that purpose, must submit a written application to the responsible HHS official. The application must include the following information:

1309.10 a A legal description of the site of the facility, and an explanation of the appropriateness of the location to the grantee’s service area, including a statement of the effect that acquisition or major renovation of the facility has had or will have on the transportation of children to the program, on the grantee’s ability to collaborate with other child care, early education programs, social services and health providers, and on all other program activities and services.

1309.10 b Plans and specifications of the facility to be acquired, including information on the size and type of structure, the number and a description of the rooms, and the lot on which the building is located or will be located (including the space available for a playground and for parking). If incidental alterations and renovations or major renovations are being proposed to make a facility suitable to carry out the Head Start program, a description of the renovations, and the plans and specifications submitted, must also describe the facility as it will be after renovations are complete. In the case of a proposed major renovation or construction project, the applicant must submit a written estimate of all costs associated with the project. An architect or engineer must prepare the written estimate.

1309.10 c [sic]1309.10 d The intended use of the facility proposed for acquisition or major renovation,

including information showing the percentage of floor space that will be used as a Head Start center or a direct support facility for a Head Start program. As provided under section 644 f 2 D of the Act, in the case of a request regarding funding for the continuing purchase of a facility, the application must include information demonstrating that the facility will be used principally as a Head Start center, or a direct support facility for a Head Start program.

1309.10 e An assurance that the facility complies (or will comply when constructed or after completion of the renovations described in paragraph b of this section) with local licensing and code requirements, the access requirements of the Americans with Disabilities Act (ADA), if applicable, and section 504 of the

30


Rehabilitation Act of 1973. The grantee will also assure that it has met the requirements of the Flood Disaster Protection Act of 1973, if applicable.

1309.10 f If the grantee proposing to purchase a facility without undertaking major renovations is claiming that the lack of alternative facilities will prevent or would have prevented operation of the program, a statement of how it was determined that there is or was a lack of alternative facilities. This statement must be supported, whenever possible, by a written statement from a licensed real estate professional in the grantee’s service area. If a grantee requesting approval of the use of Head Start funds to continue purchase of a facility is unable to provide such statements based on circumstances which existed at the time the purchase began, the grantee and the licensed real estate professional may use present conditions as a basis for making the determination.

1309.10 g The terms of any proposed or existing loan(s) related to acquisition or major renovation of facility and the repayment plans (detailing balloon payments or other unconventional terms, if any), and information on all other sources of funding of the acquisition or major renovations, including any restrictions or conditions imposed by other funding sources.

1309.10 h A statement of the effect that the acquisition or major renovation of the facility would have on the grantee’s meeting the non-Federal share requirement of section 640 b of the Head Start Act, including whether the grantee is seeking a waiver of its non-Federal share obligation under that section of the Act.

1309.10 i Certification by a licensed engineer or architect that the building proposed to be purchased or for which Head Start funds will be used to continue to purchase is structurally sound and safe for use as a Head Start facility. The applicant must certify that, upon completion of major renovation to a facility or construction of a facility, that an inspection by a licensed engineer or architect will be conducted to determine that the facility is structurally sound and safe for use as a Head Start facility.

1309.10 j A statement of the effect that the acquisition or major renovation of a facility would have on the grantee’s ability to meet the limitation on development and administrative costs in section 644 b of the Head Start Act. One-time fees and expenses necessary to the acquisition or major renovation, such as the down payment, the cost of necessary renovation, loan fees and related expenses, and fees paid to attorneys, engineers, and appraisers, are not considered to be administrative costs.

1309.10 k A proposed schedule for acquisition, renovation and occupancy of the facility.1309.10 l Reasonable assurance that the applicant will obtain, or has obtained, a fee

simple or such other estate or interest in the site of the facility to assure undisturbed use and possession for the purpose of operating a Head Start program. A grantee seeking funding for acquisition or major renovation of a facility that is sited on land not owned by the grantee must establish in its application that there is no other feasible alternative to acquisition or leasing of the facility for providing a suitable facility appropriate to the needs of the Head Start program. If the grantee proposes to acquire a facility without also purchasing the land on which the facility is or will be situated, the application

31


must include a copy of the existing or proposed land lease or other document which protects the Federal interest in the facility and ensures undisturbed use and possession of the facility by the grantee, or other organization designated by ACF, for the purpose of operating a Head Start program or other program designated by ACF. A grantee applying for funding to make major renovations to a facility it does not own must include with its application written permission from the owner of the building projected to undergo major renovation and a copy of the lease or proposed lease for the facility. A grantee receiving funds for acquisition or the major renovation of a facility, on land belonging to another party, must have a land lease or other similar interest in the underlying land which is long enough to allow the Head Start program to receive the full value of those permanent grant-supported improvements.

1309.10 m An assessment of the impact of the proposed project on the human environment pursuant to section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) and its implementing regulations (40 CFR parts 1500 through 1508), as well as a report showing the results of tests for environmental hazards present in the facility, ground water, and soil (or justification why such testing is not necessary). In addition, such information as may be necessary to comply with the National Historic Preservation Act of 1966 (16 U.S.C. 470f) must be included.

1309.10 n Assurance that the grantee will comply with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601 et seq. and 49 CFR part 24), and information about the costs that may be incurred due to compliance with this Act.

1309.10 o A statement of the share of the cost of acquisition or major renovation that will be paid with grant funds.

1309.10 p For a grantee seeking approval of the use of Head Start funds to continue purchase of a facility, a statement of the extent to which it has attempted to comply and will be able to comply with the provision of Sec. 1309.22.

1309.10 q Such additional information as the responsible HHS official may require. [68 FR 23220, May 1, 2003]

1309.11 Cost comparison for purchase, construction and major renovation of facilities.

1309.11 a A grantee proposing to acquire or undertake a major renovation of a facility must submit a detailed estimate of the costs of the proposed activity and compare the costs of the proposed activity as provided under paragraph c of this section and provide any additional information requested by the responsible HHS official.

1309.11 b All costs of acquisition, renovation and ownership must be identified, including, but not limited to, professional fees, purchase of the facility to be renovated, renovation costs, moving expenses, additional transportation costs, maintenance, taxes, insurance, and easements, rights of way or land rentals. An independent appraisal of the current value of the facility proposed to be purchased, or which the grantee will continue to purchase with Head Start funds or to receive major

32


renovation, made by a professional appraiser, must be included.1309.11 c 1 Grantees proposing to purchase a facility, without requesting funds for major

renovations to the facility, must compare costs of the proposed facility to the cost of the facility currently used by the grantee, unless the grantee has no current facility, will lose the use of its current facility, intends to continue to use its current facility after it purchases the new facility, or has shown to the satisfaction of the responsible HHS official that its existing facility is inadequate. Where the grantee’s current facility is not used as the alternate facility, the grantee must use for comparison a facility (or facilities) available for lease in the grantee’s service area and suitable for use as a Head Start facility or which can be made suitable through incidental alteration or renovations, the cost of which shall be included in the cost comparison. In the case of an application for approval of the use of Head Start funds to continue purchase of a facility, the cost of the present facility must be compared to the cost of the facility used by the grantee before purchase of its current facility. If the facility used by the grantee before the purchase of its present facility was deemed inadequate by the responsible HHS official, or the grantee had no previous facility, the alternative facility shall be an available, appropriate facility (or facilities) of comparable size that was available for rent in the grantee’s service are at the time of its purchase of the current facility. Grantees which have established under Sec. 1309.10 f that there is a lack of alternative facilities that will prevent or would have prevented operation of the program are not required to provide a cost comparison under this paragraph.

1309.11 c 2 Grantees proposing to construct a facility must compare the costs of constructing the proposed facility to the costs of purchasing a suitable alternate facility or owning, purchasing or leasing an alternative facility which can be made suitable for use through incidental alterations and renovations or major renovations. The alternative facility is one now owned by the grantee or available for lease or purchase in the grantee’s service area. If no such facility is available, this statement must explain how this fact was determined and the claim must be supported, whenever possible, by a written statement from a licensed real estate professional in the grantee’s service area.

1309.11 c 3 A grantee proposing to undertake a major renovation of a facility must compare the cost of the proposed renovation (including the cost of purchasing the facility to be renovated, if the grantee is proposing to purchase the facility) to the costs of constructing a facility of comparable size. In place of the cost comparison required in the preceding sentence, a grantee proposing to make major renovations to a leased facility must show that the monthly or annual occupancy costs for the term of the lease, including the cost of the major renovations, is less than, or comparable to, the costs of purchasing or leasing any other facility in the grantee’s service area which can be made suitable through major renovations, if such a facility is available.

1309.11 d The grantee must separately delineate the following expenses in the application:1309.11 d 1 One-time costs, including but not limited to, costs of purchasing the facility to

be renovated, the down payment, professional fees, moving expenses, the cost of site preparation; and

33


1309.11 d 2 Ongoing costs, including, but not limited to, mortgage payments, insurance premiums, maintenance costs, and property taxes. If the grantee is exempt from the payment of property taxes, this fact must be stated.

1309.11 e The period of comparison for purchase, construction or major renovation of a facility is twenty years, except that for the purchase of a modular unit the period of comparison is ten years and the period of comparison for major renovation of a leased facility is the period of the lease remaining after the renovations are completed. For approvals of the use of Head Start funds to continue purchase of the facility the period of comparison begins on the date the purchase began.

1309.11 f If the facility is to be used for other purposes in addition to the operation of the Head Start program, the cost of use of that part of the facility used for such other purposes must be allocated in accordance with applicable Office of Management and Budget cost principles. [68 FR 23221, May 1, 2003]

1309.12 Timely decisions. The responsible HHS official shall promptly review and make final decisions regarding completed applications under this part.

1309.20 Title. Title to facilities acquired with grant funds vests with the grantee upon acquisition, subject to the provisions of this part.

1309.21 Recording of Federal interest and other protection of Federal interest. FM3AFM3E

1309.21 a The Federal government has an interest in all real property and equipment acquired or upon which major renovations have been undertaken with grant funds for use as a Head Start facility. The responsible HHS official may subordinate the Federal interest in such property to that of a lender, which financed the acquisition or major renovation costs subject to the conditions set forth in paragraph f of this section.

1309.21 b Facilities acquired with grant funds may not be mortgaged or used as collateral, or sold or otherwise transferred to another party, without the written permission of the responsible HHS official.

FM3E

1309.21 c Use of the facility for other than the purpose for which the facility was funded, without the express written approval of the responsible HHS official, is prohibited.

1309.21 d 1 A grantee receiving funds to acquire or make major renovations to a facility that is or will be sited on land not owned by the grantee must have a lease or other arrangement which protects the Federal interest in the facility and ensures the grantee’s undisturbed use and possession of the facility. The lease or document evidencing another arrangement shall include provisions to protect the right of the grantee, or some other organization designated by ACF in the place of the grantee, to occupy the facility for the term of the lease or other arrangement and such other terms required by the responsible HHS official. The designation of an alternate tenant or occupant of the facility by ACF shall be subject to approval by the Lessor, which will not be withheld except for good reason, not including the willingness of another party to pay a higher rent. A grantee receiving funds for the major renovation or acquisition of a facility, on land belonging to another party, must have a land lease or other similar interest in the underlying

FM3A

34


land which is long enough to allow the Head Start program to receive the full value of those permanent grant-supported improvements.

1309.21 d 2 Except as required under Sec. 1309.31 for certain modular units, the grantee must record the Notice of Federal Interest in the appropriate official records for the jurisdiction where a facility is or will be located immediately upon: purchasing a facility or land on which a facility is to be constructed; receiving permission to use funds to continue purchase of a facility; commencing major renovation of a facility or construction of a facility. In the case of a leased facility undergoing major renovations, the Notice of Federal Interest shall be a copy of the executed lease and all amendments. In the case of a facility now sited or to be constructed on land not owned by the grantee, the Notice of Federal Interest shall be the land lease or other document protecting the Federal interest. The lease or other document must ensure the right of the grantee to have undisturbed use and possession of the facility. In the event that filing of a lease is prohibited by State law, the grantee shall file an affidavit signed by the representatives of the grantee and the Lessor stating that the lease includes terms which protect the right of the grantee, or some other organization designated by ACF in the place of the grantee, to occupy the facility for the term of the lease.

FM3A

1309.21 d 3 The Notice of Federal Interest for property sited on land not owned by the grantee shall include the following information:

FM3A

1309.21 d 3 i The date of the award of grant funds for the acquisition or major renovation of the property to be used as a Head Start facility, and the address and legal description of the property to be acquired or renovated;

FM3A

1309.21 d 3 ii That the grant incorporated conditions which included restrictions on the use of the property and provide for a Federal interest in the property;

FM3A

1309.21 d 3 iii That the property may not be used for any purpose inconsistent with that authorized by the Head Start Act and applicable regulations;

FM3A

1309.21 d 3 iv That the property may not be mortgaged or used as collateral, sold or otherwise transferred to another party, without the written permission of the responsible HHS official;

FM3A

1309.21 d 3 v That these grant conditions and requirements cannot be altered or nullified through a transfer of ownership; and

FM3A

1309.21 d 3 vi The name (including signature) and title of the person who completed the Notice for the grantee agency, and the date of the Notice.

FM3A

1309.21 d 4 A lease, serving as a Notice of Federal Interest, an affidavit filed in the land records as a substitute for the lease, or other document protecting the Federal interest in a facility acquired with grant funds and sited on land not owned by the grantee, shall include the following information:

FM3A

1309.21 d 4 i The address and legal description of the property; FM3A1309.21 d 4 ii That the grant incorporated conditions which include restrictions on the use of

the property and provide for a Federal interest in the property for the term of the lease or other arrangement; and

FM3A

1309.21 d 4 iii That the property may not be used for any purpose during the lease or other FM3A

35


arrangement that is inconsistent with that authorized by the Head Start Act and applicable regulations.

1309.21 e Grantees must meet all of the requirements in parts 74 or 92 pertaining to the purchase and disposition of real property, or the use and disposal of equipment, as appropriate.

1309.21 f In subordinating its interest in a facility acquired or upon which major renovations have been undertaken with grant funds, the responsible HHS officials does not waive application of paragraph d of this section and Sec. 1309.22. A written agreement by the responsible HHS official to subordinate the Federal interest must provide:

1309.21 f 1 i The lender shall notify the Office of the Regional Administrator, Administration for Children and Families, the Office of the Commissioner, Administration on Children, Youth and Families, Washington, D.C., and the Office of the General Counsel, Department of Health and Human Services, Washington, DC, or their successor agencies, immediately, both telephonically and in writing of any default by the Head Start grantee;

1309.21 f 1 ii Written notice of default must be sent by registered mail return receipt requested; and,

1309.21 f 1 iii The lender will not foreclose on the property until at least 60 days after the required notice by the lender has been sent.

1309.21 f 2 Such notice will include:1309.21 f 2 i The full names, addresses, and telephone numbers of the lender and the Head

Start grantee;1309.21 f 2 ii The following statement prominently displayed at the top of the first page of the

notice: “The Federal Interest in certain real property or equipment used for the Head Start Program may be at risk. Immediately give this notice to the appropriate government official”;

1309.21 f 2 iii The date and nature of the default and the manner in which the default may be cured; and

1309.21 f 2 iv In the event that the lender will be exercising its remedy of foreclosure or other remedies, the date or expected date of the foreclosure or other remedies.

1309.21 f 3 Head Start grantees which purchase facilities with respect to which the responsible HHS official has subordinated the Federal Interest to that of the lender must keep the lender informed of the current addresses and telephone numbers of the agencies to which the lender is obligated under paragraph b of this section to give notice in the event of a default. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23221, May 1, 2003]

1309.22 Rights and responsibilities in the event of grantee’s default on mortgage, or withdrawal or termination.

1309.22 a The mortgage agreement, or security agreement in the case of a modular unit which is proposed to be purchased under a chattel mortgage, shall provide in the case of default by the grantee or the withdrawal or termination of the grantee from the Head Start program that ACF may intervene. In the case of a default,

36


the mortgage agreement or security agreement must provide that ACF may intervene to ensure that the default is cured by the grantee or another agency designated by ACF and that the lender shall accept the payment of money or performance of any other obligation by ACF’s designee, for the grantee, as if such payment of money of performance had been made by the grantee. The agreement shall also provide that ACF will have a period of 60 days after notification by the grantee of default in which to intervene to attempt to cure the default. The agreement shall further provide that in the event of a default, or the withdrawal or termination of the grantee the mortgage may be assumed by an organization designated by ACF. The mortgage or creditor will have the right to approve the organization designated to assume the mortgage, but such approval will not be withheld except for good reason. The required provisions must be included in the mortgages of facilities funded as continuing purchases pursuant to Sec. 1309.2 unless a convincing justification for not doing so is shown by the Head Start grantee.

1309.22 b The grantee must immediately provide the responsible HHS official with both telephonic and written notification of a default of any description on the part of the grantee under a real property or chattel mortgage.

1309.22 c In the event that a default is not cured and foreclosure takes place, the mortgagee or creditor shall pay ACF that percentage of the proceeds from the foreclosure sale of the property attributable to the Federal share as defined in 74.2, or, if part 92 is applicable, to ACF’s share as defined in 92.3. If ACF and the mortgagee or creditor have agreed that ACF’s Federal interest will be subordinated to the mortgagee’s or creditor’s interest in the property, that agreement must be set forth in a written subordination agreement that is signed by the responsible HHS official and that complies with Sec. 1309.21 and any other applicable Federal law. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23222, May 1, 2003]

1309.23 Insurance, bonding and maintenance. FM3C1309.23 a At the time of acquiring or undertaking a major renovation of a facility or

receiving approval for the use of Head Start funds to continue purchase the grantee shall obtain insurance coverage for the facility which is not lower in value than coverage it has obtained for other real property it owns, and which at least meets the requirements of the coverage specified in paragraphs a 1 and 2 of this section. For facilities, which have been constructed or renovated, insurance coverage must begin at the commencement of the expenditure of costs in fulfillment of construction or renovation work.

FM3C

1309.23 a 1 A title insurance policy which insures the fee interest in the facility for an amount not less than the full appraised value as approved by ACF, or the amount of the purchase price, whichever is greater, and which contains an endorsement identifying ACF as a loss payee to be reimbursed if the title fails. If no endorsement naming ACF as loss payee is made, the grantee is required to pay ACF the title insurance proceeds it receives in the event of title failure; and

1309.23 a 2 A physical destruction insurance policy, including flood insurance where appropriate, which insures the full replacement value of the facility from risk of

FM3C

37


partial and total physical destruction. The insurance policy is to be maintained for the period of time the facility is owned by the grantee.

1309.23 b The grantee shall submit copies of such insurance policies to ACF within five days of acquiring the facility or receiving approval for the previous purchase of a facility. If the grantee has not received the policies in time to submit copies within this period, it shall submit evidence that it has obtained the appropriate insurance policies within five days of acquiring the facility or receiving approval for the previous purchase of a facility, and it shall submit copies of the policies within five days of its receipt of them.

1309.23 c The grantee must maintain facilities acquired with grant funds in a manner consistent with the purposes for which the funds were provided and in compliance with State and local government property standards and building codes. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23222, May 1, 2003]

1309.30 General. In addition to the special requirements of Sec. 1309.31 through 1309.34, the proposed purchase or request for approval of continuing purchase of a modular unit is subject to all of the requirements of this part with the following exceptions:

1309.30 a The requirements of Sec. 1309.33 apply rather than the requirement of Sec. 1309.10 i; and

1309.30 b Section 1309.21 d of this part does not apply to the proposed purchase of modular units if the land on which the unit is installed is not owned by the grantee. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23223, May 1, 2003]

1309.31 Site description.1309.31 a An application for the purchase or approval of a continuing purchase of a

modular unit pursuant to Sec. 1309.2 must state specifically where the modular unit is or will be installed, and whether the land on which the modular unit will be installed will be purchased by the grantee. If the grantee does not propose to purchase the land on which to install the modular unit or if the modular unit the grantee is continuing to purchase with Head Start funds is located on land not owned by the grantee, the application must state who owns the land on which the modular unit is or will be situated and describe the easement, right-of-way or land rental it will obtain or has obtained to allow it sufficient access to the modular unit.

1309.31 b Modular units which are purchased with grant funds and which are not permanently affixed to land, or which are affixed to land which is not owned by the grantee, must have posted in a conspicuous place the following notice: “On (date), the Department of Health and Human Services (DHHS) awarded (grant number) to (Name of grantee). The grant provided Federal funds for conduct of a Head Start program, including purchase of this modular unit. The grant incorporated conditions which included restrictions on the use and disposition of this property, and provided for a continuing Federal interest in the property. Specifically, the property may not be used for any purpose other than the purpose for which the facility was funded, without the express written approval of the responsible DHHS official, or sold or transferred to another party without

38


the written permission of the responsible DHHS official. These conditions are in accordance with the statutory provisions set forth in 42 U.S.C. 9839; the regulatory provisions set forth in part 1309, part 74 and part 92; and Administration for Children and Families’ grants policy.”

1309.31 c A modular unit which has been approved for purchase and installation in one location may not be moved to another location without the written permission of the responsible HHS official. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23223, May 1, 2003]

1309.32 Statement of procurement procedure for modular units.1309.32 a An application for the purchase of a modular unit must include a statement

describing the procedures which will be used by the grantee to purchase the modular unit.

1309.32 b This statement must include a copy of the specifications for the unit which is proposed to be purchased and assurance that the grantee will comply with procurement procedures in parts 74 and 92, including assurance that all transactions will be conducted in a manner to provide, to the maximum extent practical, open and free competition. A grantee requesting approval for the use of Head Start funds for continued purchase of a modular unit must also include a copy of the specifications for the unit. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23223, May 1, 2003]

1309.33 Inspection. A grantee which purchases a modular unit with grant funds or receives approval of a continuing purchase must have the modular unit inspected by a licensed engineer or architect within 15 calendar days of its installation or approval of a continuing purchase, and must submit to the responsible HHS official the engineer’s or architect’s inspection report within 30 calendar days of the inspection. [68 FR 23223, May 1, 2003]

1309.34 Costs of installation of modular unit. Consistent with the cost principles referred to in part 74 and part 92, all reasonable costs necessary to the installation of a modular unit the purchase of which has been approved by the responsible HHS official are payable with grant funds. Such costs include, but are not limited to, payments for public utility hook-ups, site surveys and soil investigations.

1309.40 Copies of documents. Certified copies of the deed, lease, loan instrument, mortgage, and any other legal documents related to the acquisition or major renovation of the facility or the discharge of any debt secured by the facility must be submitted to the responsible HHS official within ten days of their execution. [68 FR 23223, May 1, 2003]

1309.41 Record retention. All records pertinent to the acquisition or major renovation of a facility must be retained by the grantee for a period equal to the period of the grantee’s ownership (or occupancy, in the case of leased facilities) of the facility plus three years. [68 FR 23223, May 1, 2003]

1309.42 Audit of mortgage. Any audit of a grantee, which has acquired or made major renovations to a facility with grant funds, shall include an audit of any mortgage or encumbrance on the facility. Reasonable and necessary fees for this audit and

39


appraisal are payable with grant funds. [68 FR 23223, May 1, 2003]1309.43 Use of grant funds to pay fees. Consistent with the cost principles referred to

in part 74 and part 92, reasonable fees and costs associated with and necessary to the acquisition or major renovation of a facility (including reasonable and necessary fees and costs incurred to establish preliminary eligibility under Sec. 1309.4 and 1309.5, or otherwise prior to the submission of an application under Sec. 1309.10 or acquisition of the facility) are payable with grant funds, and require prior, written approval of the responsible HHS official. [68 FR 23223, May 1, 2003]

1309.44 Independent analysis.1309.44 a The responsible HHS official may direct the grantee applying for funds to

acquire or make major renovations to a facility to obtain an independent analysis of the cost comparison submitted by the grantee pursuant to Sec. 1309.11, or the statement under 1309.10 f of this part, or both, if, in the judgment of the official, such an analysis is necessary to adequately review a proposal submitted under this part.

1309.44 b The analysis shall be in writing and shall be made by a qualified, disinterested real estate professional in the community in which the property to be purchased or renovated is situated.

1309.44 c Section 1309.43 of this part applies to payment of the cost of the analysis. [64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23223, May 1, 2003]

1309.51 Submission of drawings and specifications.1309.51 a The grantee may not advertise for bids or award a contract for any part of

construction or major renovation funded by grant funds until the grantee has submitted to the responsible HHS official final working drawings and written specifications for the project, a written certification by a licensed engineer or architect as to technical appropriateness of the proposed construction or renovation and the conformity of the project as shown in the final working drawings and specifications with Head Start programmatic requirements, and a written estimate of the costs of the project by a licensed architect or engineer.

1309.51 b The responsible HHS official may authorize the grantee to advertise bids or award a contract after receiving the information provided under paragraph a of this section and determining that sufficient funding is, or will be, available to cover the costs of the project as estimated by the architect or engineer, and that the scope of the project as described in the drawings and specifications is appropriate to the needs of the grantee. [68 FR 23223, May 1, 2003, unless otherwise noted.]

1309.52 Procurement procedures.1309.52 a All facility construction and major renovation transactions must comply with

the procurement procedure in parts 74 or 92, and must be conducted in a manner to provide, to the maximum extent practical, open and free competition.

1309.52 b All contracts for construction or major renovation of a facility to be paid for in whole or in part with Head Start funds require the prior, written approval of the

40


responsible HHS official and shall be on a lump sum fixed-price basis.1309.52 c Prior written approval of the responsible HHS official is required for unsolicited

modifications that would change the scope or objective of the project or would materially alter the costs of the project by increasing the amount of grant funds needed to complete the project.

1309.52 d All construction and major renovation contracts for facilities acquired with grant funds shall contain a clause stating that the responsible HHS official or his or her designee shall have access at all reasonable times to the work being performed pursuant to the contract, at any stage of preparation or progress, and require that the contractor shall facilitate such access and inspection.

1309.53 Inspection of work.1309.53 a The grantee must provide and maintain competent and adequate architectural or

engineering inspection at the work site to insure that the completed work conforms to the approved plans and specifications.

1309.53 b The grantee must submit a final architectural or engineering inspection report of the facility to the responsible HHS official within 30 calendar days of substantial completion of the construction or renovation.

1309.54 Davis-Bacon Act. Construction and renovation projects and subcontracts financed with funds awarded under the Head Start program are subject to the Davis-Bacon Act (40 U.S.C. 276a et seq.) and the Regulations of the Department of Labor, 29 CFR part 5. The grantee must provide an assurance that all laborers and mechanics employed by contractors or subcontractors in the construction or renovation of affected Head Start facilities shall be paid wages at not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor.

FM3B

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PART 1311—Head Start Fellows (FE)

PART 1311—Head Start Fellows (FE) In FY 2010 Monitoring Protocol?45 CFR: Regulation:

1311 Head Start Fellows Program1311.1 Head Start Fellows Program Purpose.1311.1 a This part establishes regulations implementing section 648A d of the Head

Start Act, as amended, 42 U.S.C. 9801 et seq., applicable to the administration of the Head Start Fellows Program, including selection, placement, duration and status of the Head Start Fellows.

1311.1 b As provided in section 648A d of the Act, the Head Start Fellows Program is designed to enhance the ability of Head Start Fellows to make significant contributions to Head Start and to other child development and family services programs.

1311.2 Definitions. As used in this part: Act means the Head Start Act, as amended, 42 U.S.C. 9801 et seq. Associate Commissioner means the Associate Commissioner of the Head Start Bureau in the Administration on Children, Youth and Families.Head Start Fellows means individuals who participate in the Head Start Fellows Program, who may be staff in local Head Start programs or other individuals working in the field of child development and family services.

1311.3 Application process. An individual who wishes to obtain a Fellowship must submit an application to the Associate Commissioner. The Administration for Children and Families will publish an annual announcement of the availability and number of Fellowships in the Federal Register. Federal employees are not eligible to apply. (The information collection requirement contained in this section is approved under OMB Control Number 0970-0140.)

1311.4 Qualifications, selection, and placement.1311.4 a The Act specifies that an applicant must be working on the date of application

in a local Head Start program or otherwise working in the field of child development and family services. The qualifications of the applicants for Head Start Fellowship positions will be competitively reviewed. The Associate Commissioner will make the final selection of the Head Start Fellows.

1311.4 b Head Start Fellows may be placed in:1311.4 b 1 The Head Start national and regional offices;1311.4 b 2 Local Head Start agencies and programs;1311.4 b 3 Institutions of higher education;1311.4 b 4 Public or private entities and organizations concerned with services to children

and families; and1311.4 b 5 Other appropriate settings.1311.4 c A Head Start Fellow who is not an employee of a local Head Start agency or

program may only be placed in the national or regional offices within the Department of Health and Human Services that administer Head Start or local

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PART 1311—Head Start Fellows (FE) In FY 2010 Monitoring Protocol?45 CFR: Regulation:

Head Start agencies.1311.4 d Head Start Fellows shall not be placed in any agency whose primary purpose,

or one of whose major purposes is to influence Federal, State or local legislation.

1311.5 Duration of Fellowships and status of Head Start Fellows.1311.5 a Head Start Fellowships will be for terms of one year, and may be renewed for

a term of one additional year.1311.5 b For the purposes of compensation for injuries under chapter 81 of title 5,

United States Code, Head Start Fellows shall be considered to be employees, or otherwise in the service or employment, of the Federal Government.

1311.5 c Head Start Fellows assigned to the national or regional offices within the Department of Health and Human Services shall be considered employees in the Executive Branch of the Federal Government for the purposes of chapter 11 of title 18, United States Code, and for the purposes of any administrative standards of conduct applicable to the employees of the agency to which they are assigned.

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Part 74: Uniform Administrative Requirements (August 25, 1994 with updates)

Part 74: Uniform Administrative Requirements (August 25, 1994, with updates)

In FY 2010 Monitoring Protocol?

74 A Subpart A—General. Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.74.1 Purpose and applicability.74.1 a Unless inconsistent with statutory requirements, this part establishes uniform

administrative requirements governing:74.1 a 1 Department of Health and Human Services’ (HHS) grants and agreements awarded to

institutions of higher education, hospitals, other nonprofit organizations and only to commercial organizations in instances other than those involving procedures to make data available under the Freedom of Information Act provision set forth in 74.36 d 1.

74.1 a 2 Subgrants or other subawards awarded by recipients of HHS grants and agreements to institutions of higher education, hospitals, other nonprofit organizations and commercial organizations, including subgrants or other subawards awarded under HHS grants and agreements administered by State, local and Indian Tribal governments; and

74.1 b Nonprofit organizations that implement HHS programs for the States are also subject to state requirements.

74.1 c HHS shall not impose additional or inconsistent requirements except as provided in 74.4 and 74.14, or unless specifically required by Federal statute or executive order. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, 11747, Mar. 22, 1996; 65 FR 14418, Mar. 16, 2000; 68 FR 52844, Sept. 8, 2003]

74.2 Definitions.Accrued expenditures mean the charges incurred by the recipient during a given period requiring the provision of funds for: (1) Goods and other tangible property received; (2) services performed by employees, contractors, subrecipients, and other payees; and, (3) other amounts becoming owed under programs for which no current services or performance is required.Accrued income means the sum of: (1) Earnings during a given period from (i) services performed by the recipient, and (ii) goods and other tangible property delivered to purchasers; and (2) amounts becoming owed to the recipient for which no current services or performance is required by the recipient.Acquisition cost of equipment means the net invoice price of the equipment, including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges, such as the cost of installation, transportation, taxes, duty or protective in-transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the recipient’s regular accounting practices.Advance means a payment made by Treasury check or other appropriate payment mechanism to a recipient upon its request either before outlays are made by the recipient or through the use of predetermined payment schedules.

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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. The term does not include: technical assistance, which provides services instead of money; other assistance in the form of loans, loan guarantees, interest subsidies, or insurance; direct payments of any kind to individuals; and, contracts which are required to be entered into and administered under Federal procurement laws and regulations.Cash contributions mean the recipient’s cash outlay, including the outlay of money contributed to the recipient by third parties.Closeout means the process by which the HHS awarding agency determines that all applicable administrative actions and all required work of the award have been completed by the recipient and HHS.Contract means a procurement contract under an award or subaward, and a procurement subcontract under a recipient’s or subrecipient’s contract.Cost sharing or matching means that portion of project or program costs not borne by the Federal Government.Current accounting period means, with respect to 74.27 b, the period of time the recipient chooses for purposes of financial statements and audits.Date of completion means the date on which all work under an award is completed or the date on the award document, or any supplement or amendment thereto, on which HHS awarding agency sponsorship ends.Departmental Appeals Board means the independent office established in the Office of the Secretary with delegated authority from the Secretary to review and decide certain disputes between recipients of HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform other review, adjudication and mediation services as assigned.Disallowed costs mean those charges to an award that the HHS awarding agency determines to be unallowable, in accordance with the applicable Federal cost principles or other terms and conditions contained in the award.Discretionary award means an award made by an HHS awarding agency in keeping with specific statutory authority which enables the agency to exercise judgment (“discretion”) in selecting the applicant/recipient organization through a competitive award process.Equipment means tangible nonexpendable personal property, including exempt property, charged directly to the award having a useful life of more than one year and an acquisition cost of $5000 or more per unit. However, consistent with recipient policy, lower limits may be established.Excess property means property under the control of any HHS awarding agency that, as determined by the head of the awarding agency or his/her delegate, is no longer required for the agency’s needs or the discharge of its responsibilities.Exempt property means tangible personal property acquired in whole or in part with Federal funds, where the HHS awarding agency has statutory authority to vest title in the recipient without further obligation to the Federal Government. An example of exempt property authority is contained in the Federal Grant and Cooperative Agreement Act, 31

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U.S.C. 6306, for property acquired under an award to conduct basic or applied research by a nonprofit institution of higher education or nonprofit organization whose principal purpose is conducting scientific research.Federal funds authorized mean the total amount of Federal funds obligated by the HHS awarding agency for use by the recipient. This amount may include any authorized carryover of unobligated funds from prior funding periods when permitted by the HHS awarding agency’s implementing instructions or authorized by the terms and conditions of the award.Federal share of real property, equipment, or supplies means that percentage of the property’s or supplies’ acquisition costs and any improvement expenditures paid with Federal funds. This will be the same percentage as the Federal share of the total costs under the award for the funding period in which the property was acquired (excluding the value of third party in-kind contributions).Federally recognized Indian Tribal government means the governing body of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs.Funding period means the period of time when Federal funding is available for obligation by the recipient.Government means a State or local government or a federally recognized Indian tribal government.HHS means the U.S. Department of Health and Human Services.

HHS awarding agency means any organization component of HHS that is authorized to make and administer awards.Intangible property and debt instruments mean, but are not limited to, trademarks, copyrights, patents and patent applications and such property as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership, whether considered tangible or intangible.Local government means a local unit of government, including specifically a county, municipality, city, town, township, local public authority, school district, special district, intra-state district, council of governments (whether or not incorporated as a nonprofit corporation under State law), any other regional or interstate entity, or any agency or instrumentality of local government.Obligations mean the amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that require payment by the recipient during the same or a future period.OGAM means the Office of Grants and Acquisition Management, which is an organizational component within the Office of the Secretary, HHS, and reports to the Assistant Secretary for Management and Budget.OMB means the U.S. Office of Management and Budget.

Outlays or expenditures mean charges made to the project or program. They may be

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reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense charged, the value of third party in-kind contributions applied and the amount of cash advances and payments made to subrecipients. For reports prepared on an accrual basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the net increase (or decrease) in the amounts owed by the recipient for goods and other property received, for services performed by employees, contractors, subrecipients and other payees and other amounts becoming owed under programs for which no current services or performance are required.Personal property means property of any kind except real property. It may be tangible, having physical existence, or intangible, having no physical existence, such as copyrights, patents, or securities.Prior approval means written approval by an authorized HHS official evidencing prior consent.Program income means gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award (see exclusions in 74.24 e and h). Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded projects, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in the terms and conditions of the award, program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them. Furthermore, program income does not include taxes, special assessments, levies, and fines raised by governmental recipients.Project costs means all allowable costs, as set forth in the applicable Federal cost principles (see 74.27), incurred by a recipient and the value of the contributions made by third parties in accomplishing the objectives of the award during the project period.Project period means the period established in the award document during which HHS awarding agency sponsorship begins and ends.Property means, unless otherwise stated, real property, equipment, intangible property and debt instruments.Real property means land, including land improvements, structures and appurtenances thereto, but excludes movable machinery and equipment.Recipient means an organization receiving financial assistance directly from an HHS awarding agency to carry out a project or program. The term includes public and private institutions of higher education, public and private hospitals, commercial organizations, and other quasi-public and private nonprofit organizations such as, but not limited to, community action agencies, research institutes, educational associations, and health centers. The term may include foreign or international organizations (such as agencies of the United Nations) which are recipients, subrecipients, or contractors or subcontractors of recipients or subrecipients at the discretion of the HHS awarding agency. The term does not include government-owned contractor-operated facilities or research centers

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providing continued support for mission-oriented, large-scale programs that are government-owned or controlled, or are designated as federally-funded research and development centers. For entitlement programs listed at 92.4 a 3, (a)(7), and (a)(8) [sic] “recipient” means the government to which an HHS awarding agency awards funds and which is accountable for the use of the funds provided. The recipient in this case is the entire legal entity even if only a particular component of the entity is designated in the award document.Research and development means all research activities, both basic and applied, and all development activities that are supported at universities, colleges, hospitals, other nonprofit institutions, and commercial organizations. “Research” is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. “Development” is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function.Small awards means a grant or cooperative agreement not exceeding the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently $100,000).State means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments.Subaward means an award of financial assistance in the form of money, or property in lieu of money, made under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient. The term includes financial assistance when provided by any legal agreement, even if the agreement is called a contract, but does not include procurement of goods and services nor does it include any form of assistance which is excluded from the definition of “award” in this section.Subrecipient means the legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided. The term may include foreign or international organizations (such as agencies of the United Nations) at the discretion of the HHS awarding agency.Supplies means all personal property excluding equipment, intangible property, and debt instruments as defined in this section, and inventions of a contractor conceived or first actually reduced to practice in the performance of work under a funding agreement (“subject inventions”), as defined in 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Business Firms Under Government Grants, Contracts, and Cooperative Agreements.”Suspension means an action by the HHS awarding agency that temporarily withdraws the agency’s financial assistance sponsorship under an award, pending corrective action by the recipient or pending a decision to terminate the award.Suspension of an award is a separate action from suspension under HHS regulations (45 CFR part 76) implementing E.O.s 12549 and 12689, “Debarment and Suspension.”

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Termination means the cancellation of HHS awarding agency sponsorship, in whole or in part, under an agreement at any time prior to the date of completion. For the entitlement programs listed at 92.4 a 3, (a)(7), and (a)(8), [sic] “termination” shall have that meaning assigned at 92.3.Third party in-kind contributions means the value of non-cash contributions provided by non-Federal third parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.Unliquidated obligations, for financial reports prepared on a cash basis, mean the amount of obligations incurred by the recipient that has not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the recipient for which an outlay has not been recorded.Unobligated balance means the portion of the funds authorized by the HHS awarding agency that has not been obligated by the recipient and is determined by deducting the cumulative obligations from the cumulative funds authorized.Unrecovered indirect cost means the difference between the amount awarded and the amount which could have been awarded under the recipient’s approved negotiated indirect cost rate.Working capital advance means a procedure whereby funds are advanced to the recipient to cover its estimated disbursement needs for a given initial period. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996; 62 FR 41878, Aug. 4, 1997]

74.3 Effect on other issuances. This part supersedes all administrative requirements of codified program regulations, program manuals, handbooks and other nonregulatory materials which are inconsistent with the requirements of this part, except to the extent they are required by Federal statute, or authorized in accordance with the deviations provision in 74.4. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]

74.4 Deviations.

74.4 a After consultation with OMB, the HHS OGAM may grant exceptions to HHS awarding agencies for classes of awards or recipients subject to the requirements of this part when exceptions are not prohibited by statute. However, in the interest of maximum uniformity, exceptions from the requirements of this part shall be permitted only in unusual circumstances. HHS awarding agencies may apply more restrictive requirements to a class of awards or recipients when approved by the OGAM, after consultation with the OMB. HHS awarding agencies may apply less restrictive requirements without approval by the OGAM when making small awards except for those requirements which are statutory. Exceptions on a case-by-case basis may also be made by HHS awarding agencies without seeking prior approval from the OGAM. OGAM will maintain a record of all requests for exceptions from the provisions of this part that have been approved for classes of awards or recipients.

74.4 b As a matter of Departmental policy, requests for individual case deviations will be considered favorably by HHS and its awarding agencies whenever the deviation will facilitate comprehensive or integrated service delivery, or multiple-source consolidated awards, unless the deviation would impair the integrity of the program. [59 FR 43760,

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Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]74.5 Subawards.74.5 a Unless inconsistent with statutory requirements, this part (except for 74.12 and the forms

prescribed in 74.22) shall apply to—74.5 a 1 Except for subawards under block grants (45 CFR part 96), all subawards received by

institutions of higher education, hospitals, other nonprofit organizations, and commercial organizations from any recipient of an HHS award, including any subawards received from States, local governments, and Indian tribal governments covered by Part 92; and

74.5 a 2 All subawards received from States by any entity, including a government entity, under the entitlement programs identified at Part 92, 92.4 a, (a)(7), and (a)(8) [sic], except that 74.12 and 74.25 of this part shall not apply.

74.5 b Except as provided in paragraph a 2 of this section , when State, local, and Indian Tribal government recipients of HHS awards make subawards to a government entity, they shall apply the regulations at Part 92, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments,” or State rules, whichever apply, to such awards. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]

Subpart B—Pre-Award Requirements. Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted74.10 Purpose. Sections 74.11 through 74.17 prescribe forms and instructions and other pre-

award matters to be used in applying for HHS awards.74.11 Pre-award policies.74.11 a Use of Grants and Cooperative Agreements, and Contracts. The Federal Grant and

Cooperative Agreement Act, 31 U.S.C. 6301–08, governs the use of grants, cooperative agreements and contracts. A grant or cooperative agreement shall be used only when the principal purpose of a transaction is to accomplish a public purpose of support or stimulation authorized by Federal statute. The statutory criterion for choosing between grants and cooperative agreements is that for the latter, “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.” Contracts shall be used when the principal purpose is acquisition of property or services for the direct benefit or use of the HHS awarding agency.

74.11 b HHS awarding agencies shall notify the public of funding priorities for discretionary grant programs, unless funding priorities are established by Federal statute.

74.12 Forms for applying for HHS financial assistance.74.12 a HHS awarding agencies shall comply with the applicable report clearance requirements

of 5 CFR part 1320, “Controlling Paperwork Burdens on the Public,” with regard to all forms used in place of or as a supplement to the Standard Form 424 (SF–424) series. However, HHS awarding agencies should use the SF–424 series and its program narrative whenever possible.

74.12 b Applicants shall use the SF–424 series or those forms and instructions prescribed by the HHS awarding agency. Applicants shall submit the original and two copies of any applications unless additional copies are required pursuant to 5 CFR part 1320.

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74.12 c For Federal programs covered by E.O. 12372, as amended by E.O. 12416, “Intergovernmental Review of Federal Programs,” the applicant shall complete the appropriate sections of the SF–424 (Application for Federal Assistance) indicating whether the application was subject to review by the State Single Point of Contact (SPOC). The name and address of the SPOC for a particular State can be obtained from the HHS awarding agency or the Catalog of Federal Domestic Assistance. The SPOC shall advise the applicant whether the program for which application is made has been selected by that State for review. (See also 45 CFR part 100.)

74.12 d HHS awarding agencies that do not use the SF–424 form will indicate on the application form they prescribe whether the application is subject to review by the State under E.O. 12372.

74.12 e This section does not apply to applications for subawards. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]

74.13 Debarment and suspension. Recipients are subject to the nonprocurement debarment and suspension common rule implementing E.O.s 12549 and 12689, “Debarment and Suspension,” 2 CFR part 376. This common rule restricts subawards and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. [59 FR 43760, Aug. 25, 1994, as amended at 72 FR 9235, Mar. 1, 2007]

74.14 Special award conditions.74.14 a The HHS awarding agency may impose additional requirements as needed, without

regard to 74.4, above, if an applicant or recipient:74.14 a 1 Has a history of poor performance;74.14 a 2 Is not financially stable;74.14 a 3 Has a management system that does not meet the standards prescribed in this part;74.14 a 4 Has not conformed to the terms and conditions of a previous award; or74.14 a 5 Is not otherwise responsible.74.14 b When it imposes any additional requirements, the HHS awarding agency must notify the

recipient in writing as to the following:74.14 b 1 The nature of the additional requirements;74.14 b 2 The reason why the additional requirements are being imposed;74.14 b 3 The nature of the corrective actions needed;74.14 b 4 The time allowed for completing the corrective actions; and74.14 b 5 The method for requesting reconsideration of the additional requirements imposed.74.14 c The HHS awarding agency will promptly remove any additional requirements once the

conditions that prompted them have been corrected.74.15 Metric system of measurement. The Metric Conversion Act, as amended by the Omnibus

Trade and Competitiveness Act, 15 U.S.C. 205, declares that the metric system is the preferred measurement system for U.S. trade and commerce. The Act requires each Federal agency to establish a date or dates in consultation with the Secretary of

51



Commerce, when the metric system of measurement will be used in the agency’s procurements, grants, and other business-related activities. Metric implementation may take longer where the use of the system is initially impractical or likely to cause significant inefficiencies in the accomplishment of federally-funded activities. HHS awarding agencies will follow the provisions of E.O. 12770, “Metric Usage in Federal Government Programs.”

74.16 Resource Conservation and Recovery Act (RCRA, Section 6002 of Pub. L. No. 94–580 (Codified at 42 U.S.C. 6962)). Under the Act, any State agency or agency of a political subdivision of a State which is using appropriated Federal funds must comply with section 6002 of the RCRA. This section requires that preference be given in procurement programs to the purchase of specific products containing recycled materials identified in guidelines developed by the Environmental Protection Agency (EPA) (40 CFR parts 247–254). Accordingly, State and local institutions of higher education, hospitals, and other nonprofit organizations that receive direct HHS awards or other Federal funds shall give preference in their procurement programs funded with Federal funds to the purchase of recycled products pursuant to the EPA guidelines.

74.17 Certifications and representations. Unless prohibited by statute or codified regulation, each HHS awarding agency is authorized and encouraged to allow recipients to submit certifications and representations required by statute, executive order, or regulation on an annual basis, if the recipients have ongoing and continuing relationships with the HHS awarding agency. Annual certifications and representations shall be signed by the responsible official(s) with the authority to ensure recipients’ compliance with the pertinent requirements.

74.17 a The funds provided under this part shall be administered in compliance with the standards set forth in part 87 (Equal Treatment for Faith-based Organizations) of this chapter.

74.17 b [Reserved] [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996; 69 FR 42592, July 16, 2004]

74.18 Participation by faith-based organizations. The funds provided under this part shall be administered in compliance with the standards set forth in part 87 (Equal Treatment for Faith-based Organizations) of this chapter. [69 FR 42592, July 16, 2004]Subpart C—Post-Award Requirements Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.

74.20 Financial and Program Management. Requirements for Awards & 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

74.20C [Subpart C: Post-Award Requirements] Financial and Program Management. Purpose of financial and program management. Sections 74.21 through 74.28 prescribe standards for financial management systems, methods for making payments, and rules for satisfying cost sharing and matching requirements, accounting for program income, budget revision approvals, making audits, determining allowability of cost, and establishing fund availability.

74.21 Standards for financial management systems. FM1FFM2A

52



FM2DFM3CFM5A

74.21 a Recipients shall relate financial data to performance data and develop unit cost information whenever practical. For awards that support research, unit cost information is usually not appropriate.

74.21 b Recipients’ financial management systems shall provide for the following: FM1FFM2AFM2DFM3CFM5A

74.21 b 1 Accurate, current and complete disclosure of the financial results of each HHS-sponsored project or program in accordance with the reporting requirements set forth in 74.52. If the HHS awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient shall not be required to establish an accrual accounting system. These recipients may develop such accrual data for their reports on the basis of an analysis of the documentation on hand.

FM5A

74.21 b 2 Records that identify adequately the source and application of funds for HHS-sponsored activities. These records shall contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, outlays, income and interest.

FM5A

74.21 b 3 Effective control over and accountability for all funds, property and other assets. Recipients shall adequately safeguard all such assets and assure they are used solely for authorized purposes.

FM1FFM3C

74.21 b 4 Comparison of outlays with budget amounts for each award. Whenever appropriate, financial information should be related to performance and unit cost data. (Unit cost data are usually not appropriate for awards that support research.)

FM1F

74.21 b 5 Written procedures to minimize the time elapsing between the transfer of funds to the recipient from the U.S. Treasury and the issuance or redemption of checks, warrants or payments by other means for program purposes by the recipient. To the extent that the provisions of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) and its implementing regulations, “Rules and Procedures for Funds Transfers,” (31 CFR part 205) apply, payment methods of State agencies, instrumentalities, and fiscal agents shall be consistent with CMIA Treasury-State Agreements, or the CMIA default procedures codified at 31 CFR 205.9 f.

FM2D

74.21 b 6 Written procedures for determining the reasonableness, allocability and allowability of costs in accordance with the provisions of the applicable Federal cost principles and the terms and conditions of the award.

FM2A

74.21 b 7 Accounting records, including cost accounting records, that are supported by source documentation.

74.21 c Where the Federal Government guarantees or insures the repayment of money borrowed by the recipient, the HHS awarding agency, at its discretion, may require adequate bonding and insurance if the bonding and insurance requirements of the recipient are not deemed adequate to protect the interest of the Federal Government.

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http://www.access.gpo.gov/nara/cfr/waisidx_02/31cfr205_02.html




74.21 d The HHS awarding agency may require adequate fidelity bond coverage where the recipient lacks sufficient coverage to protect the Federal Government’s interest.

74.21 e Where bonds are required in the situations described in 74.21 c and d, the bonds shall be obtained from companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part 223, “Surety Companies Doing Business with the United States.”

74.22 Payment. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996] FM2D74.22 a Unless inconsistent with statutory program purposes, payment methods shall minimize

the time elapsing between the transfer of funds from the U.S. Treasury and the issuance or redemption of checks, warrants, or payment by other means by the recipients. Payment methods of State agencies or instrumentalities shall be consistent with Treasury-State CMIA agreements, or the CMIA default procedures codified at 31 CFR 205.9, to the extent that either applies.

74.22 b 1 Recipients will be paid in advance, provided they maintain or demonstrate the willingness to maintain:

74.22 b 1 i Written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient; and

74.22 b 1 ii Financial management systems that meet the standards for fund control and accountability as established in 74.21.

74.22 b 2 Unless inconsistent with statutory program purposes, cash advances to a recipient organization shall be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient organization in carrying out the purpose of the approved program or project. The timing and amount of cash advances shall be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and the proportionate share of any allowable indirect costs.

FM2D

74.22 c Whenever possible, advances will be consolidated to cover anticipated cash needs for all awards made by all HHS awarding agencies to the recipient.

74.22 c 1 Advance payment mechanisms include electronic funds transfer, with Treasury checks available on an exception basis.

74.22 c 2 Advance payment mechanisms are subject to 31 CFR part 205.74.22 c 3 Recipients may submit requests for advances and reimbursements at least monthly when

electronic fund transfers are not used.74.22 d Requests for Treasury check advance payment shall be submitted on PMS–270, “Request

for Advance or Reimbursement,” or other forms as may be authorized by HHS. This form is not to be used when Treasury check advance payments are made to the recipient automatically through the use of a predetermined payment schedule or if precluded by special HHS-wide instructions for electronic funds transfer.

74.22 e Reimbursement is the preferred method when the requirements in paragraph b of this section cannot be met. The HHS awarding agency may also use this method on any construction agreement, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the HHS assistance

54




constitutes a minor portion of the project.74.22 e 1 When the reimbursement method is used, HHS will make payment within 30 days after

receipt of the billing, unless the billing is improper.74.22 e 2 Recipients may submit a request for reimbursement at least monthly when electronic

funds transfers are not used.74.22 f If a recipient cannot meet the criteria for advance payments and the HHS awarding

agency has determined that reimbursement is not feasible because the recipient lacks sufficient working capital, HHS may provide cash on a working capital advance basis. Under this procedure, HHS advances cash to the recipient to cover its estimated disbursement needs for an initial period generally geared to the recipient’s disbursing cycle. Thereafter, HHS reimburses the recipient for its actual cash disbursements. The working capital advance method of payment will not be used for recipients unwilling or unable to provide timely advances to their subrecipient to meet the subrecipient’s actual cash disbursements.

74.22 g Unless inconsistent with statutory program purposes, to the extent available, recipients shall disburse funds available from repayments to and interest earned on a revolving fund, program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments.

74.22 h Unless otherwise required by statute, the HHS awarding agency will not withhold payments for proper charges made by recipients at any time during the project period unless paragraph h 1 or 2 of this section applies:

74.22 h 1 A recipient has failed to comply with the project objectives, the terms and conditions of the award, or HHS awarding agency reporting requirements.

74.22 h 2 The recipient or subrecipient is delinquent in a debt to the United States. Under such conditions, the HHS awarding agency may, upon reasonable notice, inform the recipient that payments shall not be made for obligations incurred after a specified date until the conditions are corrected or the indebtedness to the Federal Government is liquidated. (See 45 CFR part 30).

74.22 i Standards governing the use of banks and other institutions as depositories of funds advanced under awards are as follows.

74.22 i 1 Except for situations described in paragraph i 2 of this section , HHS will not require separate depository accounts for funds provided to a recipient or establish any eligibility requirements for depositories for funds provided to a recipient. However, recipients must be able to account for the receipt, obligation and expenditure of funds.

74.22 i 2 Advances of Federal funds shall be deposited and maintained in insured accounts whenever possible.

74.22 j Consistent with the national goal of expanding the opportunities for women-owned and minority-owned business enterprises, recipients are encouraged to use women-owned and minority-owned banks (a bank which is owned at least 50% by women or minority group members).

74.22 k Recipients shall maintain advances of Federal funds in interest bearing accounts, unless one of the following conditions apply:

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74.22 k 1 The recipient receives less than $120,000 in Federal awards per year.74.22 k 2 The best reasonably available interest bearing account would not be expected to earn

interest in excess of $250 per year on Federal cash balances.74.22 k 3 The depository would require an average or minimum balance so high that it would not

be feasible within the expected Federal and non-Federal cash resources.74.22 l For those entities where CMIA and its implementing regulations do not apply (see 31

CFR part 205), interest earned on Federal advances deposited in interest bearing accounts shall be remitted annually to the Department of Health and Human Services, Payment Management System, P.O. Box 6021, Rockville, MD 20852. Recipients with Electronic Funds Transfer capability should use an electronic medium such as the FEDWIRE Deposit System. Interest amounts up to $250 per year may be retained by the recipient for administrative expense. State universities and hospitals shall comply with CMIA, as it pertains to interest. If an entity subject to CMIA uses its own funds to pay pre-award costs for discretionary awards without prior written approval from the HHS awarding agency, it waives its right to recover the interest under CMIA. (See 74.25 d).

74.22 m PMS–270, Request for Advance or Reimbursement. Recipients shall use the PMS–270 to request advances or reimbursement for all programs when electronic funds transfer or predetermined advance methods are not used. HHS shall not require recipients to submit more than an original and two copies.

74.22 n Recipients and subrecipients are not required to use forms PMS–270 and 272 in connection with subaward payments.

74.23 Cost sharing or matching. FM2HFM2I

74.23 a To be accepted, all cost sharing or matching contributions, including cash and third party in-kind, shall meet all of the following criteria:

FM2HFM2I

74.23 a 1 Are verifiable from the recipient’s records; FM2H74.23 a 2 Are not included as contributions for any other federally-assisted project or program;74.23 a 3 Are necessary and reasonable for proper and efficient accomplishment of project or

program objectives;FM2I

74.23 a 4 Are allowable under the applicable cost principles; Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching;

FM2I

74.23 a 5 Are provided for in the approved budget; and74.23 a 6 Conform to other provisions of this part, as applicable.74.23 b Unrecovered indirect costs may be included as part of cost sharing or matching.74.23 c Values for recipient contributions of services and property shall be established in

accordance with the applicable cost principles. If the HHS awarding agency authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing or matching shall be the lesser of:

74.23 c 1 The certified value of the remaining life of the property recorded in the recipient’s

56





accounting records at the time of donation; or74.23 c 2 The current fair market value. However, when there is sufficient justification, the HHS

awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project.

74.23 d Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient’s organization. In those instances in which the required skills are not found in the recipient’s organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.

FM2HFM2I

74.23 e When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee’s regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.

74.23 f Donated supplies may include such items as expendable property, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or matching share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.

FM2I

74.23 g The method used for determining cost sharing or matching for donated equipment, buildings and land for which title passes to the recipient may differ according to the purpose of the award, if paragraph g 1 or 2 of this section applies:

74.23 g 1 If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing or matching.

74.23 g 2 If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the HHS awarding agency has approved the charges.

74.23 h The value of donated property shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications.

FM2H

74.23 h 1 The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.

FM2H

74.23 h 2 The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation.

FM2H

74.23 h 3 The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.

FM2H

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74.23 h 4 The value of loaned equipment shall not exceed its fair rental value.74.23 i The following requirements pertain to the recipient’s supporting records for in-kind

contributions from third parties.FM2H

74.23 i 1 Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees, including time records.

FM2H

74.23 i 2 The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.

FM2H

74.24 Program income.74.24 a Standards set forth in this section shall be used to account for program income related to

projects financed in whole or in part with Federal funds.74.24 b Except as provided below in paragraph h of this section, program income earned during

the project period shall be retained by the recipient and, in accordance with the terms and conditions of the award, shall be used in one or more of the following ways:

74.24 b 1 Added to funds committed to the project or program, and used to further eligible project or program objectives;

74.24 b 2 Used to finance the non-Federal share of the project or program; or74.24 b 3 Deducted from the total project or program allowable cost in determining the net

allowable costs on which the Federal share of costs is based.74.24 c When the HHS awarding agency authorizes the disposition of program income as

described in paragraph b 1 or b 2 of this section, program income in excess of any limits stipulated shall be used in accordance with paragraph b 3 of this section .

74.24 d In the event that the HHS awarding agency does not specify in the terms and conditions of the award how program income is to be used, paragraph b 3 of this section shall apply automatically to all projects or programs except research. For awards that support performance of research work, paragraph b 1 of this section shall apply automatically unless:

74.24 d 1 The HHS awarding agency indicates in the terms and conditions of the award another alternative; or

74.24 d 2 The recipient is subject to special award conditions under 74.14; or 74.24 d 3 The recipient is a commercial organization (see 74.82).74.24 e Unless the terms and conditions of the award provide otherwise, recipients shall have no

obligation to the Federal Government regarding program income earned after the end of the project period.

74.24 f Costs incident to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the award.

74.24 g Proceeds from the sale of property shall be handled in accordance with the requirements of the Property Standards. (See 74.30 through 74.37, below).

74.24 h The Patent and Trademark Laws Amendments, 35 U.S.C. section 200-212, apply to inventions made under an award for performance of experimental, developmental, or research work. Unless the terms and conditions for the award provide otherwise,

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recipients shall have no obligation to HHS with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under an award. However, no scholarship, fellowship, training grant, or other funding agreement made primarily to a recipient for educational purposes will contain any provision giving the Federal agency rights to inventions made by the recipient.

74.25 Revision of budget and program plans. FM2L74.25 a The budget plan is the financial expression of the project or program as approved during

the award process. It may include either the sum of the Federal and non-Federal shares, or only the Federal share, depending upon HHS awarding agency requirements. It shall be related to performance for program evaluation purposes whenever appropriate.

FM2L

74.25 b Recipients are required to report deviations from budget and program plans, and request prior approvals for budget and program plan revisions, in accordance with this section. Except as provided at 74.4, 74.14, and this section, HHS awarding agencies may not impose other prior approval requirements for specific items.

FM2L

74.25 c For nonconstruction awards, recipients shall obtain prior approvals from the HHS awarding agency for one or more of the following program or budget related reasons.

FM2L

74.25 c 1 Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).

FM2L

74.25 c 2 Change in the project director or principal investigator or other key persons specified in the application or award document.

FM2L

74.25 c 3 The absence for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.

FM2L

74.25 c 4 The need for additional Federal funding. FM2L74.25 c 5 The inclusion, unless waived by the HHS awarding agency, or costs that require prior

approval in accordance with OMB Circular A-21, “Cost Principles for Educational Institutions;” [sic; now at 2CFR 220] OMB Circular A-122, “Cost Principles for Nonprofit Organizations;” [sic now at 2CFR 230] or appendix E of this part, “Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals,” or 48 CFR part 31, “Contract Cost Principles and Procedures,” as applicable.

FM2L

74.25 c 6 The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.

FM2L

74.25 c 7 Unless described in the application and funded in the approved award, the subaward, transfer or contracting out of any work under an award. This provision does not apply to the purchase of supplies, material, equipment or general support services.

FM2L

74.25 c 8 The inclusion of research patient care costs in research awards made for the performance of research work.

FM2L

74.25 d Except for requirements listed in paragraph c 1 and c 4 of this section, the HHS awarding agency is authorized, at its option, to waive cost-related and administrative prior written approvals required by this part and its appendixes. Additional waivers may be granted authorizing recipients to do any one or more of the following:

FM2L

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74.25 d 1 Incur pre-award costs up to 90 calendar days prior to award, or more than 90 calendar days with the prior approval of the HHS awarding agency. However, all pre-award costs are incurred at the recipient’s risk: the HHS awarding agency is under no obligation to reimburse such costs if for any reason the applicant does not receive an award or if the award to the recipient is less than anticipated and inadequate to cover such costs.

FM2L

74.25 d 2 Initiate a one-time extension of the expiration date of the award of up to 12 months unless one or more of the conditions identified at paragraph d 2 i , ii, and iii of this section apply. For one-time extensions, the recipient must notify the HHS awarding agency in writing, with the supporting reasons and revised expiration date, at least 10 days before the date specified in the award. This one-time extension may not be exercised either by recipients or HHS awarding agencies merely for the purpose of using unobligated balances. Such extensions are not permitted where:

FM2L

74.25 d 2 i The terms and conditions of award prohibit the extension; or FM2L74.25 d 2 ii The extension requires additional Federal funds; or FM2L74.25 d 2 iii The extension involves any change in the approved objectives or scope of the project. FM2L74.25 d 3 Carry forward unobligated balances to subsequent funding periods. FM2L74.25 d 4 For awards that support performance of research work, unless the HHS awarding agency

provides otherwise in the award, or the award is subject to 74.14 or subpart E of this Part, the prior approval requirements described in paragraph d 1 -3 of this section are automatically waived (i.e., recipients need not obtain such prior approvals). However, extension of award expiration dates must be approved by the HHS awarding agency if one of the conditions in paragraph d 2 of this section applies.

FM2L

74.25 e The HHS awarding agencies may not permit any budget changes in a recipient’s award that would cause any Federal appropriation to be used for purposes other then those consistent with the original purpose of the authorization and appropriation under which the award was funded.

FM2L

74.25 f For construction awards, recipients shall obtain prior written approval promptly from the HHS awarding agency for budget revisions whenever:

FM2L

74.25 f 1 The revision results from changes in the scope or the objective of the project or program; FM2L74.25 f 2 The need arises for additional Federal funds to complete the project; or FM2L74.25 f 3 A revision is desired which involves specific costs for which prior written approval

requirements apply in keeping with the applicable cost principles listed in 74.27.FM2L

74.25 g When an HHS awarding agency makes an award that provides support for both construction and nonconstruction work, it may require the recipient to obtain prior approval before making any fund or budget transfers between the two types of work supported.

FM2L

74.25 h For both construction and nonconstruction awards, recipients shall notify the HHS awarding agency in writing promptly whenever the amount of Federal authorized funds is expected to exceed the needs of the recipient for the project period by more than $5000 or five percent of the Federal award, whichever is greater. This notification shall not be required if an application for additional funding is submitted for a continuation award.

FM2L

74.25 i Within 30 calendar days from the date of receipt of the request for budget revisions, HHS FM2L

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awarding agencies shall notify the recipient whether its requested budget revisions have been approved. If the requested revision is still under consideration at the end of 30 calendar days, the HHS awarding agency must inform the recipient in writing of the date when the recipient may expect a decision.

74.25 j When requesting approval for budget changes, recipients shall make their requests in writing.

FM2L

74.25 k All approvals granted in keeping with the provisions of this section shall not be valid unless they are in writing, and signed by at least one of the following HHS officials:

FM2L

74.25 k 1 The Head of the HHS Operating or Staff Division that made the award or subordinate official with proper delegated authority from the Head, including the Head of the Regional Office of the HHS Operating or Staff Division that made the award; or

FM2L

74.25 k 2 The responsible Grants Officer of the HHS Operating or Staff Division that made the award or an individual duly authorized by the Grants Officer.

FM2L

74.26 Non-Federal audits.74.26 a Recipients and subrecipients that are institutions of higher education, hospitals affiliated

with institutions of higher education, other gateway.html organizations, and commercial organizations shall be subject to the audit requirements contained in OMB Circular A-133, “Audits of Institutions of Higher Education and Other Non-Profit Institutions.” (See appendix I to this part.)

74.26 a 1 OMB Circular A-133 exempts hospitals not affiliated with an institution of higher education. In determining whether this exemption applies, the term affiliated includes all situations where:

74.26 a 1 i A hospital or an institution of higher education has an ownership interest in the other entity or some other party (other than a State or local unit of government) has an ownership interest in each of them; or

74.26 a 1 ii An affiliation agreement exists; or74.26 a 1 iii Federal research or training awards to a hospital or institution of higher education are

performed in whole or in part in the facilities of, or involve the staff of, the other entity.74.26 a 2 Hospitals not covered by the audit provisions of OMB Circular A-133 are subject to the

audit requirements of the HHS awarding agency.74.26 b State and local governments shall be subject to the audit requirements contained in the

Single Audit Act, 31 U.S.C. 7501—07, and OMB Circular A-128, “Audits of State and Local Governments.” (See appendix J to this part.)

74.26 c All copies of audit reports that a recipient is required, under OMB Circulars A-128 or OMB Circular A-133, to submit to the HHS awarding agency shall be addressed to the National External Audit Resources Unit, 323 West 8th St., Lucas Place—Rm. 514, Kansas City, MO 64105. The HHS Office of Inspector General will distribute copies as appropriate within HHS. Recipients, therefore, are not required to send their audit reports to any other HHS official.

74.27 Allowable costs.74.27 a For each kind of recipient, there is a particular set of Federal principles that applies in

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determining allowable costs. Allowability of costs shall be determined in accordance with the cost principles applicable to the entity incurring the costs. Thus, allowability of costs incurred by State, local or federally-recognized Indian tribal governments is determined in accordance with the provisions of OMB Circular A-87, “Cost Principles for State and Local Governments” [sic; now at 2CFR 225]. The allowability of costs incurred by gateway.html organizations (except for those listed in Attachment C of Circular A-122) is determined in accordance with the provisions of OMB Circular A-122, “Cost Principles for Nonprofit Organizations” [sic now at 2CFR 230] and paragraph b of this section . The allowability of costs incurred by institutions of higher education is determined in accordance with the provisions of OMB Circular A-21, “Cost Principles for Educational Institutions.” [sic; now at 2CFR 220] The allowability of costs incurred by hospitals is determined in accordance with the provisions of appendix E of this part, “Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals.” The allowability of costs incurred by commercial organizations and those gateway.html organizations listed in Attachment C to Circular A-122 is determined in accordance with the provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part 31, except that independent research and development costs are unallowable.

74.27 b OMB Circular A-122 [sic now at 2CFR 230] does not cover the treatment of bid and proposal costs or independent research and development costs. The following rules apply to these costs for gateway.html organizations subject to that Circular.

74.27 b 1 Bid and proposal costs. Bid and proposal costs are the immediate costs of preparing bids, proposals, and applications for Federal and non-Federal awards, contracts, and other agreements, including the development of scientific, cost, and other data needed to support the bids, proposals, and applications. Bid and proposal costs of the current accounting period are allowable as indirect costs. Bid and proposal costs of past accounting periods are unallowable in the current period. However, if the recipient’s established practice is to treat these costs by some other method, they may be accepted if they are found to be reasonable and equitable. Bid and proposal costs do not include independent research and development costs covered by paragraph b 2 of this section , or pre-award costs covered by OMB Circular A-122, Attachment B, paragraph 33 [sic; now at 2 CFR Part 230 Appendix B 33 and 74.25 d 1.

74.27 b 2 Independent Research and Development costs. Independent research and development is research and development which is conducted by an organization, and which is not sponsored by Federal or non-Federal awards, contracts, or other agreements. Independent research and development shall be allocated its proportionate share of indirect costs on the same basis as the allocation of indirect costs to sponsored research and development. The cost of independent research and development, including their proportionate share of indirect costs, are unallowable.

74.28 Period of availability of funds. Where a funding period is specified, a recipient may charge to the award only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the HHS awarding agency pursuant to 74.25 d 1.

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74.30 Property Standards. Purpose of property standards. Sections 74.31 through 74.37 set forth uniform standards governing management and disposition of property furnished by HHS or whose cost was charged directly to a project supported by an HHS award. The

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HHS awarding agency may not impose additional requirements, unless specifically required to do so by Federal statute. The recipient may use its own property management standards and procedures provided they meet the provisions of 74.31 through 74.37.

74.31 Insurance coverage. Recipients shall, at a minimum, provide the equivalent insurance coverage for real property and equipment acquired with HHS funds as provided to other property owned by the recipient.

FM2CFM3C

74.32 Real property.74.32 a Title to real property shall vest in the recipient subject to the condition that the recipient

shall use the real property for the authorized purpose of the project as long as it is needed and shall not encumber the property without approval of the HHS awarding agency.

74.32 b The recipient shall obtain written approval from the HHS awarding agency for the use of real property in other federally-sponsored projects when the recipient determines that the property is no longer needed for the purpose of the original project. Use in other projects shall be limited to those under federally-sponsored projects (i.e., awards) or programs that have purposes consistent with those authorized for support by the HHS awarding agency.

74.32 c When the real property is no longer needed as provided in paragraphs a and b of this section, the recipient shall request disposition instructions from the HHS awarding agency or its successor. The HHS awarding agency must provide one or more of the following disposition instructions:

74.32 c 1 The recipient may be permitted to retain title without further obligation to the Federal Government after it compensates the Federal Government for that percentage of the current fair market value of the property attributable to the Federal share in the project.

74.32 c 2 The recipient may be directed to sell the property under guidelines provided by the HHS awarding agency and pay the Federal Government for that percentage of the current fair market value of the property attributable to the Federal share in the project (after deducting actual and reasonable selling and fix-up expenses, if any, from the sales proceeds). When the recipient is authorized or required to sell the property, proper sales procedures shall be established that provide for competition to the extent practicable and result in the highest possible return.

74.32 c 3 The recipient may be directed to transfer title to the property to the Federal Government or to an eligible third party provided that, in such cases, the recipient shall be entitled to compensation for its attributable percentage of the current fair market value of the property.

74.33 Federally-owned and exempt property.74.33 a Title of federally-owned property remains vested in the Federal Government. Recipients

shall submit annually an inventory listing of federally-owned property in their custody to the HHS awarding agency. Upon completion of the award or when the property is no longer needed, the recipient shall report the property to the HHS awarding agency for further agency utilization.

74.33 b If the HHS awarding agency has no further need for the property, it shall be declared excess and reported to the General Services Administration, unless the HHS awarding agency has statutory authority to dispose of the property by alternative methods (e.g., the authority provided by the Federal Technology Transfer Act, 15 U.S.C. 3710i, to donate

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research equipment to educational and gateway.html organizations in accordance with E.O. 12821, “Improving Mathematics and Science Education in Support of the National Education Goals”). Appropriate instructions shall be issued to the recipient by the HHS awarding agency.

74.33 b 1 Exempt property shall not be subject to the requirements of 74.34, except that it shall be subject to paragraph h 1, 2, and 4 [sic; see paragraph g 1 , 2, and 4] of that section concerning the HHS awarding agency’s right to require transfer.

74.34 Equipment. FM3D74.34 a Title to equipment acquired by a recipient with HHS funds shall vest in the recipient,

subject to the conditions of this section.74.34 b [sic]74.34 b 1 The recipient shall not use equipment acquired with HHS funds to provide services to

non-Federal organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for so long as the Federal Government retains an interest in the equipment.

74.34 b 2 If the equipment is owned by the Federal Government, use on other activities not sponsored by the Federal Government shall be permissible if authorized by the HHS awarding agency.

74.34 b 3 User charges shall be treated as program income, in keeping with the provisions of Sec. 74.24.

74.34 c The recipient shall use the equipment in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds and shall not encumber the property without approval of the HHS awarding agency. When no longer needed for the original project or program, the recipient shall use the equipment in connection with its other federally-sponsored activities, if any, in the following order of priority:

74.34 c 1 Programs, projects, or activities sponsored by the HHS awarding agency;74.34 c 2 Programs, projects, or activities sponsored by other HHS awarding agencies; then74.34 c 3 Programs, project, or activities sponsored by other Federal agencies.74.34 d During the time that equipment is used on the program, project, or activity for which it

was acquired, the recipient shall make it available for use on other projects or programs if such other use will not interfere with the work on the program, project, or activity for which the equipment was originally acquired. First preference for such other use shall be given to other programs, projects, or activities sponsored by the HHS awarding agency. Second preference shall be given to programs, projects, or activities sponsored by other HHS awarding agencies. Third preference shall be given to programs, projects, or activities sponsored by other Federal agencies.

74.34 e When acquiring replacement equipment, the recipient may use the equipment to be replaced as trade-in or sell the equipment and use the proceeds to offset the costs of the replacement equipment subject to the approval of the HHS awarding agency.

74.34 f The recipient's property management standards for equipment acquired with Federal funds and federally-owned equipment shall include all of the following:

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74.34 f 1 Equipment records shall be maintained accurately and shall include the following information:

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74.34 f 1 i A description of the equipment; FM3D74.34 f 1 ii Manufacturer's serial number, model number, Federal stock number, national stock

number, or other identification number;FM3D

74.34 f 1 iii Source of the equipment, including the award number; FM3D74.34 f 1 iv Whether title vests in the recipient or the Federal Government; FM3D74.34 f 1 v Acquisition date (or date received, if the equipment was furnished by the Federal

Government) and cost;FM3D

74.34 f 1 vi Information from which one can calculate the percentage of HHS's share in the cost of the equipment (not applicable to equipment furnished by the Federal Government);

FM3D

74.34 f 1 vii Location and condition of the equipment and the date the information was reported; FM3D74.34 f 1 viii

Unit acquisition cost; and FM3D

74.34 f 1 ix Ultimate disposition data, including date of disposal and sales price or the method used to determine current fair market value where a recipient compensates the HHS awarding agency for its share.

74.34 f 2 Equipment owned by the Federal Government shall be identified to indicate Federal ownership.

74.34 f 3 The recipient shall take a physical inventory of equipment and the results reconciled with the equipment records at least once every two years. Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference. The recipient shall, in connection with the inventory, verify the existence, current utilization, and continued need for the equipment.

FM3D

74.34 f 4 Recipient shall maintain a control system to insure adequate safeguards to prevent loss, damage, or theft of the equipment. Any loss, damage, or theft of equipment shall be investigated and fully documented; if the equipment was owned by the Federal Government, the recipient shall promptly notify the HHS awarding agency.

74.34 f 5 The recipient shall implement adequate maintenance procedures to keep the equipment in good condition.

74.34 f 6 Where the recipient is authorized or required to sell the equipment, proper sales procedures shall be established which provide for competition to the extent practicable and result in the highest possible return.

74.34 g When the recipient no longer needs the equipment, it may use the equipment for other activities in accordance with the following standards. For equipment with a current per unit fair market value of $5000 or more, the recipient may retain the equipment for other uses provided that compensation is made to the original HHS awarding agency or its successor. The amount of compensation shall be computed by applying the percentage of HHS's share in the cost of the original project or program to the current fair market value of the equipment. If the recipient has no need for the equipment, the recipient shall

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request disposition instructions from the HHS awarding agency; such instructions must be issued to the recipient no later than 120 calendar days after the recipient's request and the following procedures shall govern:

74.34 g 1 If so instructed or if disposition instructions are not issued within 120 calendar days after the recipient's request, the recipient shall sell the equipment and reimburse the HHS awarding agency an amount computed by applying to the sales proceeds the percentage of HHS share in the cost of the original project or program. However, the recipient shall be permitted to deduct and retain from the HHS share $500 or ten percent of the proceeds, whichever is less, for the recipient's selling and handling expenses.

FM3D

74.34 g 2 If the recipient is instructed to ship the equipment elsewhere, the recipient shall be reimbursed by the HHS awarding agency by an amount which is computed by applying the percentage of the recipient's share in the cost of the original project or program to the current fair market value of the equipment, plus any reasonable shipping or interim storage costs incurred.

FM3D

74.34 g 3 If the recipient is instructed to otherwise dispose of the equipment, the recipient will be reimbursed by the HHS awarding agency for such costs incurred in its disposition.

FM3D

74.34 g 4 If the recipient's project or program for which or under which the equipment was acquired is still receiving support from the same HHS program, and if the HHS awarding agency approves, the net amount due may be used for allowable costs of that project or program. Otherwise the net amount must be remitted to the HHS awarding agency by check.

FM3D

74.34 h The HHS awarding agency reserves the right to order the transfer of title to the Federal Government or to a third party named by the awarding agency when such third party is otherwise eligible under existing statutes. Such transfer shall be subject to the following standards:

74.34 h 1 The equipment shall be appropriately identified in the award or otherwise made known to the recipient in writing.

74.34 h 2 The HHS awarding agency may require submission of a final inventory that lists all equipment acquired with HHS funds and federally-owned equipment.

74.34 h 3 If the HHS awarding agency fails to issue disposition instructions within 120 calendar days after receipt of the inventory, the recipient shall apply the standards of paragraph g 1 of this section as appropriate.

74.34 h 4 When the HHS awarding agency exercises its right to order the transfer of title to the Federal Government, the equipment shall be subject to the rules for federally-owned equipment. (See Sec. 74.34 g).

74.35 Supplies.74.35 a Title to supplies shall vest in the recipient upon acquisition. If there is a residual

inventory of unused supplies exceeding $5000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federally-sponsored project or program, the recipient shall retain the supplies for use on non-federally sponsored activities or sell them, but shall, in either case, compensate the Federal Government for its share. The amount of compensation shall be computed in the same manner as for equipment. (See 74.34 g).

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74.35 a 1 The recipient shall not use supplies acquired with Federal funds to provide services to non-Federal organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute as long as the Federal Government retains an interest in the supplies.

74.35 a 2 If the supplies owned by the Federal Government, use on other activities not sponsored by the Federal Government shall be permissible if authorized by the HHS awarding agency.

74.35 a 3 User charges shall be treated as program income, in keeping with the provisions of 74.24.74.36 Intangible property.74.36 a The recipient may copyright any work that is subject to copyright and was developed, or

for which ownership was purchased, under an award. The HHS awarding agency reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for Federal purposes, and to authorize others to do so.

74.36 b Recipients are subject to applicable regulations governing patents and inventions, including government-wide regulations issued by the Department of Commerce at 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements.”

74.36 c The Federal Government has the right to:74.36 c 1 Obtain, reproduce, publish or otherwise use the data first produced under an award; and74.36 c 2 Authorize others to receive, reproduce, publish, or otherwise use such data for Federal

purposes.74.36 d 1 In addition, in response to a Freedom of Information Act (FOIA) request for research data

relating to published research findings produced under an award that were used by the Federal Government in developing an agency action that has the force and effect of law, the HHS Awarding Agency shall request, and the recipient shall provide, within a reasonable time, the research data so that they can be made available to the public through the procedures established under the FOIA. If the HHS Awarding Agency obtains the research data solely in response to a FOIA request, the agency may charge the requester a reasonable fee equaling the full incremental cost of obtaining the research data. This fee should reflect costs incurred by the agency, the recipient, and applicable subrecipients. This fee is in addition to any fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).

74.36 d 2 The following definitions apply for purposes of this paragraph d:74.36 d 2 i Research data is defined as the recorded factual material commonly accepted in the

scientific community as necessary to validate research findings, but not any of the following: preliminary analyses, drafts of scientific papers, plans for future research, peer reviews, or communications with colleagues. This “recorded” material excludes physical objects (e.g., laboratory samples). Research data also do not include:

74.36 d 2 I A

Trade secrets, commercial information, materials necessary to be held confidential by a researcher until they are published, or similar information which is protected under law; and

74.36 d 2 I Personnel and medical information and similar information the disclosure of which would

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B constitute a clearly unwarranted invasion of personal privacy, such as information that could be used to identify a particular person in a research study.

74.36 d 2 ii Published is defined as either when:74.36 d 2 ii A

Research findings are published in a peer-reviewed scientific or technical journal; or

74.36 d 2 ii B

A Federal agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.

74.36 d 2 iii Used by the Federal Government in developing an agency action that has the force and effect of law is defined as when an agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.

74.36 d 3 The requirements set forth in paragraph d 1 of this section do not apply to commercial organizations.

74.36 e Title to intangible property and debt instruments purchased or otherwise acquired under an award or subaward vests upon acquisition in the recipient. The recipient shall use that property for the originally—authorized purpose, and the recipient shall not encumber the property without approval of the HHS awarding agency. When no longer needed for the originally authorized purpose, disposition of the intangible property shall occur in accordance with the provisions of 74.34 g and h. [59 FR 43760, Aug. 25, 1994, as amended at 65 FR 14407, 14418, Mar. 16, 2000]

74.37 Property trust relationship. Real property, equipment, intangible property and debt instruments that are acquired or improved with Federal funds shall be held in trust by the recipients as trustee for the beneficiaries of the project or program under which the property was acquired or improved, and shall not be encumbered without the approval of the HHS awarding agency. Recipients shall record liens or other appropriate notices of record to indicate that real property has been acquired or constructed or, where applicable, improved with Federal funds, and that use and disposition conditions apply to the property.

FM3E

74.40 Procurement Standards. Purpose of procurement standards. Sections 74.41 through 74.48 set forth standards for use by recipients in establishing procedures for the procurement of supplies and other expendable property, equipment, real property and other services with Federal funds. These standards are established to ensure that such materials and services are obtained in an effective manner and in compliance with the provisions of applicable Federal statutes and executive orders. The standards apply where the cost of the procurement is treated as a direct cost of an award.

74.41 Recipient responsibilities. The standards contained in this section do not relieve the recipients of the contractual responsibilities arising under its contract(s). The recipient is the responsible authority, without recourse to the HHS awarding agency, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of an award or other agreement. This includes disputes, claims, protests of award, source evaluation or other matters of a contractual nature. Matters concerning violation of statute are to be referred to such Federal, State or local authority as may have proper jurisdiction.

74.42 Codes of conduct. The recipient shall maintain written standards of conduct governing FM1E

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the performance of its employees engaged in the award and administration of contracts. No employee, officer, or agent shall participate in the selection, award, or administration of a contract supported by Federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when the employee, officer, or agent, or any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in the firm selected for an award. The officers, employees, and agents of the recipient shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to subagreements. However, recipients may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employers, or agents of the recipients.

74.43 Competition. All procurement transactions shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. The recipient shall be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft grant applications, or contract specifications, requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded from competing for such procurements. Awards shall be made to the bidder or offeror whose bid or offer is responsive to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offeror shall fulfill in order for the bid or offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in the recipient’s interest to do so.

FM2K

74.44 Procurement procedures. FM2J74.44 a All recipients shall establish written procurement procedures. These procedures shall

provide for, at a minimum, that:FM2J

74.44 a 1 Recipients avoid purchasing unnecessary items; FM2J74.44 a 2 Where appropriate, an analysis is made of lease and purchase alternatives to determine

which would be the most economical and practical procurement for the Federal Government; and

FM2J

74.44 a 3 Solicitations for goods and services provide for all of the following: FM2J74.44 a 3 i A clear and accurate description of the technical requirements for the material, product or

service to be procured. In competitive procurements, such a description shall not contain features which unduly restrict competition.

FM2J

74.44 a 3 ii Requirements which the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals.

FM2J

74.44 a 3 iii A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards.

FM2J

74.44 a 3 iv The specific features of “brand name or equal” descriptions that bidders are required to FM2J

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meet when such items are included in the solicitation.74.44 a 3 v The acceptance, to the extent practicable and economically feasible, of products and

services dimensioned in the metric system of measurement.FM2J

74.44 a 3 vi Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient.

FM2J

74.44 b Positive efforts shall be made by recipients to utilize small businesses, minority-owned firms, and women’s business enterprises, whenever possible. Recipients of HHS awards shall take all of the following steps to further this goal.

74.44 b 1 Ensure that small businesses, minority-owned firms, and women’s business enterprises are used to the fullest extent practicable.

74.44 b 2 Make information on forthcoming opportunities available and arrange time frames for purchases and contracts to encourage and facilitate participation by small businesses, minority-owned firms, and women’s business enterprises.

74.44 b 3 Consider in the contract process whether firms competing for larger contracts intend to subcontract with small businesses, minority-owned firms, and women’s business enterprises.

74.44 b 4 Encourage contracting with consortiums of small businesses, minority-owned firms and women’s business enterprises when a contract is too large for one of these firms to handle individually.

74.44 b 5 Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce’s Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms and women’s business enterprises.

74.44 c The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) shall be determined by the recipient but shall be appropriate for the particular procurement and for promoting the best interest of the program or project involved. The “cost-plus-a-percentage-of-cost” or ‘‘percentage of construction cost” methods of contracting shall not be used.

74.44 d Contracts shall be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement. Consideration shall be given to such matters as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources. In certain circumstances, contracts with certain parties are restricted by agencies’ implementation of E.O.s 12549 and 12689, “Debarment and Suspension.” (See 45 CFR part 76.)

74.44 e Recipients shall, on request, make available for the HHS awarding agency, pre-award review and procurement documents, such as request for proposals or invitations for bids, independent cost estimates, etc., when any of the following conditions apply.

74.44 e 1 A recipient’s procurement procedures or operation fails to comply with the procurement standards in this Part.

74.44 e 2 The procurement is expected to exceed the small purchase threshold fixed at 41 U.S.C. 403(11) (currently $25,000) and is to be awarded without competition or only one bid or

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offer is received in response to a solicitation.74.44 e 3 The procurement, which is expected to exceed the small purchase threshold, specifies a

“brand name” product.74.44 e 4 The proposed award over the small purchase threshold is to be awarded to other than the

apparent low bidder under a sealed bid procurement.74.44 e 5 A proposed contract modification changes the scope of a contract or increases the

contract amount by more than the amount of the small purchase threshold.74.45 Cost and price analysis. Some form of cost or price analysis shall be made and

documented in the procurement files in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.

74.46 Procurement records. Procurement records and files for purchases in excess of the small purchase threshold shall include the following at a minimum:

74.46 a Basis for contractor selection74.46 b Justification for lack of competition when competitive bids or offers are not obtained74.46 c Basis for award cost or price.74.47 Contract administration. A system for contract administration shall be maintained to

ensure contractor conformance with the terms, conditions and specifications of the contract and to ensure adequate and timely follow up of all purchases. Recipients shall evaluate contractor performance and document, as appropriate, whether contractors have met the terms, conditions and specifications of the contract.

74.48 Contract provisions. The recipient shall include, in addition to provisions to define a sound and complete agreement, the following provisions in all contracts. The following provisions shall also be applied to subcontracts:

FM2KFM2M

74.48 a contracts in excess of the small purchase threshold shall contain contractual provisions or conditions that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or breaches the contract terms, and provide for such remedial actions as may be appropriate.

FM2KFM2M

74.48 b Contracts in excess of the small purchase threshold shall contain suitable provisions for termination by the recipient, including the manner by which termination shall be effected and the basis for settlement. In addition, such contracts shall describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

FM2KFM2M

74.48 c Except as otherwise required by statute, an award that requires the contracting (or subcontracting) for construction or facility improvements shall provide for the recipient to follow its own requirements relating to bid guarantees, performance bonds, and payment bonds unless the construction contract or subcontract exceeds $100,000. For those contracts or subcontracts exceeding $100,000, the HHS awarding agency may accept the bonding policy and requirements of the recipient, provided the HHS awarding agency has made a determination that the Federal Government’s interest is adequately

FM2K

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protected. If such a determination has not been made, the minimum requirements shall be as follows:

74.48 c 1 A bid guarantee from each bidder equivalent to five percent of the bid price. The “bid guarantee” shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder shall, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.

FM2K

74.48 c 2 A performance bond on the part of the contractor for 100% of the contract price. A “performance bond” is one executed in connection with a contract to secure fulfillment of all the contractor’s obligations under such contract.

FM2K

74.48 c 3 A payment bond on the part of the contractor for 100% of the contract price. A “payment bond” is one executed in connection with a contract to assure payment as required by statute of all persons supplying labor and material in the execution of the work provided for in the contract.

FM2K

74.48 c 4 Where bonds are required in the situations described herein, the bonds shall be obtained from companies holding certificates of authority as acceptable sureties pursuant to 31 CFR part 223, “Surety Companies Doing Business with the United States.”

FM2K

74.48 c 574.48 d

All negotiated contracts (except those for less than the small purchase threshold) awarded by recipients shall include a provision to the effect that the recipient, the HHS awarding agency, the U.S. Comptroller General, or any of their duly authorized representatives, shall have access to any books, documents, papers and records of the contractor which are directly pertinent to a specific program for the purpose of making audits, examinations, excerpts and transcriptions.

FM2K

74.48 c 674.48 e

All contracts, including small purchases, awarded by recipients and their contractors shall contain the procurement provisions of appendix A to this part, as applicable.

FM2K

74.50 Reports and Records. Purpose of reports and records. Sections 74.51 through 74.53 set forth the procedures for monitoring and reporting on the recipient’s financial and program performance and the necessary standard reporting forms. They also set forth record retention requirements.

74.51 Monitoring and reporting program performance.74.51 a Recipients are responsible for managing and monitoring each project, program,

subaward, function or activity supported by the award. Recipients shall monitor subawards to ensure that subrecipients have met the audit requirements as set forth in 74.26.

74.51 b The HHS awarding agency will prescribe the frequency with which the performance reports shall be submitted. Except as provided in paragraph f of this section, performance reports will not be required more frequently than quarterly or, less frequently than annually. Annual reports shall be due 90 calendar days after the award year; quarterly or semi-annual reports shall be due 30 days after the reporting period. The HHS awarding agency may require annual reports before the anniversary dates of multiple year awards in lieu of these requirements. The final performance reports are due 90 calendar days after the expiration or termination of the award.

74.51 c If inappropriate, a final technical or performance report will not be required after

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completion of the project.74.51 d Performance reports shall generally contain, for each award, brief information on each of

the following:74.51 d 1 A comparison of actual accomplishments with the goals and objectives established for the

period, the findings of the investigator, or both. Whenever appropriate and the output of programs or projects can be readily quantified, such quantitative data should be related to cost data for computation of unit costs.

74.51 d 2 Reasons why established goals were not met, if appropriate.74.51 d 3 Other pertinent information including, when appropriate, analysis and explanation of cost

overruns or high unit costs.74.51 e Recipients shall submit the original and two copies of performance reports.74.51 f Recipients shall immediately notify the HHS awarding agency of developments that have

a significant impact on the award-supported activities. Also, notification shall be given in the case of problems, delays, or adverse conditions which materially impair the ability to meet the objectives of the award. This notification shall include a statement of the action taken or contemplated, and any assistance needed to resolve the situation.

74.51 g HHS may make site visits, as needed.74.51 h The HHS awarding agency complies with the applicable report clearance requirements of

5 CFR part 1320, “Controlling Paperwork Burdens on the Public,” when requesting performance data from recipients.

74.52 Financial reporting. FM5B74.52 a The following forms are used for obtaining financial information from recipients: FM5B74.52 a 1 SF-269 or SF-269A, Financial Status Report. FM5B74.52 a 1 a74.52 a 1 i

The HHS awarding agency will require recipients to use either the SF-269 (long form) or SF-269A to report the status of funds for all nonconstruction projects or programs. The SF-269 shall always be used if income has been earned. The awarding agency may, however, waive the SF-269 or SF-269A requirement when the PMS-270, Request for Advance or Reimbursement, or PMS-272, Report of Federal Cash Transactions, will provide adequate information to meet its needs, except that a final SF-269 or SF-269A shall be required at the completion of the project when the PMS-270 is used only for advances.

74.52 a 1 b74.52 a 1 ii

If the HHS awarding agency requires accrual information and the recipient’s accounting records are not normally kept on the accrual basis, the recipient shall not be required to convert its accounting system, but shall develop such accrual information through best estimates based on an analysis of the documentation on hand.

74.52 a 1 c74.52 a 1 iii

The HHS awarding agency will determine the frequency of the Financial Status Report for each project or program, considering the size and complexity of the particular project or program. However, the report will not be required more frequently than quarterly or less frequently than annually except under 74.14. A final report shall be required at the completion of the agreement.

74.52 a 1 d Recipients shall submit the SF-269 and SF-269A (an original and two copies) no later FM5B

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74.52 a 1 iv than 30 days after the end of each specified reporting period for quarterly and semi-annual reports, and 90 calendar days for annual and final reports. Extensions of reporting due dates may be approved by the HHS awarding agency upon request of the recipient.

74.52 a 2 PMS-272, Report of Federal Cash Transactions. FM5B74.52 a 2 a74.52 a 2 i

When funds are advanced to recipients, the HHS awarding agency requires each recipient to submit the PMS-272 and, when necessary, its continuation sheet, PMS-272 A through G. The HHS awarding agency uses this report to monitor cash advanced to recipients and to obtain disbursement information for each agreement with the recipients.

74.52 a 2 b74.52 a 2 ii

The HHS awarding agency may require forecasts of Federal cash requirements in the “Remarks” section of the report.

74.52 a 2 c74.52 a 2 iii

Recipients shall submit the original and two copies of the PMS-272 15 calendar days following the end of each quarter. The HHS awarding agency may require a monthly report from those recipients receiving advances totaling $1 million or more per year.

FM5B

74.52 a 2 d74.52 a 2 iv

The HHS awarding agency may waive the requirement for submission of the PMS-272 for any one of the following reasons:

74.52 a 2 d a

When monthly advances do not exceed $25,000 per recipient, provided that such advances are monitored through other forms contained in this section;

74.52 a 2 d b

If, in HHS’ opinion, the recipient’s accounting controls are adequate to minimize excessive Federal advances; or,

74.52 a 2 d c

When the electronic payment mechanisms provide adequate data.

74.52 b When the HHS awarding agency needs additional information or more frequent reports, the following shall be observed.

74.52 b 1 When additional information is needed to comply with legislative requirements, the HHS awarding agency will issue instructions to require recipients to submit that information under the “Remarks” section of the reports.

74.52 b 2 When HHS determines that a recipient’s accounting system does not meet the standards in 74.21, additional pertinent information to further monitor awards may be obtained, without regard to 74.4, upon written notice to the recipient until such time as the system is brought up to standard. In obtaining this information, the HHS awarding agencies comply with report clearance requirements of 5 CFR part 1320, “Controlling Paperwork Burdens on the Public.”

74.52 b 3 The HHS awarding agency may accept the identical information from a recipient in machine readable format or computer printouts or electronic outputs in lieu of prescribed formats.

74.52 b 4 The HHS awarding agency may provide computer or electronic outputs to recipients when such action expedites or contributes to the accuracy of reporting.

74.53 Retention and access requirements for records.74.53 a This section sets forth requirements for record retention and access to records for awards

to recipients.74.53 b Financial records, supporting documents, statistical records, and all other records

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pertinent to an award shall be retained for a period of three years from the date of submission of the final expenditure report or, for awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report. The only exceptions are the following:

74.53 b 1 If any litigation, claim, financial management review, or audit is started before the expiration of the 3-year period, the records shall be retained until all litigation, claims or audit findings involving the records have been resolved and final action taken.

74.53 b 2 Records for real property and equipment acquired with Federal funds shall be retained for 3 years after final disposition.

74.53 b 3 When records are transferred to or maintained by the HHS awarding agency, the 3-year retention requirement is not applicable to the recipient.

74.53 b 4 Indirect cost rate proposals, cost allocations plans, etc., as specified in 74.53 g.74.53 c Copies of original records may be substituted for the original records if authorized by the

HHS awarding agency.74.53 d The HHS awarding agency will request transfer of certain records to its custody from

recipients when it determines that the records possess long term retention value. However, in order to avoid duplicate recordkeeping, the HHS awarding agency may make arrangements for recipients to retain any records that are continuously needed for joint use.

74.53 e HHS awarding agencies, the HHS Inspector General, the U.S. Comptroller General, or any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient’s personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period, but shall last as long as records are retained.

74.53 f Unless required by statute, the HHS awarding agency will not place restrictions on recipients that limit public access to the records of recipients that are pertinent to an award, except when the HHS awarding agency can demonstrate that such records shall be kept confidential and would have been exempted from disclosure pursuant to the Freedom of Information Act, 5 U.S.C. 552, if the records had belonged to the HHS awarding agency.

74.53 g Paragraph g 1 and g 2 of this section apply to the following types of documents, and their supporting records: Indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates).

74.53 g 1 If the recipient submits to the Federal Government or the subrecipient submits to the recipient the proposal, plan, or other computation to form the basis for negotiation of the rate, then the 3-year retention period for its supporting records starts on the date of such submission.

74.53 g 2 If the recipient is not required to submit to the Federal Government or the subrecipient is not required to submit to the recipient the proposal, plan, or other computation for

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negotiation purposes, then the 3-year retention period for the proposal, plan, or other computation and its supporting records starts at the end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.

74.60 Termination and Enforcement. Purpose of termination and enforcement. Sections 74.61 and 74.62 set forth uniform suspension, termination and enforcement procedures.

74.61 Termination.74.61 a Awards may be terminated in whole or in part only if paragraph a 1, 2, or 3 of this section

applies.74.61 a 1 By the HHS awarding agency, if a recipient materially fails to comply with the terms and

conditions of an award.74.61 a 2 By the HHS awarding agency with the consent of the recipient, in which case the two

parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated.

74.61 a 3 By the recipient upon sending to the HHS awarding agency written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. However, if the HHS awarding agency determines in the case of partial termination that the reduced or modified portion of the award will not accomplish the purposes for which the award was made, it may terminate the award in its entirety.

74.61 b If costs are allowed under an award, the responsibilities of the recipient referred to in 74.71 a, including those for property management as applicable, shall be considered in the termination of the award, and provision shall be made for continuing responsibilities of the recipient after termination, as appropriate.

74.62 Enforcement.74.62 a If a recipient materially fails to comply with the terms and conditions of an award,

whether stated in a Federal statute or regulation, an assurance, an application, or a notice of award, the HHS awarding agency may, in addition to imposing any of the special conditions outlined in 74.14, take one or more of the following actions, as appropriate in the circumstances:

74.62 a 1 Temporarily withhold cash payments pending correction of the deficiency by the recipient or more severe enforcement action by the HHS awarding agency.

74.62 a 2 Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance.

74.62 a 3 Wholly or partly suspend or terminate the current award.74.62 a 4 Withhold further awards for the project or program.74.62 a 5 Take any other remedies that may be legally available.74.62 b In taking an enforcement action, the HHS awarding agency will provide the recipient or

subrecipient an opportunity for such hearing, appeal, or other administrative proceeding to which the recipient or subrecipient is entitled under any statute or regulation applicable to the action. (See also 45 CFR parts 16, 75, and 95.)

74.62 c Costs to a recipient resulting from obligations incurred by the recipient during a

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suspension or after termination of an award are not allowable unless the HHS awarding agency expressly authorizes them in the notice of suspension or termination or subsequently. Other recipient costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if:

74.62 c 1 The costs result from obligations which were properly incurred by the recipient before the effective date of suspension or termination, are not in anticipation of it, and in the case of a termination, are noncancellable; and

74.62 c 2 The costs would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect.

74.62 d The enforcement remedies identified in this section, including suspension and termination, do not preclude a recipient from being subject to debarment and suspension under E.O.s 12549 and 12689 and the HHS implementing regulations at 74.13 of this part and 45 CFR part 76.

74.70 Subpart D. After-the-Award Requirements. Purpose. Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted. Sections 74.71 through 74.73 contain closeout procedures and other procedures for subsequent disallowances and adjustments.

74.71 Closeout procedures.74.71 a Recipients shall submit, within 90 calendar days after the date of completion of the

award, all financial, performance, and other reports as required by the terms and conditions of the award. The HHS awarding agency may approve extensions when requested by the recipient.

74.71 b Unless the HHS awarding agency authorizes an extension, a recipient shall liquidate all obligations incurred under the award not later than 90 calendar days after the funding period or the date of completion as specified in the terms and conditions of the award or in agency implementing instructions.

74.71 c HHS will make prompt payments to a recipient for allowable reimbursable costs under the award being closed out.

74.71 d The recipient shall promptly refund any balances of unobligated cash that HHS has advanced or paid and that is not authorized to be retained by the recipient for use in other projects. 45 CFR part 30 governs unreturned amounts that become delinquent debts.

74.71 e When authorized by the terms and conditions of the award, HHS will make a settlement for any upward or downward adjustments to the Federal share of costs after closeout reports are received.

74.71 f The recipient shall account for any real and personal property acquired with HHS funds or received from the Federal Government in accordance with 74.31 through 74.37.

74.71 g In the event a final audit has not been performed prior to the closeout of an award, HHS retains the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.

74.72 Subsequent adjustments and continuing responsibilities.74.72 a The closeout of an award does not affect any of the following:74.72 a 1 The right of the HHS awarding agency to disallow costs and recover funds on the basis of

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a later audit or other review.74.72 a 2 The obligation of the recipient to return any funds due as a result of later refunds,

corrections, or other transactions.74.72 a 3 Audit requirements in §74.26.74.72 a 4 Property management requirements in 74.31 through 74.37.74.72 a 5 Records retention requirements in 74.53. 74.72 b After closeout of an award, a relationship created under an award may be modified or

ended in whole or in part with the consent of the HHS awarding agency and the recipient, provided the responsibilities of the recipient referred to in 74.72 a, including those for property management as applicable, are considered and provisions made for continuing responsibilities of the recipient, as appropriate.

74.73 Collection of amounts due.74.73 a Any funds paid to a recipient in excess of the amount to which the recipient is finally

determined to be entitled under the terms and conditions of the award constitute a debt to the Federal Government. If not paid within a reasonable period after the demand for payment, the HHS awarding agency may reduce the debt by paragraph a 1, 2, or 3 of this section:

74.73 a 1 Making an administrative offset against other requests for reimbursements.74.73 a 2 Withholding advance payments otherwise due the recipient.74.73 a 3 Taking other action permitted by statute.74.73 b Except as otherwise provided by law, HHS awarding agencies will charge interest on an

overdue debt in accordance with 4 CFR ch. II, “Federal Claims Collection Standards.” (See 45 CFR part 30.)Subpart E—Special Provisions for Awards to Commercial OrganizationsSource: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.

74.80 Scope of subpart. This subpart contains provisions that apply to awards to commercial organizations. These provisions are in addition to other applicable provisions of this part, or they make exceptions from other provisions of this part for awards to commercial organizations.

74.81 Prohibition against profit. Except for awards under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) programs (15 U.S.C. 638), no HHS funds may be paid as profit to any recipient even if the recipient is a commercial organization. Profit is any amount in excess of allowable direct and indirect costs. [59 FR 43760, 8/25/1994, as amended at 61 FR 11747, 3/22/1996]

74.82 Program income. The additional costs alternative described in 74.24 b 1 may not be applied to program income earned by a commercial organization except in the SBIR and STTR programs.

74.83 Effect on intangible property. Data sharing (FOIA) requirements as set forth in §74.36(d)(1) do not apply to commercial organizations. [65 FR 14418, 3/16/2000]

Subpart F—Disputes. Source: 59 FR 43760, 8/25/1994, unless otherwise noted.

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74.90 Final decisions in disputes.74.90 a HHS attempts to promptly issue final decisions in disputes and in other matters affecting

the interests of recipients. However, final decisions adverse to the recipient are not issued until it is clear that the matter cannot be resolved through further exchange of information and views.

74.90 b Under various HHS statutes or regulations, recipients have the right to appeal from, or to have a hearing on, certain final decisions by HHS awarding agencies. (See, for example, subpart D of 42 CFR part 50, and 45 CFR part 16). Paragraphs I [sic; see a] and d of this section set forth the standards HHS expects its member agencies to meet in issuing a final decision covered by any of the statutes or regulations.

74.90 c The decision may be brief but must contain:74.90 c 1 A complete statement of the background and basis of the awarding agency’s decision,

including reference to the pertinent statutes, regulations, or other governing documents; and

74.90 c 2 Enough information to enable the recipient to understand the issues and the position of the HHS awarding agency.

74.90 d The following or similar language (consistent with the terminology of the applicable statutes or regulations) should appear at the end of the decision: “This is the final decision of the (title of grants officer or other official responsible for the decision). It shall be the final decision of the Department unless, within 30 days after receiving this decision, you deliver or mail (you should use registered or certified mail to establish the date) a written notice of appeal to (name and address of appropriate contact, e.g., the office responsible for awarding agency preliminary appeal process or, where none, the Departmental Appeals Board, Department of Health and Human Services, Washington, DC 20201). You shall attach to the notice a copy of this decision, note that you intend an appeal, state the amount in dispute, and briefly state why you think that this decision is wrong. You will be notified of further procedures.” [59 FR 43760, 8/25/1994, as amended at 61 FR 11747, 3/22/1996; 62 FR 38218, 7/17/1997]

74.91 Alternative dispute resolution. HHS encourages its awarding agencies and recipients to try to resolve disputes by using alternative dispute resolution (ADR) techniques. ADR often is effective in reducing the cost, delay and contentiousness involved in appeals and other traditional ways of handling disputes. ADR techniques include mediation, neutral evaluation and other consensual methods. Information about ADR is available from the HHS Dispute Resolution Specialist at the Departmental Appeals Board, U.S. Department of Health and Human Services, Washington, DC 20201.

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Part 74 Appendix A—Contract Provisions

Part 74 AppA—Contract Provisions All contracts awarded by a recipient, including small purchases, shall contain the following provisions as applicable where the cost of the contract is treated as a direct cost of an award:1 Equal Employment Opportunity — All contracts shall contain a provision requiring compliance

with E.O. 11246, “Equal Employment Opportunity,” as amended by E.O. 11375, “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and as supplemented by regulations at 41 CFR part 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.”

2 Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c) — All contracts and subgrants in excess of $2,000 for construction or repair awarded by recipients and subrecipients shall include a provision for compliance with the Copeland “Anti-Kickback” Act, 18 U.S.C. 874, as supplemented by Department of Labor regulations, 29 CFR part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States.” The Act provides that each contractor or subrecipient shall be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he is otherwise entitled. The recipient shall report all suspected or reported violations to the Federal awarding agency.

3 Davis-Bacon Act, as amended (40 U.S.C. 276a to a–7) — When required by Federal program legislation, all construction contracts awarded by the recipients and subrecipients of more than $2000 shall include a provision for compliance with the Davis-Bacon Act, 40 U.S.C. 276a to a–7, and as supplemented by Department of Labor regulations, 29 CFR part 5, “Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction.” Under this Act, contractors shall be required to pay wages to laborers and mechanics at a rate not less than the minimum wages specified in a wage determination made by the Secretary of Labor. In addition, contractors shall be required to pay wages not less than once a week. The recipient shall place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation and the award of a contract shall be conditioned upon the acceptance of the wage determination. The recipient shall report all suspected or reported violations to the HHS awarding agency.

4 Contract Work Hours and Safety Standards Act (40 U.S.C. 327–333) — Where applicable, all contracts awarded by recipients in excess of $100,000 for construction contracts and for other contracts that involve the employment of mechanics or laborers shall include a provision for compliance with sections 102 and 107 of the Contract Work Hours and Safety Standards Act, 40 U.S.C. 327–333, as supplemented by Department of Labor regulations, 29 CFR part 5. Under section 102 of the Act, each contractor shall be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than 1 ½ times the basic rate of pay for all hours worked in excess of 40 hours in the work week. Section 107 of the Act is applicable to construction work and provides that no laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.

5 Rights to Inventions Made Under a Contract or Agreement — Contracts or agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any further implementing regulations issued by HHS.

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Part 74 AppA—Contract Provisions 6 Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as amended

(33 U.S.C. 1251 et seq.) — Contracts and subgrants of amounts in excess of $100,000 shall contain a provision that requires the recipient to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act, 42 U.S.C. 7401 et seq., and the Federal Water Pollution Control Act, as amended 33 U.S.C. 1251 et seq. Violations shall be reported to the HHS and the appropriate Regional Office of the Environmental Protection Agency.

7 Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) — Contractors who apply or bid for an award of more than $100,000 shall file the required certification. Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any Federal agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient. (See also 45 CFR part 93).

8 Debarment and Suspension (E.O.s 12549 and 12689) — Certain contracts shall not be made to parties listed on the nonprocurement portion of the General Services Administration’s “Lists of Parties Excluded from Federal Procurement or Nonprocurement Programs” in accordance with E.O.s 12549 and 12689, “Debarment and Suspension.” (See 45 CFR part 76.) This list contains the names of parties debarred, suspended, or otherwise excluded by agencies, and contractors declared ineligible under statutory authority other than E.O. 12549. Contractors with awards that exceed the simplified acquisition threshold shall provide the required certification regarding their exclusion status and that of their principals prior to award. [59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996; 62 FR 41878, Aug. 4, 1997]

Appendixes B–D to Part 74 [Reserved].

Appendix E to Part 74—Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts With Hospitals.

Appendixes F–H to Part 74 [Reserved]

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http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=56e173b8085fbb1cc54194035d19802c&rgn=div9&view=text&node=45:1.0.1.1.35.6.11.3.11&idno=45

Part 80-Nondiscrimination Under Programs Receiving Federal Assistance Through the Department of Health, Education, and Welfare Effectuation of Title VI of the Civil Rights Act of 1964 (ND)

Part 80–Nondiscrimination under Programs Receiving Federal Assistance through the Department of Health, Education, and Welfare Effectuation of Title VI of the Civil Rights Act of 1964 (ND)

Part 80 Authority: The provisions of this Part 80 issued under Sec. 602, 78 Stat. 252; 42 U.S.C. 2000d-1, unless otherwise noted. Source: The provisions of this Part 80 appear at 29 F.R. 16298, Dec. 4, 1964; 29 F.R. 16988, Dec. 11, 1964; 30 F.R. 35, Jan. 5, 1965 unless otherwise noted.

80.1 Purpose. The purpose of this part is to effectuate the provisions of Title VI of the Civil Rights Act of 1964 (hereafter referred to as the “Act”) to the end that no person in the United States shall; on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity receiving Federal financial assistance from the Department of Health, Education, and Welfare [sic; now Department of Health and Human Services]. [Sec. 601, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d) [29 FR 16298, 12/4/1964, as amended at 38 FR 17982, 7/5/1973]

80.2 Application of this regulation. This regulation applies to any program for which Federal financial assistance is authorized to be extended to a recipient under a law administered by the Department, including the Federal assisted programs and activities listed in Appendix A of this regulation. It applies to money paid, property transferred, or other Federal financial assistance extended after the effective date of the regulation pursuant to an application approved prior to such effective date. This regulation does not apply to

80.2 a any Federal financial assistance by way of insurance or guaranty contracts,80.2 b money paid, property transferred, or other assistance extended before the effective date of this

regulation,80.2 c the use of any assistance by any individual who is the ultimate beneficiary under any such program,

or any such program, or80.2 d any employment practice, under any such program, or any employer, employment agency, or labor

organization, except to the extent described in 80.3. The fact that a type of Federal assistance is not listed in Appendix A shall not mean, if Title VI of the Act is otherwise applicable, that a program is not covered. Federal financial assistance under status now in force or hereinafter enacted may added to this list by notice published in the Federal Register. (Secs. 602, 604, Civil Rights Act of 1964; 78 Stat. 252, 253; 42 U.S.C. 2000d-1, 2000d-3) [38 FR 17979, July 5, 1973]

80.3 Discrimination prohibited.80.3 a General. No person in the United States shall, on the ground of race, color, or national origin be

excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program to which this part applies.

80.3 b Specific discriminatory actions prohibited.80.3 b 1 A recipient under any program to which this part applies may not, directly or through contractual or

other arrangements, on ground of race, color, or national origin:80.3 b 1 i Deny an individual any service, financial aid, or other benefit provided in a different manner, from

that provided under the program;80.3 b 1 ii Provide any service, financial aid, or other benefit to an individual which is different, or is provided

in a different manner, from that provided to others under the program;

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Part 80–Nondiscrimination under Programs Receiving Federal Assistance through the Department of Health, Education, and Welfare Effectuation of Title VI of the Civil Rights Act of 1964 (ND)80.3 b 1 iii

Subject an individual to segregation or separate treatment in any matter related to his receipt of any service, financial aid, or other benefit under the program;

80.3 b 1 iv

Restrict an individual in any way in the enjoyment of any advantage or privilege enjoyed by others receiving any service, financial aid, or other benefit under the program;

80.3 b 1 v Treat an individual differently from others in determining whether he satisfies any admission, enrollment, quota, eligibility, membership or other requirement or condition which individuals must meet in order to be provided any service, financial aid, or other benefit provided under the program;

80.3 b 1 vi

Deny an individual an opportunity to participate in the program through the provision of services or otherwise or afford him an opportunity to do so which is different from that afforded others under the program (including the opportunity to participate in the program as an employee but only to the extent set forth in paragraph c of this section).

80.3 b 1 vii

Deny a person the opportunity to participate as a member of a planning or advisory body which is an integral part of the program.

80.3 b 2 A recipient, in determining the types of services, financial aid, or other benefits, or facilities which will be provided under any such program, or the class of individuals to whom, or the situations in which, such services, financial aid, other benefits, or facilities will be provided under any such program, or the class of individuals to be afforded an opportunity to participate in any such program, may not, directly or through contractual or other arrangements, utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program as respect individuals of a particular race, color, or national origin.

80.3 b 3 In determining the site or location of a facilities, an applicant or recipient may not make selections with the effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any programs to which this regulation applies, on the ground of race, color, or national origin, or with the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Act or this regulation.

80.3 b 4 As used in this section, the services, financial aid, or other benefits provided under a program receiving Federal financial assistance shall be deemed to include any service, financial aid, or other benefits provided in or through a facility provided with the aid of Federal financial assistance.

80.3 b 5 The enumeration of specific forms of prohibited discrimination in this paragraph and paragraph c of this section does not limit the generality of the prohibition in paragraph a of this section.

80.3 b 6 i In administering a program regarding which the recipient has previously discriminated against persons on the ground of race, color, or national origin, the recipient must take affirmative action to overcome the effects of prior discriminations.

80.3 b 6 ii Even in the absence of such prior discrimination, a recipient in administering a program may take affirmative action to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin.

80.3 c Employment practices.80.3 c 1 Where a primary objective of the Federal financial assistance to a program to which this regulation

applies is to provide employment, a recipient may not (directly or through contractual or other arrangements) subject an individual to discrimination on the ground of race, color, or national origin in its employment practices under such program (including recruitment or recruitment advertising, employment, layoff or termination, upgrading, demotion, or transfer, rates of pay or other forms of

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compensation, and use of facilities), including programs where a primary objective of the Federal financial assistance is

80.3 c 1 i to reduce the unemployment of such individuals or to help them through employment to meet subsistence needs,

80.3 c 1 ii to assist such individuals through employment to meet expenses incident to the commencement or continuation of their education or training,

80.3 c 1 iii

to provide work experience which contributes to the education or training of such individuals, or

80.3 c 1 iv to provide remunerative activity to such individuals who because of handicaps cannot be readily absorbed in the competitive labor market. The following, under existing laws, have one of the above objectives as a primary objective:

80.3 c 1 iv a

Projects under the Public Works Acceleration Act of 1963, Public Law 87-658, 42 U.S.C. 2641-2643.

80.3 c 1 iv b

Work-study under the Vocational Education Act of 1963, as amended, 20 U.S.C. 1371-1374.

80.3 c 1 iv c

Programs assisted under laws listed in Appendix A as respects employment opportunities provided thereunder, or in facilities provided thereunder, which are limited, or for which preference is given, to students, fellows, or other persons in training for the same or related employments.

80.3 c 1 iv d

Assistance to rehabilitation facilities under the Vocational Rehabilitation Act, 29 U.S.C. 32-34, 41a and 41b

80.3 c 2 The requirements applicable to construction employment under any such program shall be those specified in or pursuant to Part III of Executive Order 11246 or any Executive Order which supersedes it.

80.3 c 3 Where a primary objective of the Federal financial assistance is not to provide employment, but discrimination on the ground of race, color, or national origin, in the employment practices of the recipient or other persons subject to the subject to the regulation tends, on the ground of race, color, or national origin, to exclude individuals from participation in, to deny them benefits of, or to subject them to discrimination under any program to which this regulation applies, the foregoing provisions of this paragraph c shall apply to employment practices of the recipient or other persons subject to the subject to the regulation, to the extent necessary to assure equality of opportunity to, and nondiscriminatory treatment of, beneficiaries.

80.3 d Indian Health and Cuban Refugee Services. An individual shall not be deemed subjected to discrimination by reason of his exclusion from the benefits of a program limited by Federal law to individuals of a particular race, color, or national origin different from his.

80.3 e Medical Emergencies. Notwithstanding the foregoing provision of this section, a recipient of Federal financial assistance shall not be deemed to have failed to comply with paragraph a of this section if immediate provision of a service or other benefit to an individual is necessary to prevent his death or serious impairment of his health, and such service or other benefit cannot be provided except by or through a medical institution which refuses or fails to comply with paragraph a of this section. (Secs. 601, 602, 604, Civil Rights Act of 1964; 78 Stat. 252, 253, 42 U.S.C. 2000d, 2000d-1, 2000d-3) [29 FR 16298, 12/4/1964, as amended at 38 FR 17979, 17982, 7/5/1973]

80.4 Assurances required.80.4 a General.

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Part 80–Nondiscrimination under Programs Receiving Federal Assistance through the Department of Health, Education, and Welfare Effectuation of Title VI of the Civil Rights Act of 1964 (ND)80.4 a 1 Every application for Federal financial assistance to carry out a program to which this part applies,

except a program to which paragraph b of this section applies, and every application for Federal financial assistance to provide a facility shall, as a condition to its approval and the extension of any Federal financial assistance pursuant to the application, contain or be accompanied by an assurance that the program will be conducted or the facility operated in compliance with all requirements imposed by or pursuant to this part. In the case of an application for Federal financial assistance to provide real property or structures thereon, the assurance shall obligate the recipient, or, in case of a subsequent transfer, the transferee, for the period during which the real property or structures are used for a purpose for which Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits. In the case of personal property the assurance shall obligate the recipient for the period during which he retains ownership or possession of the property. In all other cases the assurance shall obligate the recipient for the period during which Federal financial assistance is extended pursuant to the application. The responsible Department official shall specify the form of the foregoing assurances for each program, and the extent to which like assurances will be required of subgrantees, contractors and subcontractors, transferees, successors in interest, and other participants in the program. Any such assurance shall include provisions which give the United States a right to seek its judicial enforcement.

80.4 a 2 Where Federal financial assistance is provided in the form of a transfer of real property or interest therein from the Federal Government the instrument effecting or recording the transfer shall contain a covenant running with the land to assure nondiscrimination for the period during which the real property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits. Where no transfer of property is involved but property is improved with Federal financial assistance, the recipient shall agree to include such a covenant to any subsequent transfer of the property. Where the property is obtained from the Federal Government, such covenant may also include a condition coupled with a right to be reserved by the Department to revert title to the property in the event of a breach of the covenant where, in the discretion of the responsible Department official, such a condition and right of reverter is appropriate to the statute under which the real property is obtained and to the nature of the grant and the grantee. In the event a transferee of real property proposes to mortgage or otherwise encumber the real property as security for financing construction of new, or improvement of existing, facilities on such property for the purposes for which the property was transferred, the responsible Department official may agree, upon request of the transferee and if necessary to accomplish such financing, and upon such conditions as he deems appropriate, to forebear the exercise of such right to revert title for so long as the lien of such mortgage or other encumbrance remains effective.

80.4 b Continuing State programs. Every application by a State or a State agency to carry out a program involving continuing Federal financial assistance to which this regulation applies (including the Federal financial assistance listed in Part 2 of Appendix A) shall as a condition to its approval and the extension of any Federal financial assistance pursuant to the application

80.4 b 1 contain or be accompanied by a statement that the program is (or, in the case of a new program, will be) conducted in compliance with all requirements imposed by or pursuant to this regulation, and

80.4 b 2 provide or be accompanied by provision for such methods of administration for the program as are found by the responsible Department official to give reasonable assurance that the applicant and all recipients of Federal financial assistance under such program will comply with all requirements imposed by or pursuant to this regulation.

80.4 c Elementary and secondary schools. The requirements of paragraph a or b of this section with respect to any elementary or secondary school or school system shall be deemed to be satisfied if

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such school or school system80.4 c 1 is subject to a final order of a court of the United States for the desegregation of such school or school

system, and provides an assurance that it will comply with such order, or80.4 c 2 submits a plan for the desegregation of such school or school system which the responsible

Department official determines is adequate to accomplish the purposes of the Act and this part, at the earliest practicable time, and provides reasonable assurance that it will carry out such plan; in any case of continuing Federal financial assistance the responsible Department official may reserve the right to redetermine, after such period as may be specified by him, the adequacy of the plan to accomplish the purposes of the Act and the regulation in this part. In any case in which a final order of a court of the United States for the desegregation of such school or school system is entered after submission of such a plan, such plan shall be revised to conform to such final order, including any future modification of such order.

80.4 d Assurance from institutions.80.4 d 1 In the case of any application for Federal financial assistance to an institution of higher education

(including assistance for construction, for research, for special training project, for student loans for any other purpose), the assurance required by this section shall extend to admission practices and to all other practices relating to the treatment of students.

80.4 d 2 The assurance required with respect to an institution of higher education, hospital, or any other institution, insofar as the assurance relates to the institution's practices with respect to admission or other treatment of individuals, shall be applicable to the entire institution unless the applicant establishes, to the satisfaction of the responsible Department official, that the institution will in no way affect its practices in designated parts or programs of the institution for which Federal financial assistance is sought, or the beneficiaries of or participants in such program. If in any such case the assistance sought is for the construction of a facility, the assurance shall in any event extend to the entire facility and to facilities operated in connection therewith. (Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d, 2000d-1. Sec. 182; 80 Stat. 1209; 42 U.S.C. 2000d-5) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 9167; 38 FR 17930, 17982, July 5, 1973]

80.5 Illustrative application. The following examples will illustrate the programs aided by Federal financial assistance of the Department. (In all cases the discrimination prohibited is discrimination on the ground of race, color, or national origin prohibited by Title VI of the Act and this regulation, as a condition of the receipt of Federal financial assistance).

80.5 a In Federally assisted programs for the provision of health or welfare services, discrimination in the selection or eligibility of individuals to receive the services, and segregation or other discriminatory practices in the manner of providing them, are prohibited. This prohibition extends to all facilities and services provided by the grantee under the program or, if the grantee is a State, by a political subdivision of the State. It extends also to services purchased or otherwise obtained by the grantee (or political subdivision) from hospitals, nursing homes, schools, and similar institutions for beneficiaries of the program, and to the facilities in which such services are provided, subject however, to the provisions of 80.3 e.

80.5 b In Federally-affected area assistance (P.L. 815 and P.L. 874) for construction aid and for general support of the operation of elementary or secondary schools, or in more limited support to such schools such as for the acquisition of equipment, the provision of vocational education, or the provision of guidance and counseling services, discrimination by the recipient school district in any of its elementary or secondary schools in the admission of students, or in treatment of its students in any aspect of the educational process, is prohibited. In this and the following illustrations the

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prohibition of discrimination in the treatment of students or other trainees includes prohibitions of discrimination among students or trainees the availability or use any academic, dormitory, eating, recreational, or other facilities of the grantee or other recipient.

80.5 c In a research, training, demonstration, or other grant to a university for activities to be conducted in a graduate school, discrimination in the admission and treatment of students in the graduate school is prohibited, and the prohibition extends to the entire university unless it satisfies the responsible Department official that practices with respect to other parts or programs of the university will not interfere, directly or indirectly, with fulfillment of the assurance required with respect to the graduate school.

80.5 d In a training grant to a hospital or other nonacademic institution, discrimination is prohibited in the selection of individuals to be trained and in their treatment by the grantee during their training. In a research or demonstration grant to such an institution discrimination is prohibited with respect to any educational activity and any provision of medical or other services and any financial aid to individuals incident to the program.

80.5 e In grants to assist in the construction of facilities for the provision of health, educational or welfare services, assurances will be required that services will be provided without discrimination, to the same extent that discrimination would be prohibited as a condition of Federal operating grants for the support of such services. Thus, as a condition of grants for the construction of academic, research, or other facilities at institutions of higher education, assurances will be required that there will be no discrimination in the admission or treatment of students. In case of hospital construction grants the assurance will apply to patients, to interns, residents, students nurses, and other trainees, and to the privilege of physicians, dentists, and other professionally qualified persons to practice in the hospital, and will apply to the entire facility for which, or for a part of which, the grant is made, and to facilities operated in connection therewith. In other construction grants the assurances required will similarly be adapted to the nature of the activities to be conducted in the facilities for construction of which the grants have been authorized by Congress.

80.5 f Upon transfers of real or personal surplus property for health or educational uses, discrimination is prohibited to the same extent as in the case of grants for the construction of facilities or the provision of equipment for like purposes.

80.5 g Each applicant for a grant for the construction of educational television facilities is required to provide an assurance that it will, in its broadcast services, give due consideration to the interests of all significant racial or ethnic groups within the population to be served by the applicant.

80.5 h A recipient may not take action that is calculated to bring about indirectly what this regulations forbids it to accomplish directly. Thus, a State, in selecting or approving projects or sites for the construction of public libraries which will receive Federal financial assistance, may not base its selections or approvals on criteria which have the effect of defeating or of substantially impairing accomplishments of the objectives of the Federal assistance as respects individuals of a particular race, color, or national origin.

80.5 i In some situations, even though past discriminatory practices attributable to a recipient or applicant have been abandoned, the consequences of such practices continue to impede the full availability of a benefit. If the efforts required of the applicant or recipient under 80.6 d, to provide information as to the availability of the program or activity and the rights of beneficiaries under this regulation, have failed to overcome these consequences, it will become necessary under the requirement stated in i of 80.3 b 6 for such applicant or recipient to take additional steps to make the benefits fully available to racial and nationally groups previously subject to discrimination. This action might take the form, for

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example, of special arrangements for obtaining referrals or making selections which will insure that groups previously subjected to discrimination are adequately served.

80.5 j Even though an applicant or recipient has never used discriminatory policies, the services and benefits of the program or activity it administers may not in fact be equally available to some racial or nationally recipient may properly give special consideration to race, color, or national origin to make the benefits of its program more widely available to such groups, not then being adequately served. For example, where a university is not adequately serving members of a particular racial or nationally group, it may establish special recruitment policies to make its program better known and more readily available to such group, and take another group with more adequate service. (Sec. 601, 60, Civil Rights Act of 1964; 78 Stat. 25; 42 U.S.C. 2000d, 2000d-1) [29 FR 16298, 12/4/1964, as amended at 38 FR 17980, 17982, 7/5/1973.]

80.6 Compliance information.80.6 a Cooperation and assistance. The responsible Department official shall to the fullest extent

practicable seek the cooperation of recipients in obtaining compliance with this part and shall provide assistance and guidance to recipients to help them comply voluntarily with this part.

80.6 b Compliance reports. Each recipient shall keep such records and submit to the responsible Department official or his designee timely, complete and accurate compliance reports at such times, and in such form and containing such information, as the responsible Department official or his designee may determine to be necessary to enable him to ascertain whether the recipient has complied or is complying with this part. For example, recipients should have available for the Department racial and ethnic data showing the extent to which members of minority groups are beneficiaries of and participants in Federally-assisted programs. In the case of any program under which a primary recipient extends Federal financial assistance to any other recipient, such other recipient shall also submit such compliance reports to the primary recipient as may be necessary to enable the primary recipient to carry out its obligations under this part.

80.6 c Access to sources of information. Each recipient shall permit access by the responsible Department official or his designee during normal business hours to such of its books, records, accounts, and other sources of information, and its facilities as may be pertinent to ascertain compliance with this part. Where any information required of a recipient is in the exclusive possession of any other agency, institution or person shall fail or refuse to furnish this information the recipient shall so certify in its report and shall set forth what efforts it has made to obtain the information. Asserted considerations of privacy or confidentially may operate to bar the Department from evaluating or seeking to enforce compliance with this Part. Information of a confidential nature obtained in connection with compliance evaluation or enforcement shall not be disclosed except where necessary in formal enforcement proceedings or where otherwise required by law.

80.6 d Information to beneficiaries and participants. Each recipient shall make available to participants, beneficiaries, and other interested persons such information regarding the provisions of this regulation and its applicability to the program for which the recipient receives Federal financial assistance, and make such information available to them in such manner, as the responsible Department official finds necessary to apprise such persons of the protections against discrimination assured them by the Act and this regulation. (Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d, 2000d-1) [29 FR 16298, 12/4/1964, as amended at 32 FR 4555, 10/19/1967; 38 FR 17981, 17982, 7/5/1973]

80.7 Conduct of investigations.80.7 a Periodic compliance reviews. The responsible Department official or his designee shall from time to

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time review the practices of recipients to determine whether they are complying with this part.80.7 b Complaints. Any person who believes himself or any specific class of individuals to be subjected to

discrimination prohibited by this part may be himself or by a representative file with the responsible Department official or his designee a written complaint. A compliant must be filed not later than 180 days from the date of the alleged discrimination, unless the time for filing is extended by the responsible Department official or his designee.

80.7 c Investigations. The responsible Department official or his designee will make a prompt investigation whenever a compliance review, report, complaint, or any other information indicates a possible failure to comply with this part. The investigation should include, where appropriate, a review of the pertinent practices and policies of the recipient, the circumstances under which the possible noncompliance with this part occurred, and other factors relevant to a determination as to whether the recipient has failed to comply with this part.

80.7 d Resolution of matters.80.7 d 1 If an investigation pursuant to paragraph c of this section indicates a failure to comply with this part,

the responsible Department official or his designee will so informal the recipient and the matter will be resolved by informal means whenever possible. If it has been determine that the matter cannot be resolved by information means, action will be taken as provided for in 80.8.

80.7 d 2 If an investigation does not warrant action pursuant to subparagraph 1 of this paragraph the responsible Department official or his designee will so inform the recipient and the complainant, if any, in writing.

80.7 e Intimidatory or retaliatory acts prohibited. No recipient or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege secured by Section 601 of the Act or this part, or because he has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding or hearing under this part. The identity of complainants shall be kept confidential except to the extent necessary to carry out the purposes of this part, including the conduct of any investigation, hearing, or judicial proceeding arising thereunder. (Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d, 2000d-1) [29 FR 16298, 12/4/1964, as amended at 38 FR 17981, 17982, 7/5/1973]

80.8 Procedure for effecting compliance.80.8 a General. If there appears to be a failure or threatened failure to comply with this regulation, and if the

noncompliance or threatened noncompliance cannot be corrected by informal means, compliance with this part may be effected by the suspension or termination of or refusal to grant or to continue Federal financial assistance or by any other means authorized by law. Such other means may include, but are not limited to,

80.8 a 1 a reference to the Department of Justice with a recommendation that appropriate proceedings be brought to enforce any rights of the United States under any law of the United States (including other titles of the Act), or any assurance or other contractual undertaking, and

80.8 a 2 any applicable proceeding under State or local law.80.8 b Noncompliance with 80.4. If an applicant fails or refuses to furnish under 80.4 or otherwise fails or

refuses to comply with a requirement imposed by or pursuant to that section Federal financial assistance may be refused in accordance with the procedures of paragraph c of this section. The Department shall not be required to provide assistance in such a case during the pendency of the administrative proceedings under such paragraph except that the Department shall continue assistance during the pendency of such proceedings where such assistance is due and payable pursuant to an

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application therefor approved prior to the effective date of this part.80.8 c Termination of or refusal to grant or to continue Federal financial assistance. No order

suspending, terminating or refusing to grant or continue Federal financial assistance shall become effective until

80.8 c 1 the responsible Department official has advised the applicant or recipient of his failure to comply and has determined that compliance cannot be secured by voluntary means,

80.8 c 2 there has been an express finding on the record, after opportunity for hearing, of a failure by the applicant or recipient to comply with a requirement imposed by or pursuant to this part,

80.8 c 3 the expiration of 30 days after the Secretary has filed with the committee of the House and the committee of the Senate having legislative jurisdiction over the program involved, a full written report of the circumstances and the grounds for such action. Any action to suspend or terminate or to refuse to grant or to continue Federal financial assistance shall be limited to the particular political entity, or part thereof, or other applicant or recipient as to whom such a finding has been made and shall be limited in its effect to the particular program, or part thereof, in which such noncompliance has been so found.

80.8 d Other means authorized by law. No action to effect compliance by any other means authorized by law shall be taken until

80.8 d 1 the responsible Department official has determined that compliance cannot be secured by voluntary means,

80.8 d 2 the recipient or other person has been notified of its failure to comply and of the action to be taken to effect compliance, and

80.8 d 3 the expiration at least 10 days from the mailing of such notice to the recipient or other person. During this period of at least 10 days additional efforts shall be made to persuade the recipient or other person to comply with the regulation or other person to comply with the regulation and to take such corrective action as may be appropriate. (Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d, 2000d-1, Sec. 182, 80 Stat. 1209; 42 U.S.C. 2000d-5) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14556, Oct. 19, 1967; 38 FR 17982, July 5, 1973]

80.9 Hearings.80.9 a Opportunity for hearing. Whenever an opportunity for a hearing is required by 80.8 c, reasonable

notice shall be given by registered or certified mail, return receipt requested, to the affected applicant or recipient. This notice shall advise the applicant or recipient of the action proposed to be taken, the specific provision under which the proposed action against it is to be taken and the matters of fact or law asserted as the basis for this action, and wither

80.9 a 1 fix a date not less than 20 days after the date of such notice within which the applicant or recipient may request of the responsible Department official that the matter be scheduled for hearing or

80.9 a 2 advise the applicant or recipient that the matter in question has been set down for hearing at a stated place and time. The time and place so fixed shall be reasonable and shall be subject to change for cause. The complainant, if any, shall be advised of the time and place of the hearing. An applicant or recipient may waive a hearing and submit written information and argument for the record. The failure of an applicant or recipient to request a hearing for which a date has been set shall be deemed to be a waiver of the right to a hearing under Section 602 of the Act and 80.8 c of this regulation and consent to the making of a decision on the basis of such information as may be filed as the record.

80.9 b Time and place of hearing. Hearings shall be held at the offices of the Department in Washington,

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D.C., at the time fixed by the responsible Department official unless he determines that the convenience of the applicant or recipient or of the Department requires that another place be selected. Hearings shall be held before a hearing examiner designated in accordance with 5 U.S.C. 3105 and 3344 (section 11 of the Administrative Procedure Act.)

80.9 c Right to counsel. In all proceedings under this section, the applicant or recipient and the Department shall have the right to be represented by counsel.

80.9 d Procedures, evidence, and record.80.9 d 1 The hearing, decision, and any administrative review thereof shall be conducted in conformity with

sections 5-8 of the Administrative Procedure Act, and in accordance with such rules of procedure as are proper (and not inconsistent with this section) relating to the conduct of the hearing, giving of notices subsequent to those provided for in paragraph a of this section, taking of testimony, exhibits, arguments, and briefs, requests for findings, and other related matters. Both the Department and the applicant or recipient shall be entitled to introduce all relevant evidence on the issues as stated in the notice for hearing or as determined by the officer conducting the hearing at the outset of or during the hearing. Any person (other that a Government employee considered to be on official business) who, having been invited or requested to appear and testify as a witness on the Government's behalf, attends at a time and place scheduled for a hearing provided for by this part, may be reimbursed for his travel and actual expenses of attendance in an amount not to exceed the amount payable under the standardized travel regulations to a Government employee traveling on official business.

80.9 d 2 Technical rules of evidence shall not apply to hearings conducted pursuant to this part, but rules or principles designed to assure production of the most credible evidence available and to subject testimony to test by cross-examination shall be applied where reasonably necessary by the officer conducting the hearing. The hearing officer may exclude irrelevant, immaterial, or unduly repetitious evidence. All documents and other evidence offered or taken for the record shall be open to examination by the parties and opportunity shall be given to refute facts and arguments advanced on either side of the issues. A transcript shall be made of the oral evidence except to the extent the substance thereof is stipulated for the record. All decisions shall be based upon the hearing record and written findings shall be made.

80.9 e Consolidated or Joint Hearings. In cases in which the same or related facts are asserted to constitute noncompliance with this regulation with respect to two or more programs to which this part applies, or noncompliance with this part and the regulations of one or more other Federal departments or agencies issued under Title VI of the Act, the responsible Department official may, by agreement with such departments or agencies where applicable, provide for the conduct of consolidated or joint hearings of rules of procedures not inconsistent with this part. Final decisions in such cases, insofar as this regulation is concerned, shall be made in accordance with 80.10. (Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d-1) [29 FR 16298, 12/4/1964, as amended at 32 FR 14555, 10/19/196#; 38 FR 17981, 17982, July 5, 1973]

80.10 Decisions and notices.80.10 a Decisions by hearing examiners. After a hearing is held by a hearing examiner such hearing

examiner shall either make an initial decision, if so authorized, or certify the entire recording including his recommended findings and proposed decision to the reviewing authority for a final decision, and a copy of such initial decision or certification shall be mailed to the applicant or recipient and to the complainant, if any. Where the initial decision referred to in this paragraph or in paragraph c of this section is made by the hearing examiner, the applicant or recipient or the counsel for the Department may, within the period provided for in the rules of procedure issued by the

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responsible Department official, file with the reviewing authority shall review the initial decision, with his reasons therefor. Upon the filing of such exceptions the reviewing authority shall review the initial decision and issue its own decision thereof including the reasons therefor. In the absence of exceptions the initial decision shall constitute the final decision, subject to the provisions of paragraph e of this section.

80.10 b Decisions on record or review by the reviewing authority. Whenever a record is certified to the reviewing authority for decision or it reviews the decision of a hearing examiner pursuant to paragraph a or c of this section, the applicant or recipient shall be given reasonable opportunity to file with it briefs or other written statements of its contentions, and a copy of the final decision of the reviewing authority shall be given in writing to the applicant or recipient and to the complainant, if any.

80.10 c Decisions on record where a hearing is waived. Whenever a hearing is waived pursuant to 80.9 a the reviewing authority shall make its final decision on the record or refer the matter to a hearing examiner for an initial decision to be made on the record. A copy of such decision shall be given in writing to the applicant or recipient, and to the complainant, if any.

80.10 d Rulings required. Each decision of hearing examiner or reviewing authority shall set forth a ruling on each finding, conclusion, or exception presented, and shall identify the requirement or requirements imposed by or pursuant to this part with which it is found that the applicant or recipient has failed to comply.

80.10 e Review in certain cases by the Secretary. If the Secretary has not personally made the final decision referred to in paragraph a, b, or c of this section, a recipient or applicant or the counsel for the Department may request the Secretary to review a decision of the Reviewing Authority in accordance with rules of procedure issued by the responsible Department official. Such review is not a matter of right and shall be granted only where the Secretary determines there are special and important reasons therefor. The Secretary may grant or deny such request, in whole or in part. He may also review such a decision upon his own motion in accordance with rules of procedure issued by the responsible Department official. In the absence of a review under this paragraph, a final decision referred in paragraph a, b, or c of this section shall become the final decision of the Department when the Secretary transmits it as such to Congressional committees with the report required under Section 60 of the Act. Failure of an applicant or recipient to file an exception with the Reviewing Authority or to request review under this paragraph shall not be deemed a failure to exhaust administrative remedies for the purpose of obtaining judicial review.

80.10 f Content of orders. The final decision may provide for decision may provide for suspension or termination of, or refusal to grant or continue Federal financial assistance, in whole or in part, to which this regulation applies, and may contain such terms, conditions, and other provisions as are consistent with and will effectuate the purposes of the Act and this regulation, including provision designed to assure that no Federal financial assistance to which this regulation applies will thereafter be extended under such law or laws to the applicant or recipient determined by such decision to be in default in its performance of an assurance given by it pursuant to this regulation, or to have otherwise failed to comply with this regulation unless and until it corrects its noncompliance and satisfies the responsible Department official that it will fully comply with this regulation.

80.10 g Post-termination proceedings.80.10 g 1 An applicant or recipient adversely affected by an order issued under paragraph f of this section shall

be restored to full eligibility to receive Federal financial assistance if it satisfies the terms and conditions of that order for such eligibility or if it brings itself into compliance with this part and

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provides reasonable assurances that it will fully comply with this part. An elementary or secondary school or school system which is unable to file an assurance of compliance with 80.3 shall be restored to full eligibility to receive Federal financial assistance, if it files a court order or a plan for desegregation which meets the requirements of 80.4 c, and provides reasonable assurance that it will comply with the court order or plan.

80.10 g 2 Any applicant or recipient adversely affected by an order entered pursuant to paragraph f of this section may at any time request the responsible Department official to restore fully its eligibility to receive Federal financial assistance. Any such request shall be supported by information showing that the applicant or recipient has met the requirements of subparagraph 1 of the paragraph. If the responsible Department official determines that those requirements have been satisfied, he shall restore such eligibility.

80.10 g 3 If the responsible Department official denies any such request, the applicant or recipient may submit a request for a hearing in writing, specifying why it believes such official to have been in error. It shall thereupon given an expeditious hearing, with a decision on the record, in accordance with rules of procedure issued by the responsible Department official. The applicant or recipient will be restored to such eligibility if it proves at such hearing that it satisfied the requirements of subparagraph 1 of this paragraph. While proceedings under this paragraph are pending, the sanctions imposed by the order issued under paragraph f of this section shall remain in effect. (Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d-1) [29 FR 16298, 12/4/1964, as amended at 32 FR 14555, 10/19/1967; 38 FR 17981, 17982, 7/5/1973]

80.11 Judicial review. Action taken pursuant to section 602 of the Act is subject to judicial review as provided in section 603 of the Act. (Sec. 603, 78 Stat. 253; 42 U.S.C. 2000d-2) [29 F.R. 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967]

80.12 Effect on other regulations, forms, and instructions.80.12 a Effect on other regulations. All regulations, orders, or like directions heretofore issued by any officer

of the Department which impose requirements designed to prohibit any discrimination against individuals on the ground of race, color, or national origin under any program to which this regulation applies, and which authorize the suspension or termination of or refusal to grant or to continue Federal financial assistance to any applicant for or recipient of assistance for failure to comply with such requirements, are hereby superseded to the extent that such discrimination is prohibited by this regulation, except that nothing in this regulation shall be deemed to relieve any person of any obligation assumed or imposed under any person of any such superseded regulation, order, instruction, or like direction prior to the effective date of this regulation. Nothing in this regulation, however, shall be deemed to supersede any of the following (including future amendments thereof):

80.12 a 1 The “Standards for a Merit System of Personnel Administration,” issued jointly by the Secretaries of Defense, of Health, Education, and Welfare, and of Labor, 45 CFR Part 70;

80.12 a 2 Executive Order 11063 and regulations issued thereunder, or any other regulations or instructions, insofar as such Order, regulations, or instructions prohibit discrimination on the ground of race, color, or national origin in any program or situation to which this regulation in inapplicable, or prohibit discrimination on any other ground; or

80.12 a 3 requirements for Emergency School Assistance as published in 35 FR 13442 and codified as 45 CFR Part 181.

80.12 b Forms and instructions. The responsible Department official shall issue and promptly make available to interested persons forms and detailed instructions and procedures for effectuating this part.

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Part 80–Nondiscrimination under Programs Receiving Federal Assistance through the Department of Health, Education, and Welfare Effectuation of Title VI of the Civil Rights Act of 1964 (ND)80.12 c Supervision and coordination. The responsible Department official may from time to time assign to

officials of other departments or agencies of the Government with the consent of such departments or agencies, responsibilities in connection with the effectuation of the purposes of Title VI of the Act and this regulation (other than responsibility for review as provided in 80.10 e), including the achievements of effective coordination and maximum uniformity within the Department and within the Executive Branch of the Government in the application of Title VI and this regulation to similar programs and in similar situations. Any action taken, determination made, or requirement imposed by an official of another Department or Agency acting pursuant to an assignment of responsibility under this subsection shall have the same effect as though such action had been taken by the responsible official of this Department. (Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d-1) [29 FR 16298, 12/4/1964, as amended at 32 FR 14555, 10/19/1967; 38 FR 17981, 7/5/1973]

80.13 Definitions. As used in this part-80.13 a The term “Department” means the Department of Health and Human Services, and includes each of

its operating agencies and other organizational units.80.13 b The term “Secretary” means the Secretary of Health, Education, and Welfare [sic; now Health and

Human Services].80.13 c The term “responsible Department official” means the Secretary or, to the extent of any delegation by

the Secretary of authority to act in his stead under any one or more provisions of this part, any person or persons to whom the Secretary has heretofore delegated, or to whom the Secretary may hereafter delegate such authority.

80.13 d The term “reviewing authority” means the Secretary, or any person or persons (including a board or other body specially created for that purpose and also including the responsible Department official) acting pursuant to authority delegated by the Secretary to carry out responsibilities under 80.10 a-d.

80.13 e The term “United States” means the States of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the Canal Zone, and the territories and possessions of the United States, and the term “State” means any one of the foregoing.

80.13 f The term “Federal financial assistance” includes (1) grants and loans of Federal funds, (2) the grant or donation of Federal property, (3) the detail of Federal personnel, (4) the sale and lease of, and the permission to use (on other than a casual or transient basis), Federal property or any interest in such property without consideration or at a nominal consideration, or at a consideration which is reduced for the purpose of assisting the recipient, or in recognition of the public interest to be served by such sale or lease to the recipient, and (5) any Federal agreement, arrangement, or other contract which has as one of its purposes the provision of assistance.

80.13 g The term “program” includes any program, project, or activity for the provision of services, financial aid, or other benefits to individuals (including education or training, health, welfare, rehabilitation, housing, or other services, whether provided through employees of the recipient of Federal financial assistance or provided by others through contracts or other arrangements with the recipient, and including work opportunities and cash or loan or other assistance to individuals), or for the provision of facilities for furnishing services, financial aid or other benefits to individuals. The services, a financial aid or other benefits provided under a program receiving Federal financial assistance shall be deemed to include any services, financial aid or other benefits provided with the aid of Federal financial assistance or with the aid of any non-Federal funds, property, or other resources required to

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be expended or made available for the program to meet matching requirements or other conditions which must be met in order to receive the Federal financial assistance, and to include any services, financial aid, or other benefits provided in or through a facility provided with the aid of Federal financial assistance or such non-Federal resources.

80.13 h The “facility” includes all or any portion of structures, equipment, or other real or personal property or interests therein, and the provision of facilities includes the construction, expansion, renovation, remodeling, alteration or acquisition of facilities.

80.13 i The term “recipient” means any State, political subdivision of any State, or instrumentality of any State or political subdivision, any public or private agency, institution, or organization, or other entity, or any individual, in any State, to whom Federal financial assistance is extended, or directly or through another recipient, for any program, including any successor, assign, or transferee thereof, but such term does not include any ultimate beneficiary under any such program.

80.13 j The term “primary recipient” means any recipient which is authorized or required to extend Federal financial assistance to another recipient for the purpose of carrying out a program.

80.13 k The term “applicant” means one who submits an application, request, or plan, required to be approved by a Department official, or by a primary recipient, as a condition to eligibility for Federal financial assistance, and the term “application” means such an application, request, or plan. (Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 2000d- 1) [29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 FR 17982, July 5, 1973]

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply

Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply

Part 1. Assistance other than Continuing Assistance to States1 Loans for acquisition of equipment for academic subjects, and for minor remodeling (20 U.S.C.

445).2 Construction of facilities for institutions of higher education (20 U.S.C. 701–758).3 School Construction in federally-affected and in major disaster areas (20 U.S.C. 631–647).4 Construction of educational broadcast facilities (47 U.S.C. 390–399).5 Loan service of captioned films and educational media; research on, and production and distribution

of, educational media for the handicapped, and training of persons in the use of such media for the handicapped (20 U.S.C. 1452).

6 Demonstration residential vocational education schools (20 U.S.C. 1321).7 Research and related activities in education of handicapped children (20 U.S.C. 1441).8 Educational research, dissemination and demonstration projects; research training; and construction

under the Cooperation Research Act (20 U.S.C. 331–332(b)).9 Research in teaching modern foreign languages (20 U.S.C. 512).10 Training projects for manpower development and training (42 U.S.C. 2601, 2602, 2610a–2610c).11 Research and training projects in Vocational Education (20 U.S.C. 1281(a), 1282–1284).12 Allowances to institutions training NDEA graduate fellows (20 U.S.C. 461–465).13 Grants for training in librarianship (20 U.S.C. 1031–1033).14 Grants for training personnel for the education of handicapped children (20 U.S.C. 1431).15 Allowances for institutions training teachers and related educational personnel in elementary and

secondary education, or post-secondary vocational education (20 U.S.C. 1111–1118).16 Recruitment, enrollment, training and assignment of Teacher Corps personnel (20 U.S.C. 1101–

1107a).17 Operation and maintenance of schools in Federally-affected and in major disaster areas (20 U.S.C.

236–241; 241–1; 242–244).18 Grants or contracts for the operation of training institutes for elementary or secondary school

personnel to deal with special educational problems occasioned by desegregation (42 U.S.C. 2000c–3).

19 Grants for in-service training of teachers and other schools personnel and employment of specialists in desegregation problems (42 U.S.C. 2000c–4).

20 Higher education students loan program (Title II, National Defense Education Act, 20 U.S.C. 421–429).

21 Educational Opportunity grants and assistance for State and private programs of low-interest insured loans and State loans to students in institutions of higher education (Title IV, Higher Education Act of 1965, 20 U.S.C. 1061–1087).

22 Grants and contracts for the conduct of Talent Search, Upward Bound, and Special Services Programs (20 U.S.C. 1068).

23 Land-grant college aid (7 U.S.C. 301–308; 321–326; 328–331).

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply24 Language and area centers (Title VI, National Defense Education Act, 20 U.S.C. 511).25 American Printing House for the Blind (20 U.S.C. 101–105).26 Future Farmers of America (36 U.S.C. 271–391) and similar programs.27 Science clubs (Pub. L. 85–875, 20 U.S.C. 2, note).28 Howard University (20 U.S.C. 121–129).29 Gallaudet College (31 D.C. Code, Ch. 10).30 Establishment and operation of a model secondary school for the deaf by Gallaudet College (31 D.C.

Code 1051–1053; 80 Stat. 1027–1028).31 Faculty development programs, workshops and institutes (20 U.S.C. 1131–1132).32 National Technical Institute for the Deaf (20 U.S.C. 681–685).33 Institutes and other programs for training educational personnel (Parts D, E, and F, Title V, Higher

Education Act of 1965) (20 U.S.C. 1119–1119c–4).34 Grants and contracts for research and demonstration projects in librarianship (20 U.S.C. 1034).35 Acquisition of college library resources (20 U.S.C. 1021–1028).36 Grants for strengthening developing institutions of higher education (20 U.S.C. 1051–1054);

National Fellowships for teaching at developing institutions (20 U.S.C. 1055), and grants to retired professors to teach at developing institutions (20 U.S.C. 1056).

37 College Work-Study Program (42 U.S.C. 2751–2757).38 Financial assistance for acquisition of higher education equipment, and minor remodeling (20 U.S.C.

1121–1129).39 Grants for special experimental demonstration projects and teacher training in adult education (20

U.S.C. 1208).40 Grant programs for advanced and undergraduate international studies (20 U.S.C. 1171–1176; 22

U.S.C. 2452(b)).41 Experimental projects for developing State leadership or establishment of special services (20 U.S.C.

865).42 Grants to and arrangements with State educational and other agencies to meet special educational

needs of migratory children of migratory agricultural workers (20 U.S.C. 241e(c)).43 Grants by the Commissioner of Education to local educational agencies for supplementary

educational centers and services; guidance, counseling, and testing (20 U.S.C. 841–844; 844b).44 Resource centers for improvement of education of handicapped children (20 U.S.C. 1421) and

centers and services for deaf-blind children (20 U.S.C. 1422).45 Recruitment of personnel and dissemination of information on education of handicapped (20 U.S.C.

1433).46 Grants for research and demonstrations relating to physical education or recreation for handicapped

children (20 U.S.C. 1442) and training of physical educators and recreation personnel (20 U.S.C. 1434).

47 Dropout prevention projects (20 U.S.C. 887).48 Bilingual education programs (20 U.S.C. 880b–880b–6).

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply49 Grants to agencies and organizations for Cuban refugees (22) U.S.C. 2601(b)(4).50 Grants and contracts for special programs for children with specific learning disabilities including

research and related activities, training and operating model centers (20 U.S.C. 1461).51 Curriculum development in vocational and technical education (20 U.S.C. 1391).52 Establishment, including construction, and operation of a National Center on Educational Media and

Materials for the Handicapped (20 U.S.C. 1453).53 Grants and contracts for the development and operation of experimental preschool and early

education programs for handicapped (20 U.S.C. 1423).54 Grants to public or private non-profit agencies to carry on the Follow Through Program in

kindergarten and elementary schools (42 U.S.C. 2809 (a)(2)).55 Grants for programs of cooperative education and grants and contracts for training and research in

cooperative education (20 U.S.C. 1087a–1087c).56 Grants and contracts to encourage the sharing of college facilities and resources (network for

knowledge) (20 U.S.C. 1133– 1133b).57 Grants, contracts, and fellowships to improve programs preparing persons for public service and to

attract students to public service (20 U.S.C. 1134–1134b).58 Grants for the improvement of graduate programs (20 U.S.C. 1135–1135c).59 Contracts for expanding and improving law school clinical experience programs (20 U.S.C. 1136–

1136b).60 Exemplary programs and projects in vocational education (20 U.S.C. 1301–1305).61 Grants to reduce borrowing cost for construction of residential schools and dormitories (20 U.S.C.

1323).62 Project grants and contracts for research and demonstration relating to new or improved health

facilities and services (section 304, PHS Act, 42 U.S.C. 242b).63 Grants for construction or modernization of emergency rooms of general hospitals (Title VI, Part C,

PHS Act, 42 U.S.C. 291j).64 Institutional and special projects grants to schools of nursing (sections 805–808, PHS Act, 42 U.S.C.

296d–296g).65 Grants for construction and initial staffing of facilities for prevention and treatment of alcoholism

(section 241–2, Community Mental Health Centers Act (42 U.S.C. 2688 f and g).66 Grants for construction and initial staffing of specialized facilities for the treatment of alcoholics

requiring care in such facilities (section 243, Community Mental Health Centers Act, 42 U.S.C. 2688h).

67 Special project grants for training programs, evaluation of existing treatment programs, and conduct of significant programs relating to treatment of alcoholics (section 246, Community Mental Health Centers Act, 42 U.S.C. 2688j–1).

68 Grants for construction and initial staff of treatment facilities for narcotic addicts (section 251, Community Mental Health Centers Act, 42 U.S.C. 2688m).

69 Special project grants for training programs, evaluation of existing treatment programs, and conduct of significant programs relating to treatment of narcotics addicts (section 252, Community Mental Health Centers Act, 42 U.S.C. 2688n–1).

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply70 Grants for consultation services for Community Mental Health Centers, alcoholism prevention and

treatment facilities for narcotic addicts, and facilities for mental health of children (section 264, Community Mental Health Centers Act, 42 U.S.C. 2688r).

71 Grants for construction and initial staff of facilities for mental health of children (section 271, Community Mental Health Centers Act, 42 U.S.C. 2688u)

72 Special project grants for training programs and evaluation of existing treatment program relating to mental health of children (section 272, Community Mental Health Centers Act, 42 U.S.C. 2688x).

73 Grants and loans for construction and modernization of medical facilities in the District of Columbia (Pub. L. 90–457; 82 Stat. 631–3).

74 Teaching facilities for nurse training (sections. 801–804, Public Health Service Act, 42 U.S.C. 296–296c).

75 Teaching facilities for allied health professions personnel (section 791, Public Health Service Act, 42 U.S.C. 295h).

76 Mental retardation research facilities (Title VI, Part D, Public Health Service Act, 42 U.S.C. 295–395e).

77 George Washington University Hospital construction (76 Stat. 83, Pub. L. 87–460, May 31, 1962).78 Research projects, including conferences, communication activities and primate or other center

grants (sections 301, 303, 304, and 308, Public Health Service Act, 42 U.S.C. 241, 242a, 242b, and 242f).

79 General research support (section 301(d), Public Health Service Act, 42 U.S.C. 241).80 Mental Health demonstrations and administrative studies (section 303(a)(2), Public Health Service

Act, 42 U.S.C. 242a).81 Migratory workers health services (section 310, Public Health Service Act, 42 U.S.C. 242h).82 Immunization programs (section 317, Public Health Service Act, 42 U.S.C. 247b).83 Health research training projects and fellowship grants (sections 301, 433, Public Health Service Act,

42 U.S.C. 242, 289c).84 Categorical (heart, cancer, etc.) grants for training, traineeships or fellowships (sections 303, 433,

etc., Public Health Service Act, 42 U.S.C. 242a, 289c, etc.).85 Advanced professional nurse traineeships (section 821, Public Health Service Act, 42 U.S.C. 297).86 Department projects under Appalachian Regional Development Act (40 U.S.C. App. A).87 Grants to institutions for traineeships for professional public health personnel section 306, Public

Health Service Act, 42 U.S.C. 242d).88 Grants for graduate or specialized training in public health (section 309, Public Health Service Act,

42 U.S.C. 242g).89 Health professions school student loan program (Title VII, Part C, Public Health Service Act, 42

U.S.C. 294–294(k)).90 Grants for provision in schools of public health of training, consultation and technical assistance in

the field of public health and in the administration of state or local public health programs (section 309(c)), Public Health Service Act, 42 U.S.C. 242(g)(c)).

91 Project grants for training, studies, or demonstrations looking metropolitan area, or other local area plans for health services (section 314(c), Public Health Service Act, 42 U.S.C. 246(c)).

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply92 Project grants for training, studies, or demonstrations looking toward the development of improved

comprehensive health planning (section 314(c), Public Health Service Act, 42 U.S.C. 246(c)).93 Project grants for health services development (section 314(e), Public Health Service Act, 42 U.S.C.

246(e)).94 Institutional and special grants to health professions schools (Title VII, Part E, Public Health Service

Act, 42 U.S.C. 295f– 295f–4).95 Improvement grants to centers for allied health professions (section 792, Public Health Service Act,

42 U.S.C. 295h–1).96 Scholarship grants to health professions schools (Title VII, Part F, Public Health Service Act, 42

U.S.C. 295h–1).97 Scholarship grants to schools of nursing (Title VIII, Part D, Public Health Service Act, 42 U.S.C.

198c–298c–6).98 Traineeships for advanced training of allied health professions personnel (section 793, Public Health

Service Act, 42 U.S.C. 295h–2).99 Contracts to encourage full utilization of nursing educational talent (section 868, Public Health

Service Act, 42 U.S.C. 298c–7).100 Grants to community mental health centers for the compensation of professional and technical

personnel for the initial operation of new centers or of new services in centers (Community Mental Health Centers Act, Part B, 42 U.S.C. 2688–2688d).

101 Grants for the planning, construction, equipment and operation of multicounty demonstration health projects in the Appalachian region (section 202 of Appalachian Regional Development Act, Pub. L. 89–4, as amended, Pub. L. 90–103 40 U.S.C. App. 202).

102 Education, research, training, and demonstrations in the fields of heart disease, cancer, stroke and related diseases (sections 900–110, Public Health Service Act, 42 U.S.C. 299a–j).

103 Assistance to medical libraries (sections 390–399, Public Health Service Act, 42 U.S.C. 280b–280b–9).

104 Nursing student loans (sections 822–828. Public Health Service Act, 42 U.S.C. 297a–g).105 Hawaii leprosy payments (section 331, Public Health Service Act, 42 U.S.C. 255).106 Heart disease laboratories and related facilities for patient care (section 412(d), Public Health Service

Act, 42 U.S.C. 287a(d)).107 Grants for construction of hospitals serving Indians (Pub. L. 85–151, 42 U.S.C. 2005).108 Indian Sanitation Facilities (Pub. L. 86–121, 42 U.S.C. 2004a).109 Research projects relating to maternal and child health services and crippled children's services (42

U.S.C. 712).110 Maternal and child health special project grants to State agencies and institutions of higher learning

(42 U.S.C. 703(s)).111 Maternity and infant care and family planning services; special project grants to local health agencies

and other organizations (42 U.S.C. 708).112 Special project grants to State agencies and institutions of higher learning for crippled children's

services (42 U.S.C. 704(2)).113 Special project grants for health of school and preschool children (42 U.S.C. 709) and for dental

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Applyhealth of children (42 U.S.C. 710).

114 Grants to institutions of higher learning for training personnel for health care and related services for mothers and children (42 U.S.C. 711).

115 Grants and contracts for the conduct of research, experiments, or demonstrations relating to the developments, utilization, quality, organization, and financing of services, facilities, and resources of hospitals, long-term care facilities, for other medical facilities (section 304, Public Health Service Act, as amended by Pub. L. 90–174, 42 U.S.C. 242b).

116 Health research facilities (Title VII Part A, Public Health Service Act, 42 U.S.C. 292–292j).117 Teaching facilities for health professions personnel (Title VII, Part B, Public Health Service Act, 42

U.S.C. 293–293h).118 Project grants and contracts for research, development, training, and studies in the field of electronic

product radiation (section 356, Public Health Service Act, 42 U.S.C. 263d).119 Project grants and contracts for research, studies, demonstrations, training, and education relating to

coal mine health (section 501, Federal Coal Mine Health and Safety Act of 1969, Public Law 91–173).

120 Surplus real and related personal property disposal (40 U.S.C. 484(k)).121 Supplementary medical insurance benefits for the aged (Title XVIII, Part A, Social Security Act, 42

U.S.C. 1395c–1395i–2).122 Issuance of rent-free permits for vending stands, credit unions, employee associations, etc. (20

U.S.C. 107–107f; 45 CFR Part 20; section 25, 12 U.S.C. 1170).123 Grants for special vocational rehabilitation projects (29 U.S.C. 34(a)(1)).124 Experimental, pilot or demonstration projects to promote the objectives of Title I, X, XIV, XVI, or

XIX or Part A of Title IV of the Social Security Act (42 U.S.C. 1315).125 Social Security and welfare cooperative research or demonstration projects (42 U.S.C. 1310).126 Child welfare research, training, or demonstration projects (42 U.S.C. 626).127 Training projects (Title VI, Older Americans Act, 42 U.S.C. 3041–3042).128 Grants for expansion of vocational rehabilitation services (29 U.S.C. 34(a)(2) (A)).129 Grants for construction of rehabilitation facilities (29 U.S.C. 41a(a)–(e)) and for initial staffing of

rehabilitation facilities (29 U.S.C. 41a(f)).130 Project development grants for rehabilitation facilities (29 U.S.C. 41a(g)(2)).131 Rehabilitation Facility improvement grants (29 U.S.C. 41b(b)).132 Agreement for the establishment and operation of a national center for deaf-blind youths and adults

(29 U.S.C. 42a).133 Project grants for services for migratory agricultural workers (29 U.S.C. 42b).134 Grants for initial staffing of community mental retardation facilities (42 U.S.C. 2678–2678d).135 Grants for training welfare personnel and for expansion and development of undergraduate and

graduate social work programs (42 U.S.C. 906, 908).136 Research and development projects concerning older Americans (42 U.S.C. 3031– 3032).137 Grants to States for training of nursing home administrators (42 U.S.C. 1396g (e)).

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Part 80 Appendix A—Federal Financial Assistance to Which These Regulations Apply138 Contracts or jointly financed cooperative arrangements with industry (29 U.S.C. 34(a)(2)(B)).139 Project grants for new careers in rehabilitation (29 U.S.C. 34(a)(2)(C)).140 Children of low-income families (20 U.S.C. 241a–241m).141 Grants for training (29 U.S.C. 37(a) (2)).142 Grants for projects for training services (29 U.S.C. 41b(a)).143 Grants for comprehensive juvenile delinquency planning (42 U.S.C. 3811).144 Grants for project planning in juvenile delinquency (42 U.S.C. 3812).145 Grants for juvenile delinquency rehabilitative services projects (42 U.S.C. 3822, 3842).146 Grants for juvenile delinquency preventive service projects (42 U.S.C. 3861).147 Grants for training projects in juvenile delinquency fields (42 U.S.C. 3861).148 Grants for development of improved techniques and practices in juvenile delinquency services (42

U.S.C. 3871).149 Grants for technical assistance in juvenile delinquency services (42 U.S.C. 3872).150 Grants for State technical assistance to local units in juvenile delinquency services (42 U.S.C. 3873).151 Grants for public service centers projects (42 U.S.C. 2744).152 Grants to public or private non-profit agencies to carry on the Project Head Start Program (42 U.S.C.

2809(a)(1)).153 Project grants for new careers for the handicapped (29 U.S.C. 34(a)(2)(D)).154 Construction, demonstration, and training grants for university-affiliated facilities for persons with

developmental disabilities (42 U.S.C. 2661–2666).

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Part 80 Appendix A Part 2Continuing Assistance to States

Part 80 Appendix A Part 2 Continuing Assistance to States

1 Grants to States for public library services and construction, interlibrary cooperation and specialized State library services for certain State institutions and the physically handicapped (20 U.S.C. 351–355).

2 Grants to States for strengthening instruction in academic subjects (20 U.S.C. 441–444).3 Grants to States for vocational education (20 U.S.C. 1241–1264).4 Arrangements with State education agencies for training under the Manpower Development and

Training Act (42 U.S.C. 2601–2602, 2610a).5 Grants to States to assist in the elementary and secondary education of children of low-income families

(20 U.S.C. 241a–241m)6 Grants to States to provide for school library resources, textbooks and other instructional materials for

pupils and teachers in elementary and secondary schools (20 U.S.C. 821–827).7 Grants to States to strengthen State departments of education (20 U.S.C. 861–870).8 Grants to States for community service programs (20 U.S.C. 1001–1011).9 Grants to States for adult basic education and related research, teacher training and special projects (20

U.S.C. 1201–1211).10 Grants to State educational agencies for supplementary educational centers and services, and guidance,

counseling and testing (20 U.S.C. 841–847).11 Grants to States for research and training in vocational education (20 U.S.C. 1281(b)).12 Grants to States for exemplary programs and projects in vocational education (20 U.S.C. 1301–1305).13 Grants to States for residential vocational education schools (20 U.S.C. 1321).14 Grants to States for consumer and homemaking education (20 U.S.C. 1341).15 Grants to States for cooperative vocational educational program (20 U.S.C. 1351– 1355).16 Grants to States for vocational work study programs (20 U.S.C. 1371–1374).17 Grants to States to attract and qualify teachers to meet critical teaching shortages (20 U.S.C. 1108–

1110c).18 Grants to States for education of handicapped children (20 U.S.C. 1411–1414).19 Grants for administration of State plans and for comprehensive planning to determine construction

needs of institutions of higher education (20 U.S.C. 715(b)).20 Grants to States for comprehensive health planning (section 314(a), Public Health Service Act, 42

U.S.C. 246(a)).21 Grants to States for establishing and maintaining adequate public health services (section 314(d),

Public Health Service Act, 42 U.S.C. 246(d)).22 Grants, loans, and loan guarantees with interest subsidies for hospital and medical facilities (Title VI,

Public Health Service Act, 42 U.S.C. 291 et seq.).23 Grants to States for community mental health centers construction (Community Mental Health Centers

Act, Part A, 42 U.S.C. 2681–2687).24 Cost of rehabilitation services (Title II, Social Security Act section 222(d); 42 U.S.C. 422(d)).

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Part 80 Appendix A Part 2 Continuing Assistance to States25 Surplus personal property disposal donations for health and educational purposes through State

agencies (40 U.S.C. 484(j)).26 Grants for State and community programs on aging (Title III, Older Americans Act, 42 U.S.C. 3021–

3025).27 Grants to States for planning, provision of services, and construction and operation of facilities for

persons with developmental disabilities (42 U.S.C. 2670–2677c).28 Grants to States for vocational rehabilitation services (29 U.S.C. 32); for innovation of vocational

rehabilitation services (29 U.S.C. 33); and for rehabilitation facilities planning (29 U.S.C. 41a(g)(1)).29 Designation of State licensing agency for blind operators of vending stands (20 U.S.C. 107–107f).30 Grants to States for old-age assistance (42 U.S.C. 301 et seq.); aid to families with dependent children

(42 U.S.C. 601 et seq.); child-welfare services (42 U.S.C. 620 et seq.); aid to the blind (42 U.S.C. 1201 et seq.); aid to the permanently and totally disabled (42 U.S.C. 1351 et seq.); aid to the aged, blind, or disabled (42 U.S.C. 1381 et seq.); medical assistance (42 U.S.C. 1396 et seq.).

31 Grants to States for maternal and child health and crippled children's services (42 U.S.C. 701–707); for special projects for maternal and infant care (42 U.S.C. 708).

32 Grants to States for juvenile delinquency preventive and rehabilitative services (42 U.S.C. 3841). [38 FR 17982, July 5, 1973; 40 FR 18173, Apr. 25, 1975, as amended at 70 FR 24319, May 9, 2005]

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Part 80 Appendix B--Guidelines for Eliminating Discrimination and Denial of Services on the Basis of Race, Color, National Origin, Sex, and Handicap in Vocational Education Programs

Part 80 Appendix B—Guidelines for Eliminating Discrimination and Denial of Services on the Basis of Race, Color, National Origin, Sex, and Handicap in Vocational Education Programs

I Scope and CoverageI a Application of guidelines. These Guidelines apply to recipients of any Federal financial assistance

from the Department of Health and Human Services that offer or administer programs of vocational education or training. This includes State agency recipients.

I b Definition of recipient. The definition of recipient of Federal financial assistance is established by Department regulations implementing title VI, title IX, and section 504 (80.13 i, 86.2(h), 84.3 f.)For the purposes of title VI: The term recipient means any State, political subdivision of any State, or instrumentality of any State or political subdivision, any public or private agency, institution, or organization, or other entity, or any individual, in any State, to whom Federal financial assistance is extended, directly or through another recipient, for any program, including any successor, assignee, or transferee thereof, but such term does not include any ultimate beneficiary [e.g., students] under any such program. (80.13 i).For the purpose of title IX: Recipient means any State or political subdivision thereof, or any instrumentality of a State or political subdivision thereof, any public or private agency, institution, or organization, or other entity, or any person to whom Federal financial assistance is extended directly or through another recipient and which operates an education program or activity which receives or benefits from such assistance, including any subunit, successor, assignee, or transferee thereof. (86.2(h)).For the purposes of section 504: Recipient means any State or its political subdivision, any instrumentality of a State or its political subdivision, any public or private agency, institution, organization, or other entity, or any person to which Federal financial assistance is extended directly or through another recipient, including any successor, assignee, or transferee of a recipient, but excluding the ultimate beneficiary of the assistance. (84.3 f).

I c Examples of recipients covered by these guidelines. The following education agencies, when they provide vocational education, are examples of recipients covered by these Guidelines:

I c 1 The board of education of a public school district and its administrative agency.I c 2 The administrative board of a specialized vocational high school serving students from more than one

school district.I c 3 The administrative board of a technical or vocation school that is used exclusively or principally for

the provision of vocational education to persons who have completed or left high school (including persons seeking a certificate or an associate degree through a vocational program offered by the school) and who are available for study in preparation for entering the labor market.

I c 4 The administrative board of a postsecondary institution, such as a technical institute, skill center, junior college, community college, or four year college that has a department or division that provides vocational education to students seeking immediate employment, a certificate or an associate degree.

I c 5 The administrative board of a proprietary (private) vocational education school.I c 6 A State agency recipient itself operating a vocational education facility.I d Examples of schools to which these guidelines apply.

The following are examples of the types of schools to which these Guidelines apply.

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Part 80 Appendix B—Guidelines for Eliminating Discrimination and Denial of Services on the Basis of Race, Color, National Origin, Sex, and Handicap in Vocational Education ProgramsI d 1 A junior high school, middle school, or those grades of a comprehensive high school that offers

instruction to inform, orient, or prepare students for vocational education at the secondary level.I d 2 A vocational education facility operated by a State agency.I d 3 A comprehensive high school that has a department exclusively or principally used for providing

vocational education; or that offers at least one vocational program to secondary level students who are available for study in preparation for entering the labor market; or that offers adult vocational education to persons who have completed or left high school and who are available for study in preparation for entering the labor market.

I d 4 A comprehensive high school, offering the activities described above, that receives students on a contract basis from other school districts for the purpose of providing vocational education.

I d 5 A specialized high school used exclusively or principally for the provision of vocational education, that enrolls students from one or more school districts for the purpose of providing vocational education.

I d 6 A technical or vocational school that primarily provides vocational education to persons who have completed or left high school and who are available for study in preparation for entering the labor market, including students seeking an associate degree or certificate through a course of vocational instruction offered by the school.

I d 7 A junior college, a community college, or four-year college that has a department or division that provides vocational education to students seeking immediate employment, an associate degree or a certificate through a course of vocational instruction offered by the school.

I d 8 A proprietary school, licensed by the State, that offers vocational education.Note: Subsequent sections of these Guidelines may use the term secondary vocational education center in referring to the institutions described in paragraph 3, 4 and 5 above or the term postsecondary vocational education center in referring to institutions described in paragraph 6 and 7 above or the term vocational education center in referring to any or all institutions described above.

II Responsibilities Assigned Only to State Agency RecipientsII a Responsibilities of all state agency recipients. State agency recipients, in addition to complying with

all other provisions of the Guidelines relevant to them, may not require, approve of, or engage in any discrimination or denial of services on the basis of race, color, national origin, sex, or handicap in performing any of the following activities:

II a 1 Establishment of criteria or formulas for distribution of Federal or State funds to vocational education programs in the State;

II a 2 Establishment of requirements for admission to or requirements for the administration of vocational education programs;

II a 3 Approval of action by local entities providing vocational education. (For example, a State agency must ensure compliance with section IV of these Guidelines if and when it reviews a vocational education agency decision to create or change a geographic service area.);

II a 4 Conducting its own programs. (For example, in employing its staff it may not discriminate on the basis of sex or handicap.)

II b State agencies performing oversight responsibilities. The State agency responsible for the administration of vocational education programs must adopt a compliance program to prevent, identify and remedy discrimination on the basis of race, color, national origin, sex or handicap by its

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subrecipients. (A subrecipient, in this context, is a local agency or vocational education center that receives financial assistance through a State agency.) This compliance program must include:

II b 1 Collecting and analyzing civil rights related data and information that subrecipients compile for their own purposes or that are submitted to State and Federal officials under existing authorities;

II b 2 Conducting periodic compliance reviews of selected subrecipients (i.e., an investigation of a subrecipient to determine whether it engages in unlawful discrimination in any aspect of its program); upon finding unlawful discrimination, notifying the subrecipient of steps it must take to attain compliance and attempting to obtain voluntary compliance;

II b 3 Providing technical assistance upon request to subrecipients. This will include assisting subrecipients identify unlawful discrimination and instructing them in remedies for and prevention of such discrimination;

II b 4 Periodically reporting its activities and findings under the foregoing paragraphs, including findings of unlawful discrimination under paragraph 2, immediately above, to the Office for Civil Rights.State agencies are not required to terminate or defer assistance to any subrecipient. Nor are they required to conduct hearings. The responsibilities of the Office for Civil Rights to collect and analyze data, to conduct compliance reviews, to investigate complaints and to provide technical assistance are not diminished or attenuated by the requirements of Section II of the Guidelines.

II c Statement of procedures and practices. Within one year from the publication of these Guidelines in final form, each State agency recipient performing oversight responsibilities must submit to the Office for Civil Rights the methods of administration and related procedures it will follow to comply with the requirements described in paragraph A and B immediately above. The Department will review each submission and will promptly either approve it, or return it to State officials for revision.

III Distribution of Federal Financial Assistance and Other Funds for Vocational EducationIII a Agency responsibilities. Recipients that administer grants for vocational education must distribute

Federal, State, or local vocational education funds so that no student or group of students is unlawfully denied an equal opportunity to benefit from vocational education on the basis of race, color, national origin, sex, or handicap.

III b Distribution of funds. Recipients may not adopt a formula or other method for the allocation of Federal, State, or local vocational education funds that has the effect of discriminating on the basis of race, color, national origin, sex, or handicap. However, a recipient may adopt a formula or other method of allocation that uses as a factor race, color, national origin, sex, or handicap [or an index or proxy for race, color, national origin, sex, or handicap e.g., number of persons receiving Aid to Families with Dependent Children or with limited English speaking ability] if the factor is included to compensate for past discrimination or to comply with those provisions of the Vocational Education Amendments of 1976 designed to assist specified protected groups.

III c Example of a pattern suggesting unlawful discrimination. In each State it is likely that some local recipients will enroll greater proportions of minority students in vocational education than the State-wide proportion of minority students in vocational education. A funding formula or other method of allocation that results in such local recipients receiving per-pupil allocations of Federal or State vocational education funds lower than the State-wide average per-pupil allocation will be presumed unlawfully discriminatory.

III d Distribution through competitive grants or contracts. Each State agency that establishes criteria for awarding competitive vocational education grants or contracts must establish and apply the criteria without regard to the race, color, national origin, sex, or handicap of any or all of a recipient’s

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students, except to compensate for past discrimination.III e Application processes for competitive or discretionary grants. State agencies must disseminate

information needed to satisfy the requirements of any application process for competitive or discretionary grants so that all recipients, including those having a high percentage of minority or handicapped students, are informed of and able to seek funds. State agencies that provide technical assistance for the completion of the application process must provide such assistance without discrimination against any one recipient or class of recipients.

III f Alteration of fund distribution to provide equal opportunity. If the Office for Civil Rights finds that a recipient’s system for distributing vocational education funds unlawfully discriminates on the basis of race, color, national origin, sex, or handicap, it will require the recipient to adopt an alternative nondiscriminatory method of distribution. The Office for Civil Rights may also require the recipient to compensate for the effects of its past unlawful discrimination in the distribution of funds.

IV Access and Admission of Students To Vocational Education ProgramsIV a Recipient responsibilities. Criteria controlling student eligibility for admission to vocational

education schools, facilities and programs may not unlawfully discriminate on the basis of race, color, national origin, sex, or handicap. A recipient may not develop, impose, maintain, approve, or implement such discriminatory admissions criteria.

IV b Site selection for vocational schools. State and local recipients may not select or approve a site for a vocational education facility for the purpose or with the effect of excluding, segregating, or otherwise discriminating against students on the basis of race, color, or national origin. Recipients must locate vocational education facilities at sites that are readily accessible to both non-minority and minority communities, and that do not tend to identify the facility or program as intended for non-minority or minority students.

IV c Eligibility for admission to vocational education centers based on residence. Recipients may not establish, approve or maintain geographic boundaries for a vocational education center service area or attendance zone, (hereinafter service area), that unlawfully exclude students on the basis of race, color, or national origin. The Office for Civil Rights will presume, subject to rebuttal, that any one or combination of the following circumstances indicates that the boundaries of a given service area are unlawfully constituted:

IV c 1 A school system or service area contiguous to the given service area, contains minority or non-minority students in substantially greater proportion than the given service area;

IV c 2 A substantial number of minority students who reside outside the given vocational education center service area, and who are not eligible for the center reside, nonetheless, as close to the center as a substantial number of non-minority students who are eligible for the center;

IV c 3 The over-all vocational education program of the given service area in comparison to the over-all vocational education program of a contiguous school system or service area enrolling a substantially greater proportion of minority students:

IV c 3 a Provides its students with a broader range of curricular offerings, facilities and equipment; orIV c 3 b provides its graduates greater opportunity for employment in jobs:IV c 3 b i For which there is a demonstrated need in the community or region;IV c 3 b ii that pay higher entry level salaries or wages; orIV c 3 b iii

that are generally acknowledged to offer greater prestige or status.

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Part 80 Appendix B—Guidelines for Eliminating Discrimination and Denial of Services on the Basis of Race, Color, National Origin, Sex, and Handicap in Vocational Education ProgramsIV d Additions and renovations to existing vocational education facilities. A recipient may not add to,

modify, or renovate the physical plant of a vocational education facility in a manner that creates, maintains, or increases student segregation on the basis of race, color, national origin, sex, or handicap.

IV e Remedies for violations of site selection and geographic service area requirements. If the conditions specified in paragraph IV a, b, c, or d, immediately above, are found and not rebutted by proof of nondiscrimination, the Office for Civil rights will require the recipient(s) to submit a plan to remedy the discrimination. The following are examples of steps that may be included in the plan, where necessary to overcome the discrimination:

IV e 1 Redrawing of the boundaries of the vocational education center’s service area to include areas unlawfully excluded and/or to exclude areas unlawfully included;

IV e 2 provision of transportation to students residing in areas unlawfully excluded;IV e 3 provision of additional programs and services to students who would have been eligible for

attendance at the vocational education center but for the discriminatory service area or site selection;IV e 4 reassignment of students; andIV e 5 construction of new facilities or expansion of existing facilities.IV f Eligibility for admission to secondary vocational education centers based on numerical limits

imposed on sending schools. A recipient may not adopt or maintain a system for admission to a secondary vocational education center or program that limits admission to a fixed number of students from each sending school included in the center’s service area if such a system disproportionately excludes students from the center on the basis of race, sex, national origin or handicap. (Example: Assume 25% of a school district’s high school students are black and that most of those black students are enrolled in one high school; the white students, 75% of the district’s total enrollment, are generally enrolled in the five remaining high schools. This paragraph prohibits a system of admission to the secondary vocational education center that limits eligibility to a fixed and equal number of students from each of the district’s six high schools.)

IV g Remedies for violation of eligibility based on numerical limits requirements. If the Office for Civil Rights finds a violation of paragraph F, above, the recipient must implement an alternative system of admissions that does not disproportionately exclude students on the basis of race, color, national origin, sex, or handicap.

IV h Eligibility for admission to vocational education centers, branches or annexes based upon student option. A vocational education center, branch or annex, open to all students in a service area and predominantly enrolling minority students or students of one race, national origin or sex, will be presumed unlawfully segregated if:

IV h 1 It was established by a recipient for members of one race, national origin or sex; orIV h 2 it has since its construction been attended primarily by members of one race, national origin or sex; orIV h 3 most of its program offerings have traditionally been selected predominantly by members of one race,

national origin or sex.IV i Remedies for facility segregation under student option plans. If the conditions specified in paragraph

IV h are found and not rebutted by proof of nondiscrimination, the Office for Civil Rights will require the recipient(s) to submit a plan to remedy the segregation. The following are examples of steps that may be included in the plan, where necessary to overcome the discrimination:

IV I 1 elimination of program duplication in the segregated facility and other proximate vocational facilities;

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Part 80 Appendix B—Guidelines for Eliminating Discrimination and Denial of Services on the Basis of Race, Color, National Origin, Sex, and Handicap in Vocational Education ProgramsIV I 2 relocation or “clustering” of programs or courses;IV I 3 adding programs and courses that traditionally have been identified as intended for members of a

particular race, national origin or sex to schools that have traditionally served members of the other sex or traditionally served persons of a different race or national origin;

IV I 4 merger of programs into one facility through school closings or new construction;IV I 5 intensive outreach recruitment and counseling;IV I 6 providing free transportation to students whose enrollment would promote desegregation.IV j [Paragraph J omitted]IV k Eligibility based on evaluation of each applicant under admissions criteria. Recipients may not judge

candidates for admission to vocational education programs on the basis of criteria that have the effect of disproportionately excluding persons of a particular race, color, national origin, sex, or handicap. However, if a recipient can demonstrate that such criteria have been validated as essential to participation in a given program and that alternative equally valid criteria that do not have such a disproportionate adverse effect are unavailable, the criteria will be judged nondiscriminatory. Examples of admissions criteria that must meet this test are past academic performance, record of disciplinary infractions, counselors’ approval, teachers’ recommendations, interest inventories, high school diplomas and standardized tests, such as the Test of Adult Basic Education (TABE).An introductory, preliminary, or exploratory course may not be established as a prerequisite for admission to a program unless the course has been and is available without regard to race, color, national origin, sex, and handicap. However, a course that was formerly only available on a discriminatory basis may be made a prerequisite for admission to a program if the recipient can demonstrate that:

IV k a the course is essential to participation in the program; andIV k b the course is presently available to those seeking enrollment for the first time and to those formerly

excluded.IV l Eligibility of national origin minority persons with limited English language skills. Recipients may

not restrict an applicant’s admission to vocational education programs because the applicant, as a member of a national origin minority with limited English language skills, cannot participate in and benefit from vocational instruction to the same extent as a student whose primary language is English. It is the responsibility of the recipient to identify such applicants and assess their ability to participate in vocational instruction. Acceptable methods of identification include:

IV l 1 Identification by administrative staff, teachers, or parents of secondary level students;IV l 2 identification by the student in postsecondary or adult programs; andIV l 3 appropriate diagnostic procedures, if necessary.

Recipients must take steps to open all vocational programs to these national origin minority students. A recipient must demonstrate that a concentration of students with limited English language skills in one or a few programs is not the result of discriminatory limitations upon the opportunities available to such students.

IV m Remedial action in behalf of persons with limited English language skills. If the Office for Civil Rights finds that a recipient has denied national origin minority persons admission to a vocational school or program because of their limited English language skills or has assigned students to vocational programs solely on the basis of their limited English language skills, the recipient will be required to submit a remedial plan that insures national origin minority students equal access to

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vocational education programs.IV n Equal access for handicapped students. Recipients may not deny handicapped students access to

vocational education programs or courses because of architectural or equipment barriers, or because of the need for related aids and services or auxiliary aids. If necessary, recipients must:

IV n 1 Modify instructional equipment;IV n 2 modify or adapt the manner in which the courses are offered;IV n 3 house the program in facilities that are readily accessible to mobility impaired students or alter

facilities to make them readily accessible to mobility impaired students; andIV n 4 provide auxiliary aids that effectively make lectures and necessary materials available to

postsecondary handicapped students;IV n 5 provide related aids or services that assure secondary students an appropriate education.

Academic requirements that the recipient can demonstrate are essential to a program of instruction or to any directly related licensing requirement will not be regarded as discriminatory. However, where possible, a recipient must adjust those requirements to the needs of individual handicapped students.Access to vocational programs or courses may not be denied handicapped students on the ground that employment opportunities in any occupation or profession may be more limited for handicapped persons than for non-handicapped persons.

IV o Public notification. Prior to the beginning of each school year, recipients must advise students, parents, employees and the general public that all vocational opportunities will be offered without regard to race, color, national origin, sex, or handicap. Announcement of this policy of non-discrimination may be made, for example, in local newspapers, recipient publications and/or other media that reach the general public, program beneficiaries, minorities (including national origin minorities with limited English language skills), women, and handicapped persons. A brief summary of program offerings and admission criteria should be included in the announcement; also the name, address and telephone number of the person designated to coordinate Title IX and Section 504 compliance activity.If a recipient’s service area contains a community of national origin minority persons with limited English language skills, public notification materials must be disseminated to that community in its language and must state that recipients will take steps to assure that the lack of English language skills will not be a barrier to admission and participation in vocational education programs.

V Counseling and Prevocational ProgramsV a Recipient responsibilities. Recipients must insure that their counseling materials and activities

(including student program selection and career/employment selection), promotional, and recruitment efforts do not discriminate on the basis of race, color, national origin, sex, or handicap.

V b Counseling and prospects for success. Recipients that operate vocational education programs must insure that counselors do not direct or urge any student to enroll in a particular career or program, or measure or predict a student’s prospects for success in any career or program based upon the student’s race, color, national origin, sex, or handicap. Recipients may not counsel handicapped students toward more restrictive career objectives than nonhandicapped students with similar abilities and interests. If a vocational program disproportionately enrolls male or female students, minority or non-minority students, or handicapped students, recipients must take steps to insure that the disproportion does not result from unlawful discrimination in counseling activities.

V c Student recruitment activities. Recipients must conduct their student recruitment activities so as not to

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exclude or limit opportunities on the basis of race, color, national origin, sex, or handicap. Where recruitment activities involve the presentation or portrayal of vocational and career opportunities, the curricula and programs described should cover a broad range of occupational opportunities and not be limited on the basis of the race, color, national origin, sex, or handicap of the students or potential students to whom the presentation is made. Also, to the extent possible, recruiting teams should include persons of different races, national origins, sexes, and handicaps.

V d Counseling of students with limited English-speaking ability or hearing impairments. Recipients must insure that counselors can effectively communicate with national origin minority students with limited English language skills and with students who have hearing impairments. This requirement may be satisfied by having interpreters available.

V e Promotional activities. Recipients may not undertake promotional efforts (including activities of school officials, counselors, and vocational staff) in a manner that creates or perpetuates stereotypes or limitations based on race, color, national origin, sex or handicap. Examples of promotional efforts are career days, parents’ night, shop demonstrations, visitations by groups of prospective students and by representatives from business and industry. Materials that are part of promotional efforts may not create or perpetuate stereotypes through text or illustration. To the extent possible they should portray males or females, minorities or handicapped persons in programs and occupations in which these groups traditionally have not been represented. If a recipient’s service area contains a community of national origin minority persons with limited English language skills, promotional literature must be distributed to that community in its language.

VI Equal Opportunity in the Vocational Education Instructional SettingVI a Accommodations for handicapped students. Recipients must place secondary level handicapped

students in the regular educational environment of any vocational education program to the maximum extent appropriate to the needs of the student unless it can be demonstrated that the education of the handicapped person in the regular environment with the use of supplementary aids and services cannot be achieved satisfactorily. Handicapped students may be placed in a program only after the recipient satisfies the provisions of the Department’s Regulation, Part 84, relating to evaluation, placement, and procedural safeguards. If a separate class or facility is identifiable as being for handicapped persons, the facility, the programs, and the services must be comparable to the facilities, programs, and services offered to nonhandicapped students.

VI b Student financial assistance. Recipients may not award financial assistance in the form of loans, grants, scholarships, special funds, subsidies, compensation for work, or prizes to vocational education students on the basis of race, color, national origin, sex, or handicap, except to overcome the effects of past discrimination. Recipients may administer sex restricted financial assistance where the assistance and restriction are established by will, trust, bequest, or any similar legal instrument, if the overall effect of all financial assistance awarded does not discriminate on the basis of sex. Materials and information used to notify students of opportunities for financial assistance may not contain language or examples that would lead applicants to believe the assistance is provided on a discriminatory basis. If a recipient’s service area contains a community of national origin minority persons with limited English language skills, such information must be disseminated to that community in its language.

VI c Housing in residential postsecondary vocational education centers. Recipients must extend housing opportunities without discrimination based on race, color, national origin, sex, or handicap. This obligation extends to recipients that provide on-campus housing and/or that have agreements with providers of off-campus housing. In particular, a recipient postsecondary vocational education program that provides on-campus or off-campus housing to its nonhandicapped students must

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provide, at the same cost and under the same conditions, comparable convenient and accessible housing to handicapped students.

VI d Comparable facilities. Recipients must provide changing rooms, showers, and other facilities for students of one sex that are comparable to those provided to students of the other sex. This may be accomplished by alternating use of the same facilities or by providing separate, comparable facilities. Such facilities must be adapted or modified to the extent necessary to make the vocational education program readily accessible to handicapped persons.

VII Work Study, Cooperative Vocational Education, Job Placement, and Apprentice TrainingVII a Responsibilities in cooperative vocational education programs, work-study programs, and job

placement programs. A recipient must insure that:VII a a It does not discriminate against its students on the basis of race, color, national origin, sex, or

handicap in making available opportunities in cooperative education, work study and job placement programs; and

VII a b students participating in cooperative education, work study and job placement programs are not discriminated against by employers or prospective employers on the basis of race, color, national origin, sex, or handicap in recruitment, hiring, placement, assignment to work tasks, hours of employment, levels of responsibility, and in pay.If a recipient enters into a written agreement for the referral or assignment of students to an employer, the agreement must contain an assurance from the employer that students will be accepted and assigned to jobs and otherwise treated without regard to race, color, national origin, sex, or handicap. Recipients may not honor any employer’s request for students who are free of handicaps or for students of a particular race, color, national origin, or sex. In the event an employer or prospective employer is or has been subject to court action involving discrimination in employment, school officials should rely on the court’s findings if the decision resolves the issue of whether the employer has engaged in unlawful discrimination.

VII b Apprentice training programs. A recipient may not enter into any agreement for the provision or support of apprentice training for students or union members with any labor union or other sponsor that discriminates against its members or applicants for membership on the basis of race, color, national origin, sex, or handicap. If a recipient enters into a written agreement with a labor union or other sponsor providing for apprentice training, the agreement must contain an assurance from the union or other sponsor:

VII b 1 That it does not engage in such discrimination against its membership or applicants for membership; and

VII b 2 that apprentice training will be offered and conducted for its membership free of such discrimination.VIII Employment of Faculty and StaffVIII a Employment generally. Recipients may not engage in any employment practice that discriminates

against any employee or applicant for employment on the basis of sex or handicap. Recipients may not engage in any employment practice that discriminates on the basis of race, color, or national origin if such discrimination tends to result in segregation, exclusion or other discrimination against students.

VIII b Recruitment. Recipients may not limit their recruitment for employees to schools, communities, or companies disproportionately composed of persons of a particular race, color, national origin, sex, or handicap except for the purpose of overcoming the effects of past discrimination. Every source of

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faculty must be notified that the recipient does not discriminate in employment on the basis of race, color, national origin, sex, or handicap.

VIII c Patterns of discrimination. Whenever the Office for Civil Rights finds that in light of the representation of protected groups in the relevant labor market there is a significant under-representation or overrepresentation of protected group persons on the staff of a vocational education school or program, it will presume that the disproportion results from unlawful discrimination. This presumption can be overcome by proof that qualified persons of the particular race, color, national origin, or sex, or that qualified handicapped persons are not in fact available in the relevant labor market.

VIII d Salary policies. Recipients must establish and maintain faculty salary scales and policy based upon the conditions and responsibilities of employment, without regard to race, color, national origin, sex or handicap.

VIII e Employment opportunities for handicapped applicants. Recipients must provide equal employment opportunities for teaching and administrative positions to handicapped applicants who can perform the essential functions of the position in question. Recipients must make reasonable accommodation for the physical or mental limitations of handicapped applicants who are otherwise qualified unless recipients can demonstrate that the accommodation would impose an undue hardship.

VIII f The effects of past discrimination. Recipients must take steps to overcome the effects of past discrimination in the recruitment, hiring, and assignment of faculty. Such steps may include the recruitment or reassignment of qualified persons of a particular race, national origin, or sex, or who are handicapped.

VIII g Staff of state advisory councils of vocational education. State Advisory Councils of Vocational Education are recipients of Federal financial assistance and therefore must comply with Section VIII of the Guidelines.

VIII h Employment at state operated vocational education centers through state civil-service authorities.Where recruitment and hiring of staff for State operated vocational education centers is conducted by a State civil service employment authority, the State education agency operating the program must insure that recruitment and hiring of staff for the vocational education center is conducted in accordance with the requirements of these Guidelines.

IX Proprietary Vocational Education SchoolsIX a Recipient responsibilities. Proprietary vocational education schools that are recipients of Federal

financial assistance through Federal student assistance programs or otherwise are subject to all of the requirements of the Department’s regulations and these Guidelines.

IX b Enforcement authority. Enforcement of the provisions of Title IX of the Education Amendments of 1972 and section 504 of the Rehabilitation Act of 1973 is the responsibility of the Department of Health and Human Services. However, authority to enforce Title VI of the Civil Rights Act of 1964 for proprietary vocational education schools has been delegated to the Veterans Administration.When the Office for Civil Rights receives a Title VI complaint alleging discrimination by a proprietary vocational education school it will forward the complaint to the Veterans Administration and cite the applicable requirements of the Department’s regulations and these Guidelines. The complainant will be notified of such action. [44 FR 17164, Mar. 21, l979]

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Part 84: Nondiscrimination on the Basis of Handicapin Programs and Activities Receiving Federal Financial Assistance.

Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance.

84.1 Subpart A—General Provisions. Purpose. The purpose of this part is to effectuate section 504 of the Rehabilitation Act of 1973, which is designed to eliminate discrimination on the basis of handicap in any program or activity receiving Federal financial assistance.

84.2 Application. This part applies to each recipient of Federal financial assistance from the Department of Health and Human Services and to each program or activity that receives or benefits from such assistance.

84.3 Definitions. As used in this part, the term:84.3 a The Act means the Rehabilitation Act of 1973, Pub. L. 93-112, as amended by the

Rehabilitation Act Amendments of 1974, Pub. L. 93-516, 29 U.S.C. 794.84.3 b Section 504 means section 504 of the Act.84.3 c Education of the Handicapped Act means that statute as amended by the Education for all

Handicapped Children Act of 1975, Pub. L. 94-142, 20 U.S.C. 1401 et seq.84.3 d Department means the Department of Health and Human Services.84.3 e Director means the Director of the Office for Civil Rights of the Department.84.3 f Recipient means any state or its political subdivision, any instrumentality of a state or its

political subdivision, any public or private agency, institution, organization, or other entity, or any person to which Federal financial assistance is extended directly or through another recipient, including any successor, assignee, or transferee of a recipient, but excluding the ultimate beneficiary of the assistance.

84.3 g Applicant for assistance means one who submits an application, request, or plan required to be approved by a Department official or by a recipient as a condition to becoming a recipient.

84.3 h Federal financial assistance means any grant, loan, contract (other than a procurement contract or a contract of insurance or guaranty), or any other arrangement by which the Department provides or otherwise makes available assistance in the form of:

84.3 h 1 Funds;84.3 h 2 Services of Federal personnel; or84.3 h 3 Real and personal property or any interest in or use of such property, including:84.3 h 3 i Transfers or leases of such property for less than fair market value or for reduced consideration;

and84.3 h 3 ii Proceeds from a subsequent transfer or lease of such property if the Federal share of its fair

market value is not returned to the Federal Government.84.3 i Facility means all or any portion of buildings, structures, equipment, roads, walks, parking lots,

or other real or personal property or interest in such property.84.3 j Handicapped person.84.3 j 1 Handicapped persons means any person who84.3 j 1 i has a physical or mental impairment which substantially limits one or more major life

activities,

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.3 j 1 ii has a record of such an impairment, or84.3 j 1 iii is regarded as having such an impairment.84.3 j 2 As used in paragraph j 1 of this section, the phrase:84.3 j 2 i Physical or mental impairment means84.3 j 2 i a any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting

one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive, digestive, genito-urinary; hemic and lymphatic; skin; and endocrine; or

84.3 j 2 i b any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities.

84.3 j 2 ii Major life activities means functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.

84.3 j 2 iii Has a record of such an impairment means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.

84.3 j 2 iv Is regarded as having an impairment means84.3 j 2 iv a has a physical or mental impairment that does not substantially limit major life activities but

that is treated by a recipient as constituting such a limitation;84.3 j 2 iv b has a physical or mental impairment that substantially limits major life activities only as a

result of the attitudes of others toward such impairment; or84.3 j 2 iv c has none of the impairments defined in paragraph j 2 i of this section but is treated by a

recipient as having such an impairment.84.3 k Qualified handicapped person means:84.3 k 1 With respect to employment, a handicapped person who, with reasonable accommodation, can

perform the essential functions of the job in question;84.3 k 2 With respect to public preschool elementary, secondary, or adult educational services, a

handicapped person84.3 k 2 i of an age during which nonhandicapped persons are provided such services,84.3 k 2 ii of any age during which it is mandatory under state law to provide such services to

handicapped persons, or84.3 k 2 iii to whom a state is required to provide a free appropriate public education under section 612 of

the Education of the Handicapped Act; and84.3 k 3 With respect to postsecondary and vocational education services, a handicapped person who

meets the academic and technical standards requisite to admission or participation in the recipient’s education program or activity;

84.3 k 4 With respect to other services, a handicapped person who meets the essential eligibility requirements for the receipt of such services.

84.3 l Handicap means any condition or characteristic that renders a person a handicapped person as defined in paragraph j of this section.

84.4 Discrimination prohibited.84.4 a General. No qualified handicapped person shall, on the basis of handicap, be excluded from

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participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity which receives or benefits from Federal financial assistance.

84.4 b Discriminatory actions prohibited.84.4 b 1 A recipient, in providing any aid, benefit, or service, may not, directly or through contractual,

licensing, or other arrangements, on the basis of handicap:84.4 b 1 i Deny a qualified handicapped person the opportunity to participate in or benefit from the aid,

benefit, or service;84.4 b 1 ii Afford a qualified handicapped person an opportunity to participate in or benefit from the aid,

benefit, or service that is not equal to that afforded others;84.4 b 1 iii Provide a qualified handicapped person with an aid, benefit, or service that is not as effective as

that provided to others;84.4 b 1 iv Provide different or separate aid, benefits, or services to handicapped persons or to any class of

handicapped persons unless such action is necessary to provide qualified handicapped persons with aid, benefits, or services that are as effective as those provided to others;

84.4 b 1 v Aid or perpetuate discrimination against a qualified handicapped person by providing significant assistance to an agency, organization, or person that discriminates on the basis of handicap in providing any aid, benefit, or service to beneficiaries of the recipients program;

84.4 b 1 vi Deny a qualified handicapped person the opportunity to participate as a member of planning or advisory boards; or

84.4 b 1 vii Otherwise limit a qualified handicapped person in the enjoyment of any right, privilege, advantage, or opportunity enjoyed by others receiving an aid, benefit, or service.

84.4 b 2 For purposes of this part, aids, benefits, and services, to be equally effective, are not required to produce the identical result or level of achievement for handicapped and nonhandicapped persons, but must afford handicapped persons equal opportunity to obtain the same result, to gain the same benefit, or to reach the same level of achievement, in the most integrated setting appropriate to the person’s needs.

84.4 b 3 Despite the existence of separate or different programs or activities provided in accordance with this part, a recipient may not deny a qualified handicapped person the opportunity to participate in such programs or activities that are not separate or different.

84.4 b 4 A recipient may not, directly or through contractual or other arrangements, utilize criteria or methods of administration

84.4 b 4 i that have the effect of subjecting qualified handicapped persons to discrimination on the basis of handicap,

84.4 b 4 ii that have the purpose or effect of defeating or substantially impairing accomplishment of the objectives of the recipient’s program with respect to handicapped persons, or

84.4 b 4 iii that perpetuate the discrimination of another recipient if both recipients are subject to common administrative control or are agencies of the same State.

84.4 b 5 In determining the site or location of a facility, an applicant for assistance or a recipient may not make selections

84.4 b 5 i that have the effect of excluding handicapped persons from, denying them the benefits of, or otherwise subjecting them to discrimination under any program or activity that receives or

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benefits from Federal financial assistance or84.4 b 5 ii that have the purpose or effect of defeating or substantially impairing the accomplishment of

the objectives of the program or activity with respect to handicapped persons.84.4 b 6 As used in this section, the aid, benefit, or service provided under a program or activity

receiving or benefitting from Federal financial assistance includes any aid, benefit, or service provided in or through a facility that has been constructed, expanded, altered, leased or rented, or otherwise acquired, in whole or in part, with Federal financial assistance.

84.4 c Programs limited by Federal law. The exclusion of nonhandicapped persons from the benefits of a program limited by Federal statute or executive order to handicapped persons or the exclusion of a specific class of handicapped persons from a program limited by Federal statute or executive order to a different class of handicapped persons is not prohibited by this part.

84.5 Assurances required.84.5 a Assurances. An applicant for Federal financial assistance for a program or activity to which this

part applies shall submit an assurance, on a form specified by the Director, that the program will be operated in compliance with this part. An applicant may incorporate these assurances by reference in subsequent applications to the Department.

84.5 b Duration of obligation.84.5 b 1 In the case of Federal financial assistance extended in the form of real property or to provide

real property or structures on the property, the assurance will obligate the recipient or, in the case of a subsequent transfer, the transferee, for the period during which the real property or structures are used for the purpose for which Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits.

84.5 b 2 In the case of Federal financial assistance extended to provide personal property, the assurance will obligate the recipient for the period during which it retains ownership or possession of the property.

84.5 b 3 In all other cases the assurance will obligate the recipient for the period during which Federal financial assistance is extended.

84.5 c Covenants.84.5 c 1 Where Federal financial assistance is provided in the form of real property or interest in the

property from the Department, the instrument effecting or recording this transfer shall contain a covenant running with the land to assure nondiscrimination for the period during which the real property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits.

84.5 c 2 Where no transfer of property is involved but property is purchased or improved with Federal financial assistance, the recipient shall agree to include the covenant described in paragraph b 2 of this section in the instrument effecting or recording any subsequent transfer of the property.

84.5 c 3 Where Federal financial assistance is provided in the form of real property or interest in the property from the Department, the covenant shall also include a condition coupled with a right to be reserved by the Department to revert title to the property in the event of a breach of the covenant. If a transferee of real property proposes to mortgage or otherwise encumber the real property as security for financing construction of new, or improvement of existing, facilities on the property for the purposes for which the property was transferred, the Director may, upon request of the transferee and if necessary to accomplish such financing and upon such

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conditions as he or she deems appropriate, agree to forbear the exercise of such right to revert title for so long as the lien of such mortgage or other encumbrance remains effective.

84.6 Remedial action, voluntary action, and self-evaluation.84.6 a Remedial action.84.6 a 1 If the Director finds that a recipient has discriminated against persons on the basis of handicap

in violation of section 504 or this part, the recipient shall take such remedial action as the Director deems necessary to overcome the effects of the discrimination.

84.6 a 2 Where a recipient is found to have discriminated against persons on the basis of handicap in violation of section 504 or this part and where another recipient exercises control over the recipient that has discriminated, the Director, where appropriate, may require either or both recipients to take remedial action.

84.6 a 3 The Director may, where necessary to overcome the effects of discrimination in violation of section 504 or this part, require a recipient to take remedial action

84.6 a 3 i with respect to handicapped persons who are no longer participants in the recipient’s program but who were participants in the program when such discrimination occurred or

84.6 a 3 ii with respect to handicapped persons who would have been participants in the program had the discrimination not occurred.

84.6 b Voluntary action. A recipient may take steps, in addition to any action that is required by this part, to overcome the effects of conditions that resulted in limited participation in the recipient’s program or activity by qualified handicapped persons.

84.6 c Self-evaluation.84.6 c 1 A recipient shall, within one year of the effective date of this part:84.6 c 1 i Evaluate, with the assistance of interested persons, including handicapped persons or

organizations representing handicapped persons, its current policies and practices and the effects thereof that do not or may not meet the requirements of this part;

84.6 c 1 ii Modify, after consultation with interested persons, including handicapped persons or organizations representing handicapped persons, any policies and practices that do not meet the requirements of this part; and

84.6 c 1 iii Take, after consultation with interested persons, including handicapped persons or organizations representing handicapped persons, appropriate remedial steps to eliminate the effects of any discrimination that resulted from adherence to these policies and practices.

84.6 c 2 A recipient that employs fifteen or more persons shall, for at least three years following completion of the evaluation required under paragraph c 1 of this section , maintain on file, make available for public inspection, and provide to the Director upon request:

84.6 c 2 i A list of the interested persons consulted,84.6 c 2 ii a description of areas examined and any problems identified, and84.6 c 2 iii a description of any modifications made and of any remedial steps taken.84.7 Designation of responsible employee and adoption of grievance procedures.84.7 a Designation of responsible employee. A recipient that employs fifteen or more persons shall

designate at least one person to coordinate its efforts to comply with this part.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.7 b Adoption of grievance procedures. A recipient that employs fifteen or more persons shall adopt

grievance procedures that incorporate appropriate due process standards and that provide for the prompt and equitable resolution of complaints alleging any action prohibited by this part. Such procedures need not be established with respect to complaints from applicants for employment or from applicants for admission to postsecondary educational institutions.

84.8 Notice.84.8 a A recipient that employs fifteen or more persons shall take appropriate initial and continuing

steps to notify participants, beneficiaries, applications, and employees, including those with impaired vision or hearing, and unions or professional organizations holding collective bargaining or professional agreements with the recipient that it does not discriminate on the basis of handicap in violation of section 504 and this part. The notification shall state, where appropriate, that the recipient does not discriminate in admission or access to, or treatment or employment in, its programs and activities. The notification shall also include an identification of the responsible employee designated pursuant to Sec. 84.7 a. A recipient shall make the initial notification required by this paragraph within 90 days of the effective date of this part. Methods of initial and continuing notification may include the posting of notices, publication in newspapers and magazines, placement of notices in recipients’ publication, and distribution of memoranda or other written communications.

84.8 b If a recipient publishes or uses recruitment materials or publications containing general information that it makes available to participants, beneficiaries, applicants, or employees, it shall include in those materials or publications a statement of the policy described in paragraph a of this section. A recipient may meet the requirement of this paragraph either by including appropriate inserts in existing materials and publications or by revising and reprinting the materials and publications.

84.9 Administrative requirements for small recipients. The Director may require any recipient with fewer than fifteen employees, or any class of such recipients, to comply with Secs. 84.7 and 84.8, in whole or in part, when the Director finds a violation of this part or finds that such compliance will not significantly impair the ability of the recipient or class of recipients to provide benefits or services.

84.10 Effect of State or local law or other requirements and effect of employment opportunities.84.10 a The obligation to comply with this part is not obviated or alleviated by the existence of any

state or local law or other requirement that, on the basis of handicap, imposes prohibitions or limits upon the eligibility of qualified handicapped persons to receive services or to practice any occupation or profession.

84.10 b The obligation to comply with this part is not obviated or alleviated because employment opportunities in any occupation or profession are or may be more limited for handicapped persons than for nonhandicapped persons.

84.11 [Subpart B—Employment Practices] Discrimination prohibited.84.11 a General.84.11 a 1 No qualified handicapped person shall, on the basis of handicap, be subjected to discrimination

in employment under any program or activity to which this part applies.84.11 a 2 A recipient that receives assistance under the Education of the Handicapped Act shall take

positive steps to employ and advance in employment qualified handicapped persons in programs assisted under that Act.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.11 a 3 A recipient shall make all decisions concerning employment under any program or activity to

which this part applies in a manner which ensures that discrimination on the basis of handicap does not occur and may not limit, segregate, or classify applicants or employees in any way that adversely affects their opportunities or status because of handicap.

84.11 a 4 A recipient may not participate in a contractual or other relationship that has the effect of subjecting qualified handicapped applicants or employees to discrimination prohibited by this subpart. The relationships referred to in this paragraph include relationships with employment and referral agencies, with labor unions, with organizations providing or administering fringe benefits to employees of the recipient, and with organizations providing training and apprenticeship programs.

84.11 b Specific activities. The provisions of this subpart apply to:84.11 b 1 Recruitment, advertising, and the processing of applications for employment;84.11 b 2 Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of

return from layoff and rehiring;84.11 b 3 Rates of pay or any other form of compensation and changes in compensation;84.11 b 4 Job assignments, job classifications, organizational structures, position descriptions, lines of

progression, and seniority lists;84.11 b 5 Leaves of absence, sick leave, or any other leave;84.11 b 6 Fringe benefits available by virtue of employment, whether or not administered by the

recipient;84.11 b 7 Selection and financial support for training, including apprenticeship, professional meetings,

conferences, and other related activities, and selection for leaves of absence to pursue training;84.11 b 8 Employer sponsored activities, including social or recreational programs; and84.11 b 9 Any other term, condition, or privilege of employment.84.11 c A recipient’s obligation to comply with this subpart is not affected by any inconsistent term of

any collective bargaining agreement to which it is a party.84.12 Reasonable accommodation.84.12 a A recipient shall make reasonable accommodation to the known physical or mental limitations

of an otherwise qualified handicapped applicant or employee unless the recipient can demonstrate that the accommodation would impose an undue hardship on the operation of its program.

84.12 b Reasonable accommodation may include:84.12 b 1 Making facilities used by employees readily accessible to and usable by handicapped persons,

and84.12 b 2 job restructuring, part-time or modified work schedules, acquisition or modification of

equipment or devices, the provision of readers or interpreters, and other similar actions.84.12 c In determining pursuant to paragraph a of this section whether an accommodation would

impose an undue hardship on the operation of a recipient’s program, factors to be considered include:

84.12 c 1 The overall size of the recipient’s program with respect to number of employees, number and type of facilities, and size of budget;

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.12 c 2 The type of the recipient’s operation, including the composition and structure of the recipient’s

workforce; and84.12 c 3 The nature and cost of the accommodation needed.84.12 d A recipient may not deny any employment opportunity to a qualified handicapped employee or

applicant if the basis for the denial is the need to make reasonable accommodation to the physical or mental limitations of the employee or applicant.

84.13 Employment criteria.84.13 a A recipient may not make use of any employment test or other selection criterion that screens

out or tends to screen out handicapped persons or any class of handicapped persons unless:84.13 a 1 The test score or other selection criterion, as used by the recipient, is shown to be job-related

for the position in question, and84.13 a 2 alternative job-related tests or criteria that do not screen out or tend to screen out as many

handicapped persons are not shown by the Director to be available.84.13 b A recipient shall select and administer tests concerning employment so as best to ensure that,

when administered to an applicant or employee who has a handicap that impairs sensory, manual, or speaking skills, the test results accurately reflect the applicant’s or employee’s job skills, aptitude, or whatever other factor the test purports to measure, rather than reflecting the applicant’s or employee’s impaired sensory, manual, or speaking skills (except where those skills are the factors that the test purports to measure).

84.14 Preemployment inquiries. 84.14 a Except as provided in paragraph b and c of this section, a recipient may not conduct a

preemployment medical examination or may not make preemployment inquiry of an applicant as to whether the applicant is a handicapped person or as to the nature or severity of a handicap. A recipient may, however, make preemployment inquiry into an applicant’s ability to perform job-related functions.

84.14 b When a recipient is taking remedial action to correct the effects of past discrimination pursuant to Sec. 84.6 a, when a recipient is taking voluntary action to overcome the effects of conditions that resulted in limited participation in its federally assisted program or activity pursuant to Sec. 84.6 b, or when a recipient is taking affirmative action pursuant to section 503 of the Act, the recipient may invite applicants for employment to indicate whether and to what extent they are handicapped, Provided, That:

84.14 b 1 The recipient states clearly on any written questionnaire used for this purpose or makes clear orally if no written questionnaire is used that the information requested is intended for use solely in connection with its remedial action obligations or its voluntary or affirmative action efforts; and

84.14 b 2 The recipient states clearly that the information is being requested on a voluntary basis, that it will be kept confidential as provided in paragraph d of this section, that refusal to provide it will not subject the applicant or employee to any adverse treatment, and that it will be used only in accordance with this part.

84.14 c Nothing in this section shall prohibit a recipient from conditioning an offer of employment on the results of a medical examination conducted prior to the employee’s entrance on duty, Provided, That:

84.14 c 1 All entering employees are subjected to such an examination regardless of handicap, and

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http://www.dol.gov/esa/regs/compliance/ofccp/sec503.htm

Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.14 c 2 the results of such an examination are used only in accordance with the requirements of this

part.84.14 d Information obtained in accordance with this section as to the medical condition or history of

the applicant shall be collected and maintained on separate forms that shall be accorded confidentiality as medical records, except that:

84.14 d 1 Supervisors and managers may be informed regarding restrictions on the work or duties of handicapped persons and regarding necessary accommodations;

84.14 d 2 First aid and safety personnel may be informed, where appropriate, if the condition might require emergency treatment; and

84.14 d 3 Government officials investigating compliance with the Act shall be provided relevant information upon request.

84.15-84.20 [Reserved]84.21 [Subpart C—Program Accessibility] Discrimination prohibited. No qualified handicapped

person shall, because a recipient’s facilities are inaccessible to or unusable by handicapped persons, be denied the benefits of, be excluded from participation in, or otherwise be subjected to discrimination under any program or activity to which this part applies.

84.22 Existing facilities.84.22 a Program accessibility. A recipient shall operate each program or activity to which this part

applies so that the program or activity, when viewed in its entirety, is readily accessible to handicapped persons. This paragraph does not require a recipient to make each of its existing facilities or every part of a facility accessible to and usable by handicapped persons.

84.22 b Methods. A recipient may comply with the requirements of paragraph a of this section through such means as redesign of equipment, reassignment of classes or other services to accessible buildings, assignment of aides to beneficiaries, home visits, delivery of health, welfare, or other social services at alternate accessible sites, alteration of existing facilities and construction of new facilities in conformance with the requirements of Sec. 84.23, or any other methods that result in making its program or activity accessible to handicapped persons. A recipient is not required to make structural changes in existing facilities where other methods are effective in achieving compliance with paragraph a of this section. In choosing among available methods for meeting the requirement of paragraph a of this section, a recipient shall give priority to those methods that offer programs and activities to handicapped persons in the most integrated setting appropriate.

84.22 c Small health, welfare, or other social service providers. If a recipient with fewer than fifteen employees that provides health, welfare, or other social services finds, after consultation with a handicapped person seeking its services, that there is no method of complying with paragraph a of this section other than making a significant alteration in its existing facilities, the recipient may, as an alternative, refer the handicapped person to other providers of those services that are accessible.

84.22 d Time period. A recipient shall comply with the requirement of paragraph a of this section within sixty days of the effective date of this part except that where structural changes in facilities are necessary, such changes shall be made within three years of the effective date of this part, but in any event as expeditiously as possible.

84.22 e Transition plan. In the event that structural changes to facilities are necessary to meet the

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requirement of paragraph a of this section, a recipient shall develop, within six months of the effective date of this part, a transition plan setting forth the steps necessary to complete such changes. The plan shall be developed with the assistance of interested persons, including handicapped persons or organizations representing handicapped persons. A copy of the transition plan shall be made available for public inspection. The plan shall, at a minimum:

84.22 e 1 Identify physical obstacles in the recipient’s facilities that limit the accessibility of its program or activity to handicapped persons;

84.22 e 2 Describe in detail the methods that will be used to make the facilities accessible;84.22 e 3 Specify the schedule for taking the steps necessary to achieve full program accessibility and, if

the time period of the transition plan is longer than one year, identify the steps that will be taken during each year of the transition period; and

84.22 e 4 Indicate the person responsible for implementation of the plan.84.22 f Notice. The recipient shall adopt and implement procedures to ensure that interested persons,

including persons with impaired vision or hearing, can obtain information as to the existence and location of services, activities, and facilities that are accessible to and usable by handicapped persons.

84.23 New construction.84.23 a Design and construction. Each facility or part of a facility constructed by, on behalf of, or for

the use of a recipient shall be designed and constructed in such manner that the facility or part of the facility is readily accessible to and usable by handicapped persons, if the construction was commenced after the effective date of this part.

84.23 b Alteration. Each facility or part of a facility which is altered by, on behalf of, or for the use of a recipient after the effective date of this part in a manner that affects or could affect the usability of the facility or part of the facility shall, to the maximum extent feasible, be altered in such manner that the altered portion of the facility is readily accessible to and usable by handicapped persons.

84.23 c Conformance with Uniform Federal Accessibility Standards.84.23 c 1 Effective as of January 18, 1991, design, construction, or alteration of buildings in

conformance with sections 3-8 of the Uniform Federal Accessibility Standards (UFAS) (appendix A to 41 CFR subpart 101-19.6) shall be deemed to comply with the requirements of this section with respect to those buildings. Departures from particular technical and scoping requirements of UFAS by the use of other methods are permitted where substantial equivalent or greater access to and usability of the building is provided.

84.23 c 2 For purposes of this section, section 4.1.61 g of UFAS shall be interpreted to exempt from the requirements of UFAS only mechanical rooms and other spaces that, because of their intended use, will not require accessibility to the public or beneficiaries or result in the employment or residence therein of persons with physical handicaps.

84.23 c 3 This section does not require recipients to make building alterations that have little likelihood of being accomplished without removing or altering a load-bearing structural member.

84.24-84.30 [Reserved]84.31 [Subpart D—Preschool, Elementary, and Secondary Education] Application of this subpart.]

Subpart D applies to preschool, elementary, secondary, and adult education programs and activities that receive or benefit from Federal financial assistance and to recipients that operate,

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or that receive or benefit from Federal financial assistance for the operation of, such programs or activities.

84.32 Location and notification. A recipient that operates a public elementary or secondary education program shall annually:

84.32 a Undertake to identify and locate every qualified handicapped person residing in the recipient’s jurisdiction who is not receiving a public education; and

84.32 b Take appropriate steps to notify handicapped persons and their parents or guardians of the recipient’s duty under this subpart.

84.33 Free appropriate public education.84.33 a General. A recipient that operates a public elementary or secondary education program shall

provide a free appropriate public education to each qualified handicapped person who is in the recipient’s jurisdiction, regardless of the nature or severity of the person’s handicap.

84.33 b Appropriate education.84.33 b 1 For the purpose of this subpart, the provision of an appropriate education is the provision of

regular or special education and related aids and services that84.33 b 1 i are designed to meet individual educational needs of handicapped persons as adequately as the

needs of nonhandicapped persons are met and84.33 b 1 ii are based upon adherence to procedures that satisfy the requirements of Sec. 84.34, 84.35, and

84.36.84.33 b 2 Implementation of an individualized education program developed in accordance with the

Education of the Handicapped Act is one means of meeting the standard established in paragraph b 1 i of this section.

84.33 b 3 A recipient may place a handicapped person in or refer such person to a program other than the one that it operates as its means of carrying out the requirements of this subpart. If so, the recipient remains responsible for ensuring that the requirements of this subpart are met with respect to any handicapped person so placed or referred.

84.33 c Free education.84.33 c 1 General. For the purpose of this section, the provision of a free education is the provision of

educational and related services without cost to the handicapped person or to his or her parents or guardian, except for those fees that are imposed on non-handicapped persons or their parents or guardian. It may consist either of the provision of free services or, if a recipient places a handicapped person in or refers such person to a program not operated by the recipient as its means of carrying out the requirements of this subpart, of payment for the costs of the program. Funds available from any public or private agency may be used to meet the requirements of this subpart. Nothing in this section shall be construed to relieve an insurer or similar third party from an otherwise valid obligation to provide or pay for services provided to a handicapped person.

84.33 c 2 Transportation. If a recipient places a handicapped person in or refers such person to a program not operated by the recipient as its means of carrying out the requirements of this subpart, the recipient shall ensure that adequate transportation to and from the program is provided at no greater cost than would be incurred by the person or his or her parents or guardian if the person were placed in the program operated by the recipient.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.33 c 3 Residential placement. If placement in a public or private residential program is necessary to

provide a free appropriate public education to a handicapped person because of his or her handicap, the program, including non-medical care and room and board, shall be provided at no cost to the person or his or her parents or guardian.

84.33 c 4 Placement of handicapped persons by parents. If a recipient has made available, in conformance with the requirements of this section and Sec. 84.34, a free appropriate public education to a handicapped person and the person’s parents or guardian choose to place the person in a private school, the recipient is not required to pay for the person’s education in the private school. Disagreements between a parent or guardian and a recipient regarding whether the recipient has made such a program available or otherwise regarding the question of financial responsibility are subject to the due process procedures of Sec. 84.36.

84.33 d Compliance. A recipient may not exclude any qualified handicapped person from a public elementary or secondary education after the effective date of this part. A recipient that is not, on the effective date of this regulation, in full compliance with the other requirements of the preceding paragraphs of this section shall meet such requirements at the earliest practicable time and in no event later than September 1, 1978.

84.34 Educational setting.84.34 a Academic setting. A recipient to which this subpart applies shall educate, or shall provide for

the education of, each qualified handicapped person in its jurisdiction with persons who are not handicapped to the maximum extent appropriate to the needs of the handicapped person. A recipient shall place a handicapped person in the regular educational environment operated by the recipient unless it is demonstrated by the recipient that the education of the person in the regular environment with the use of supplementary aids and services cannot be achieved satisfactorily. Whenever a recipient places a person in a setting other than the regular educational environment pursuant to this paragraph, it shall take into account the proximity of the alternate setting to the person’s home.

84.34 b Nonacademic settings. In providing or arranging for the provision of nonacademic and extracurricular services and activities, including meals, recess periods, and the services and activities set forth in Sec. 84.37 a 2, a recipient shall ensure that handicapped persons participate with nonhandicapped persons in such activities and services to the maximum extent appropriate to the needs of the handicapped person in question.

84.34 c Comparable facilities. If a recipient, in compliance with paragraph a of this section, operates a facility that is identifiable as being for handicapped persons, the recipient shall ensure that the facility and the services and activities provided therein are comparable to the other facilities, services, and activities of the recipient.

84.35 Evaluation and placement.84.35 a Preplacement evaluation. A recipient that operates a public elementary or secondary education

program shall conduct an evaluation in accordance with the requirements of paragraph b of this section of any person who, because of handicap, needs or is believed to need special education or related services before taking any action with respect to the initial placement of the person in a regular or special education program and any subsequent significant change in placement.

84.35 b Evaluation procedures. A recipient to which this subpart applies shall establish standards and procedures for the evaluation and placement of persons who, because of handicap, need or are believed to need special education or related services which ensure that:

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.35 b 1 Tests and other evaluation materials have been validated for the specific purpose for which they

are used and are administered by trained personnel in conformance with the instructions provided by their producer;

84.35 b 2 Tests and other evaluation materials include those tailored to assess specific areas of educational need and not merely those which are designed to provide a single general intelligence quotient; and

84.35 b 3 Tests are selected and administered so as best to ensure that, when a test is administered to a student with impaired sensory, manual, or speaking skills, the test results accurately reflect the student’s aptitude or achievement level or whatever other factor the test purports to measure, rather than reflecting the student’s impaired sensory, manual, or speaking skills (except where those skills are the factors that the test purports to measure).

84.35 c Placement procedures. In interpreting evaluation data and in making placement decisions, a recipient shall

84.35 c 1 draw upon information from a variety of sources, including aptitude and achievement tests, teacher recommendations, physical condition, social or cultural background, and adaptive behavior,

84.35 c 2 establish procedures to ensure that information obtained from all such sources is documented and carefully considered,

84.35 c 3 ensure that the placement decision is made by a group of persons, including persons knowledgeable about the child, the meaning of the evaluation data, and the placement options, and

84.35 c 4 ensure that the placement decision is made in conformity with Sec. 84.34.84.35 d Reevaluation. A recipient to which this section applies shall establish procedures, in accordance

with paragraph b of this section, for periodic reevaluation of students who have been provided special education and related services. A reevaluation procedure consistent with the Education for the Handicapped Act is one means of meeting this requirement.

84.36 Procedural safeguards. A recipient that operates a public elementary or secondary education program shall establish and implement, with respect to actions regarding the identification, evaluation, or educational placement of persons who, because of handicap, need or are believed to need special instruction or related services, a system of procedural safeguards that includes notice, an opportunity for the parents or guardian of the person to examine relevant records, an impartial hearing with opportunity for participation by the person’s parents or guardian and representation by counsel, and a review procedure. Compliance with the procedural safeguards of section 615 of the Education of the Handicapped Act is one means of meeting this requirement.

84.37 Nonacademic services.84.37 a General.84.37 a 1 A recipient to which this subpart applies shall provide non-academic and extracurricular

services and activities in such manner as is necessary to afford handicapped students an equal opportunity for participation in such services and activities.

84.37 a 2 Nonacademic and extracurricular services and activities may include counseling services, physical recreational athletics, transportation, health services, recreational activities, special interest groups or clubs sponsored by the recipients, referrals to agencies which provide

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assistance to handicapped persons, and employment of students, including both employment by the recipient and assistance in making available outside employment.

84.37 b Counseling services. A recipient to which this subpart applies that provides personal, academic, or vocational counseling, guidance, or placement services to its students shall provide these services without discrimination on the basis of handicap. The recipient shall ensure that qualified handicapped students are not counseled toward more restrictive career objectives than are nonhandicapped students with similar interests and abilities.

84.37 c Physical education and athletics.84.37 c 1 In providing physical education courses and athletics and similar programs and activities to any

of its students, a recipient to which this subpart applies may not discriminate on the basis of handicap. A recipient that offers physical education courses or that operates or sponsors interscholastic, club, or intramural athletics shall provide to qualified handicapped students an equal opportunity for participation in these activities.

84.37 c 2 A recipient may offer to handicapped students physical education and athletic activities that are separate or different from those offered to nonhandicapped students only if separation or differentiation is consistent with the requirements of Sec. 84.34 and only if no qualified handicapped student is denied the opportunity to compete for teams or to participate in courses that are not separate or different.

84.38 Preschool and adult education programs. A recipient to which this subpart applies that operates a preschool education or day care program or activity or an adult education program or activity may not, on the basis of handicap, exclude qualified handicapped persons from the program or activity and shall take into account the needs of such persons in determining the aid, benefits, or services to be provided under the program or activity.

84.39 Private education programs.84.39 a A recipient that operates a private elementary or secondary education program may not, on the

basis of handicap, exclude a qualified handicapped person from such program if the person can, with minor adjustments, be provided an appropriate education, as defined in Sec. 84.33 b 1, within the recipient’s program.

84.39 b A recipient to which this section applies may not charge more for the provision of an appropriate education to handicapped persons than to nonhandicapped persons except to the extent that any additional charge is justified by a substantial increase in cost to the recipient.

84.39 c A recipient to which this section applies that operates special education programs shall operate such programs in accordance with the provisions of Secs. 84.35 and Sec. 84.36. Each recipient to which this section applies is subject to the provisions of Sec. 84.34, 84.37, and 84.38.

84.40 [Reserved]84.41 [Subpart E—Postsecondary Education] Application of this subpart. Subpart E applies to

postsecondary education programs and activities, including postsecondary vocational education programs and activities, that receive or benefit from Federal financial assistance and to recipients that operate, or that receive or benefit from Federal financial assistance for the operation of, such programs or activities.

84.42 Admissions and recruitment.84.42 a General. Qualified handicapped persons may not, on the basis of handicap, be denied admission

or be subjected to discrimination in admission or recruitment by a recipient to which this

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subpart applies.84.42 b Admissions. In administering its admission policies, a recipient to which this subpart applies:84.42 b 1 May not apply limitations upon the number or proportion of handicapped persons who may be

admitted;84.42 b 2 May not make use of any test or criterion for admission that has a disproportionate, adverse

effect on handicapped persons or any class of handicapped persons unless84.42 b 2 i the test or criterion, as used by the recipient, has been validated as a predictor of success in the

education program or activity in question and84.42 b 2 ii alternate tests or criteria that have a less disproportionate, adverse effect are not shown by the

Director to be available.84.42 b 3 Shall assure itself that84.42 b 3 i admissions tests are selected and administered so as best to ensure that, when a test is

administered to an applicant who has a handicap that impairs sensory, manual, or speaking skills, the test results accurately reflect the applicant’s aptitude or achievement level or whatever other factor the test purports to measure, rather than reflecting the applicant’s impaired sensory, manual, or speaking skills (except where those skills are the factors that the test purports to measure);

84.42 b 3 ii admissions tests that are designed for persons with impaired sensory, manual, or speaking skills are offered as often and in as timely a manner as are other admissions tests; and

84.42 b 3 iii admissions tests are administered in facilities that, on the whole, are accessible to handicapped persons; and

84.42 b 4 Except as provided in paragraph c of this section, may not make preadmission inquiry as to whether an applicant for admission is a handicapped person but, after admission, may make inquiries on a confidential basis as to handicaps that may require accommodation.

84.42 c Preadmission inquiry exception. When a recipient is taking remedial action to correct the effects of past discrimination pursuant to Sec. 84.6 a or when a recipient is taking voluntary action to overcome the effects of conditions that resulted in limited participation in its federally assisted program or activity pursuant to Sec. 84.6 b, the recipient may invite applicants for admission to indicate whether and to what extent they are handicapped, Provided, That:

84.42 c 1 The recipient states clearly on any written questionnaire used for this purpose or makes clear orally if no written questionnaire is used that the information requested is intended for use solely in connection with its remedial action obligations or its voluntary action efforts; and

84.42 c 2 The recipient states clearly that the information is being requested on a voluntary basis, that it will be kept confidential, that refusal to provide it will not subject the applicant to any adverse treatment, and that it will be used only in accordance with this part.

84.42 d Validity studies. For the purpose of paragraph b 2 of this section, a recipient may base prediction equations on first year grades, but shall conduct periodic validity studies against the criterion of overall success in the education program or activity in question in order to monitor the general validity of the test scores.

84.43 Treatment of students; general.84.43 a No qualified handicapped student shall, on the basis of handicap, be excluded from

participation in, be denied the benefits of, or otherwise be subjected to discrimination under any

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academic, research, occupational training, housing, health insurance, counseling, financial aid, physical education, athletics, recreation, transportation, other extracurricular, or other postsecondary education program or activity to which this subpart applies.

84.43 b A recipient to which this subpart applies that considers participation by students in education programs or activities not operated wholly by the recipient as part of, or equivalent to, and education program or activity operated by the recipient shall assure itself that the other education program or activity, as a whole, provides an equal opportunity for the participation of qualified handicapped persons.

84.43 c A recipient to which this subpart applies may not, on the basis of handicap, exclude any qualified handicapped student from any course, course of study, or other part of its education program or activity.

84.43 d A recipient to which this subpart applies shall operate its programs and activities in the most integrated setting appropriate.

84.44 Academic adjustments.84.44 a Academic requirements. A recipient to which this subpart applies shall make such

modifications to its academic requirements as are necessary to ensure that such requirements do not discriminate or have the effect of discriminating, on the basis of handicap, against a qualified handicapped applicant or student. Academic requirements that the recipient can demonstrate are essential to the program of instruction being pursued by such student or to any directly related licensing requirement will not be regarded as discriminatory within the meaning of this section. Modifications may include changes in the length of time permitted for the completion of degree requirements, substitution of specific courses required for the completion of degree requirements, and adaptation of the manner in which specific courses are conducted.

84.44 b Other rules. A recipient to which this subpart applies may not impose upon handicapped students other rules, such as the prohibition of tape recorders in classrooms or of dog guides in campus buildings, that have the effect of limiting the participation of handicapped students in the recipient’s education program or activity.

84.44 c Course examinations. In its course examinations or other procedures for evaluating students’ academic achievement in its program, a recipient to which this subpart applies shall provide such methods for evaluating the achievement of students who have a handicap that impairs sensory, manual, or speaking skills as will best ensure that the results of the evaluation represents the student’s achievement in the course, rather than reflecting the student’s impaired sensory, manual, or speaking skills (except where such skills are the factors that the test purports to measure).

84.44 d Auxiliary aids.84.44 d 1 A recipient to which this subpart applies shall take such steps as are necessary to ensure that no

handicapped student is denied the benefits of, excluded from participation in, or otherwise subjected to discrimination under the education program or activity operated by the recipient because of the absence of educational auxiliary aids for students with impaired sensory, manual, or speaking skills.

84.44 d 2 Auxiliary aids may include taped texts, interpreters or other effective methods of making orally delivered materials available to students with hearing impairments, readers in libraries for students with visual impairments, classroom equipment adapted for use by students with manual impairments, and other similar services and actions. Recipients need not provide

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attendants, individually prescribed devices, readers for personal use or study, or other devices or services of a personal nature.

84.45 Housing.84.45 a Housing provided by the recipient. A recipient that provides housing to its nonhandicapped

students shall provide comparable, convenient, and accessible housing to handicapped students at the same cost as to others. At the end of the transition period provided for in Subpart C, such housing shall be available in sufficient quantity and variety so that the scope of handicapped students’ choice of living accommodations is, as a whole, comparable to that of nonhandicapped students.

84.45 b Other housing. A recipient that assists any agency, organization, or person in making housing available to any of its students shall take such action as may be necessary to assure itself that such housing is, as a whole, made available in a manner that does not result in discrimination on the basis of handicap.

84.46 Financial and employment assistance to students.84.46 a Provision of financial assistance.84.46 a 1 In providing financial assistance to qualified handicapped persons, a recipient to which this

subpart applies may not84.46 a 1 i on the basis of handicap, provide less assistance than is provided to nonhandicapped persons,

limit eligibility for assistance, or otherwise discriminate or84.46 a 1 ii assist any entity or person that provides assistance to any of the recipient’s students in a manner

that discriminates against qualified handicapped persons on the basis of handicap.84.46 a 2 A recipient may administer or assist in the administration of scholarships, fellowships, or other

forms of financial assistance established under wills, trusts, bequests, or similar legal instruments that require awards to be made on the basis of factors that discriminate or have the effect of discriminating on the basis of handicap only if the overall effect of the award of scholarships, fellowships, and other forms of financial assistance is not discriminatory on the basis of handicap.

84.46 b Assistance in making available outside employment. A recipient that assists any agency, organization, or person in providing employment opportunities to any of its students shall assure itself that such employment opportunities, as a whole, are made available in a manner that would not violate Subpart B if they were provided by the recipient.

84.46 c Employment of students by recipients. A recipient that employs any of its students may not do so in a manner that violates Subpart B.

84.47 Nonacademic services.84.47 a Physical education and athletics.84.47 a 1 In providing physical education courses and athletics and similar programs and activities to any

of its students, a recipient to which this subpart applies may not discriminate on the basis of handicap. A recipient that offers physical education courses or that operates or sponsors intercollegiate, club, or intramural athletics shall provide to qualified handicapped students an equal opportunity for participation in these activities.

84.47 a 2 A recipient may offer to handicapped students physical education and athletic activities that are separate or different only if separation or differentiation is consistent with the requirements of

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Sec. 84.43 d and only if no qualified handicapped student is denied the opportunity to compete for teams or to participate in courses that are not separate or different.

84.47 b Counseling and placement services. A recipient to which this subpart applies that provides personal, academic, or vocational counseling, guidance, or placement services to its students shall provide these services without discrimination on the basis of handicap. The recipient shall ensure that qualified handicapped students are not counseled toward more restrictive career objectives than are nonhandicapped students with similar interests and abilities. This requirement does not preclude a recipient from providing factual information about licensing and certification requirements that may present obstacles to handicapped persons in their pursuit of particular careers.

84.47 c Social organizations. A recipient that provides significant assistance to fraternities, sororities, or similar organizations shall assure itself that the membership practices of such organizations do not permit discrimination otherwise prohibited by this subpart.

84.48-84.50 [Reserved]84.51 [Subpart F—Health, Welfare, and Social Services] Application of this subpart. Subpart F

applies to health, welfare, and other social service programs and activities that receive or benefit from Federal financial assistance and to recipients that operate, or that receive or benefit from Federal financial assistance for the operation of, such programs or activities.

84.52 Health, welfare, and other social services.84.52 a General. In providing health, welfare, or other social services or benefits, a recipient may not,

on the basis of handicap:84.52 a 1 Deny a qualified handicapped person these benefits or services;84.52 a 2 Afford a qualified handicapped person an opportunity to receive benefits or services that is not

equal to that offered nonhandicapped persons;84.52 a 3 Provide a qualified handicapped person with benefits or services that are not as effective (as

defined in Sec. 84.4 b) as the benefits or services provided to others; 84.52 a 4 Provide benefits or services in a manner that limits or has the effect of limiting the participation

of qualified handicapped persons; or84.52 a 5 Provide different or separate benefits or services to handicapped persons except where

necessary to provide qualified handicapped persons with benefits and services that are as effective as those provided to others.

84.52 b Notice. A recipient that provides notice concerning benefits or services or written material concerning waivers of rights or consent to treatment shall take such steps as are necessary to ensure that qualified handicapped persons, including those with impaired sensory or speaking skills, are not denied effective notice because of their handicap.

84.52 c Emergency treatment for the hearing impaired. A recipient hospital that provides health services or benefits shall establish a procedure for effective communication with persons with impaired hearing for the purpose of providing emergency health care.

84.52 d Auxiliary aids.84.52 d 1 A recipient to which this subpart applies that employs fifteen or more persons shall provide

appropriate auxiliary aids to persons with impaired sensory, manual, or speaking skills, where necessary to afford such persons an equal opportunity to benefit from the service in question.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.52 d 2 The Director may require recipients with fewer than fifteen employees to provide auxiliary aids

where the provision of aids would not significantly impair the ability of the recipient to provide its benefits or services.

84.52 d 3 For the purpose of this paragraph, auxiliary aids may include Brailled and taped material, interpreters, and other aids for persons with impaired hearing or vision.

84.53 Drug and alcohol addicts. A recipient to which this subpart applies that operates a general hospital or outpatient facility may not discriminate in admission or treatment against a drug or alcohol abuser or alcoholic who is suffering from a medical condition, because of the person’s drug or alcohol abuse or alcoholism.

84.54 Education of institutionalized persons. A recipient to which this subpart applies and that operates or supervises a program or activity for persons who are institutionalized because of handicap shall ensure that each qualified handicapped person, as defined in Sec. 84.3 k 2, in its program or activity is provided an appropriate education, as defined in Sec. 84.33 b. Nothing in this section shall be interpreted as altering in any way the obligations of recipients under Subpart D.

84.55 Procedures relating to health care for handicapped infants.84.55 a Infant Care Review Committees. The Department encourages each recipient health care

provider that provides health care services to infants in programs receiving Federal financial assistance to establish an Infant Care Review Committee (ICRC) to assist the provider in delivering health care and related services to infants and in complying with this part. The purpose of the committee is to assist the health care provider in the development of standards, policies and procedures for providing treatment to handicapped infants and in making decisions concerning medically beneficial treatment in specific cases. While the Department recognizes the value of ICRC’s in assuring appropriate medical care to infants, such committees are not required by this section. An ICRC should be composed of individuals representing a broad range of perspectives, and should include a practicing physician, a representative of a disability organization, a practicing nurse, and other individuals. A suggested model ICRC is set forth in paragraph f of this section.

84.55 b Posting of informational notice.84.55 b 1 Each recipient health care provider that provides health care services to infants in programs or

activities receiving Federal financial assistance shall post and keep posted in appropriate places an informational notice.

84.55 b 2 The notice must be posted at location(s) where nurses and other medical professionals who are engaged in providing health care and related services to infants will see it. To the extent it does not impair accomplishment of the requirement that copies of the notice be posted where such personnel will see it, the notice need not be posted in area(s) where parents of infant patients will see it.

84.55 b 3 Each health care provider for which the content of the following notice (identified as Notice A) is truthful may use Notice A. For the content of the notice to be truthful:

84.55 b 3 i The provider must have a policy consistent with that stated in the notice;84.55 b 3 ii the provider must have a procedure for review of treatment deliberations and decisions to

which the notice applies, such as (but not limited to) an Infant Care Review Committee; and84.55 b 3 iii the statements concerning the identity of callers and retaliation are truthful.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. Notice A Notice A: PRINCIPLES OF TREATMENT OF DISABLED INFANTS

It is the policy of this hospital, consistent with Federal law, that, nourishment and medically beneficial treatment (as determined with respect for reasonable medical judgments) should not be withheld from handicapped infants solely on the basis of their present or anticipated mental or physical impairments.This Federal law, section 504 of the Rehabilitation Act of 1973, prohibits discrimination on the basis of handicap in programs or activities receiving Federal financial assistance. For further information, or to report suspected noncompliance, call: [Identify designated hospital contact point and telephone number] or [Identify appropriate child protective services agency and telephone number] or U.S. Department of Health and Human Services (HHS): 800-368-1019 (Toll-free; available 24 hours a day; TDD capability).The identity of callers will be held confidential. Retaliation by this hospital against any person for providing information about possible noncompliance is prohibited by this hospital and Federal regulations.

84.55 b 4 Health care providers other than those described in paragraph b 3 of this section must post the following notice (identified as Notice B):

Notice B Notice B: PRINCIPLES OF TREATMENT OF DISABLED INFANTSFederal law prohibits discrimination on the basis of handicap. Under this law, nourishment and medically beneficial treatment (as determined with respect for reasonable medical judgments) should not be withheld from handicapped infants solely on the basis of their present or anticipated mental or physical impairments. This Federal law, section 504 of the Rehabilitation Act of 1973, applies to programs or activities receiving Federal financial assistance. For further information, or to report suspected noncompliance, call: [Identify appropriate child protective services agency and telephone number] or U.S. Department of Health and Human Services (HHS): 800-368-1019 (Toll-free; available 24 hours a day: TDD capability)The identity of callers will be held confidential. Federal regulations prohibit retaliation by this hospital against any person who provides information about possible violations.

84.55 b 5 The notice may be no smaller than 5 by 7 inches, and the type size no smaller than that generally used for similar internal communications to staff. The recipient must insert the specified information on the notice it selects. Recipient hospitals in Washington, DC, must list 863-0100 as the telephone number for HHS. No other alterations may be made to the notice. Copies of the notices may be obtained from the Department of Health and Human Services upon request, or the recipient may produce its own notices in conformance with the specified wording.

84.55 c Responsibilities of recipient state child protective services agencies.84.55 c 1 Within 60 days of the effective date of this section, each recipient state child protective services

agency shall establish and maintain in written form methods of administration and procedures to assure that the agency utilizes its full authority pursuant to state law to prevent instances of unlawful medical neglect of handicapped infants. These methods of administration and procedures shall include:

84.55 c 1 i A requirement that health care providers report on a timely basis to the state agency circumstances which they determine to constitute known or suspected instances of unlawful medical neglect of handicapped infants;

84.55 c 1 ii A method by which the state agency can receive reports of suspected unlawful medical neglect of handicapped infants from health care providers, other individuals, and the Department on a

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timely basis;84.55 c 1 iii Immediate review of reports of suspected unlawful medical neglect of handicapped infants and,

where appropriate, on-site investigation of such reports;84.55 c 1 iv Provision of child protective services to such medically neglected handicapped infants,

including, where appropriate, seeking a timely court order to compel the provision of necessary nourishment and medical treatment; and

84.55 c 1 v Timely notification to the responsible Department official of each report of suspected unlawful medical neglect involving the withholding, solely on the basis of present or anticipated physical or mental impairments, of treatment or nourishment from a handicapped infant who, in spite of such impairments, will medically benefit from the treatment or nourishment, the steps taken by the state agency to investigate such report, and the state agency’s final disposition of such report.

84.55 c 2 Whenever a hospital at which an infant who is the subject of a report of suspected unlawful medical neglect is being treated has an Infant Care Review Committee (ICRC) the Department encourages the state child protective services agency to consult with the ICRC in carrying out the state agency’s authorities under its state law and methods of administration. In developing its methods of administration and procedures, the Department encourages child protective services agencies to adopt guidelines for investigations similar to those of the Department regarding the involvement of ICRC’s.

84.55 d Expedited access to records. Access to pertinent records and facilities of a recipient pursuant to 80.6 c (made applicable to this part by 84.61) shall not be limited to normal business hours when, in the judgment of the responsible Department official, immediate access is necessary to protect the life or health of a handicapped individual.

84.55 e Expedited action to effect compliance. The requirement of 80.8 d 3 pertaining to notice to recipients prior to the initiation of action to effect compliance (made applicable to this part by 84.61) shall not apply when, in the judgment of the responsible Department official, immediate action to effect compliance is necessary to protect the life or health of a handicapped individual. In such cases the recipient will, as soon as practicable, be given oral or written notice of its failure to comply, of the action to be taken to effect compliance, and its continuing opportunity to comply voluntarily.

84.55 f Model Infant Care Review Committee. Recipient health care providers wishing to establish Infant Care Review Committees should consider adoption of the following model. This model is advisory. Recipient health care providers are not required to establish a review committee or, if one is established, to adhere to this model. In seeking to determine compliance with this part, as it relates to health care for handicapped infants, by health care providers that have an ICRC established and operated substantially in accordance with this model, the Department will, to the extent possible, consult with the ICRC.

84.55 f 1 Establishment and purpose.84.55 f 1 i The hospital establishes an Infant Care Review Committee (ICRC) or joins with one or more

other hospitals to create a joint ICRC. The establishing document will state that the ICRC is for the purpose of facilitating the development and implementation of standards, policies and procedures designed to assure that, while respecting reasonable medical judgments, treatment and nourishment not be withheld, solely on the basis of present or anticipated physical or mental impairments, from handicapped infants who, in spite of such impairments, will benefit medically from the treatment or nourishment.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.55 f 1 ii The activities of the ICRC will be guided by the following principles:84.55 f 1 ii a The interpretative guidelines of the Department relating to the applicability of this part to health

care for handicapped infants.84.55 f 1 ii b As stated in the “Principles of Treatment of Disabled Infants” of the coalition of major medical

and disability organizations, including the American Academy of Pediatrics, National Association of Children’s Hospitals and Related Institutions, Association for Retarded Citizens, Down’s Syndrome Congress, Spina Bifida Association, and others: When medical care is clearly beneficial, it should always be provided. When appropriate medical care is not available, arrangements should be made to transfer the infant to an appropriate medical facility. Consideration such as anticipated or actual limited potential of an individual and present or future lack of available community resources are irrelevant and must not determine the decisions concerning medical care. The individual’s medical condition should be the sole focus of the decision. These are very strict standards. It is ethically and legally justified to withhold medical or surgical procedures which are clearly futile and will only prolong the act of dying. However, supportive care should be provided, including sustenance as medically indicated and relief of pain and suffering. The needs of the dying person should be respected. The family also should be supported in its grieving. In cases where it is uncertain whether medical treatment will be beneficial, a person’s disability must not be the basis for a decision to withhold treatment. At all times during the process when decisions are being made about the benefit or futility of medical treatment, the person should be cared for in the medically most appropriate ways. When doubt exists at any time about whether to treat, a presumption always should be in favor of treatment.

84.55 f 1 ii c As stated by the President’s Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research:This [standard for providing medically beneficial treatment] is a very strict standard in that it excludes consideration of the negative effects of an impaired child’s life on other persons, including parents, siblings, and society. Although abiding by this standard may be difficult in specific cases, it is all too easy to undervalue the lives of handicapped infants; the Commission finds it imperative to counteract this by treating them no less vigorously than their healthy peers or than older children with similar handicaps would be treated.

84.55 f 1 iii The ICRC will carry out its purposes by:84.55 f 1 iii a

Recommending institutional policies concerning the withholding or withdrawal of medical or surgical treatments to infants, including guidelines for ICRC action for specific categories of life-threatening conditions affecting infants;

84.55 f 1 iii b

Providing advice in specific cases when decisions are being considered to withhold or withdraw from infant life-sustaining medical or surgical treatment; and

84.55 f 1 iii c

Reviewing retrospectively on a regular basis infant medical records in situations in which life-sustaining medical or surgical treatment has been withheld or withdrawn.

84.55 f 2 Organization and staffing. The ICRC will consist of at least 7 members and include the following:

84.55 f 2 i A practicing physician (e.g., a pediatrician, a neonatologist, or a pediatric surgeon),84.55 f 2 ii A practicing nurse,84.55 f 2 iii A hospital administrator,

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.55 f 2 iv A representative of the legal profession,84.55 f 2 v A representative of a disability group, or a developmental disability expert,84.55 f 2 vi A lay community member, and84.55 f 2 vii A member of a facility’s organized medical staff, who shall serve as chairperson.

In connection with review of specific cases, one member of the ICRC shall be designated to act as “special advocate” for the infant, as provided in paragraph f 3 ii e of the section. The hospital will provide staff support for the ICRC, including legal counsel. The ICRC will meet on a regular basis, or as required below in connection with review of specific cases. It shall adopt or recommend to the appropriate hospital official or body such administrative policies as terms of office and quorum requirements. The ICRC will recommend procedures to ensure that both hospital personnel and patient families are fully informed of the existence and functions of the ICRC and its availability on a 24-hour basis.

84.55 f 3 Operation of ICRC84.55 f 3 i Prospective policy development.84.55 f 3 i a The ICRC will develop and recommend for adoption by the hospital institutional policies

concerning the withholding or withdrawal of medical treatment for infants with life-threatening conditions. These will include guidelines for management of specific types of cases or diagnoses, for example, Down’s syndrome and spina bifida, and procedures to be followed in such recurring circumstances as, for example, brain death and parental refusal to consent to life-saving treatment. The hospital, upon recommendation of the ICRC, may require attending physicians to notify the ICRC of the presence in the facility of an infant with a diagnosis specified by the ICRC, e.g., Down’s syndrome and spina bifida.

84.55 f 3 i b In recommending these policies and guidelines, the ICRC will consult with medical and other authorities on issues involving disabled individuals, e.g., neonatologists, pediatric surgeons, county and city agencies which provide services for the disabled, and disability advocacy organizations. It will also consult with appropriate committees of the medical staff, to ensure that the ICRC policies and guidelines build on existing staff by-laws, rules and regulations concerning consultations and staff membership requirements. The ICRC will also inform and educate hospital staff on the policies and guidelines it develops.

84.55 f 3 ii Review of specific cases. In addition to regularly scheduled meetings, interim ICRC meetings will take place under specified circumstances to permit review of individual cases. The hospital will, to the extent possible, require in each case that life-sustaining treatment be continued, until the ICRC can review the case and provide advice.

84.55 f 3 ii a Interim ICRC meetings will be convened within 24 hours (or less if indicated) when there is disagreement between the family of an infant and the infant’s physician as to the withholding or withdrawal of treatment, when a preliminary decision to withhold or withdraw life-sustaining treatment has been made in certain categories of cases identified by the ICRC, when there is disagreement between members of the hospital’s medical and/or nursing staffs, or when otherwise appropriate.

84.55 f 3 ii b Such interim ICRC meetings will take place upon the request of any member of the ICRC or hospital staff or parent or guardian of the infant. The ICRC will have procedures to preserve the confidentiality of the identity of persons making such requests, and such persons shall be protected from reprisal. When appropriate, the ICRC or a designated member will inform the requesting individual of the ICRC’s recommendation.

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.55 f 3 ii c The ICRC may provide for telephone and other forms of review when the timing and nature of

the case, as identified in policies developed by the ICRC, make the convening of an interim meeting impracticable.

84.55 f 3 ii d Interim meetings will be open to the affected parties. The ICRC will ensure that the interests of the parents, the physician, and the child are fully considered; that family members have been fully informed of the patient’s condition and prognosis; that they have been provided with a listing which describes the services furnished by parent support groups and public and private agencies in the geographic vicinity to infants with conditions such as that before the ICRC; and that the ICRC will facilitate their access to such services and groups.

84.55 f 3 ii e To ensure a comprehensive evaluation of all options and factors pertinent to the committee’s deliberations, the chairperson will designate one member of the ICRC to act, in connection with that specific case, as special advocate for the infant. The special advocate will seek to ensure that all considerations in favor of the provision of life-sustaining treatment are fully evaluated and considered by the ICRC.

84.55 f 3 ii f In cases in which there is disagreement on treatment between a physician and an infant’s family, and the family wishes to continue life-sustaining treatment, the family’s wishes will be carried out, for as long as the family wishes, unless such treatment is medically contraindicated. When there is physician/family disagreement and the family refuses consent to life-sustaining treatment, and the ICRC, after due deliberation, agrees with the family, the ICRC will recommend that the treatment be withheld. When there is physician/family disagreement and the family refuses consent, but the ICRC disagrees with the family, the ICRC will recommend to the hospital board or appropriate official that the case be referred immediately to an appropriate court or child protective agency, and every effort shall be made to continue treatment, preserve the status quo, and prevent worsening of the infant’s condition until such time as the court or agency renders a decision or takes other appropriate action. The ICRC will also follow this procedure in cases in which the family and physician agree that life-sustaining treatment should be withheld or withdrawn, but the ICRC disagrees.

84.55 f 3 iii Retrospective record review. The ICRC, at its regularly-scheduled meeting, will review all records involving withholding or termination of medical or surgical treatment to infants consistent with hospital policies developed by the ICRC, unless the case was previously before the ICRC pursuant to paragraph f 3 ii of this section. If the ICRC finds that a deviation was made from the institutional policies in a given case, it shall conduct a review and report the findings to appropriate hospital personnel for appropriate action.

84.55 f 4 Records. The ICRC will maintain records of all of its deliberations and summary descriptions of specific cases considered and the disposition of those cases. Such records will be kept in accordance with institutional policies on confidentiality of medical information. They will be made available to appropriate government agencies, or upon court order, or as otherwise required by law. Note: The mandatory provisions set forth in paragraph b-e inclusive of this section are subject to an injunction prohibiting their enforcement. In Bowen v. American Hospital Association, U.S., 106 S. Ct. 2101 (1986), the Supreme Court upheld the action of a United States District Court, 585 F. Supp. 541 (S.D.N.Y. 1984), declaring invalid and enjoining enforcement of provisions under this section, promulgated January 12, 1984. (Information collection requirements contained in paragraph c have been approved by the Office of Management and Budget under control number 0990-0114)

84.56-84.60 [Reserved]

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Part 84: Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving Federal Financial Assistance. 84.61 [Subpart G—Procedures] Procedures. The procedural provisions applicable to title VI of the

Civil Rights Act of 1964 apply to this part. These procedures are found in Secs. 80.6 through 80.10 and Part 81 of this Title.

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Part 92: Uniform Administrative Requirementsfor Grants and Cooperative Agreements to State and Local Governments

Part 92: Uniform Administrative Requirements


Subpart A: General

Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments

92.1 Purpose and scope of this part. This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards to State, local and Indian tribal governments.

92.2 Scope of subpart. This subpart contains general rules pertaining to this part and procedures for control of exceptions from this part.

92.3 Definitions. As used in this part:92.3 a Accrued expenditures mean the charges incurred by the grantee during a given

period requiring the provision of funds for: (1) Goods and other tangible property received; (2) services performed by employees, contractors, subgrantees, subcontractors, and other payees; and (3) other amounts becoming owed under programs for which no current services or performance is required, such as annuities, insurance claims, and other benefit payments.

92.3 b Accrued income means the sum of: (1) Earnings during a given period from services performed by the grantee and goods and other tangible property delivered to purchasers, and (2) amounts becoming owed to the grantee for which no current services or performance is required by the grantee.

92.3 c Acquisition cost of an item of purchased equipment means the net invoice unit price of the property including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges such as the cost of installation, transportation, taxes, duty or protective in-transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the grantee’s regular accounting practices.

92.3 d Administrative requirements mean those matters common to grants in general, such as financial management, kinds and frequency of reports, and retention of records. These are distinguished from programmatic requirements, which concern matters that can be treated only on a program-by-program or grant-by-grant basis, such as kinds of activities that can be supported by grants under a particular program.

92.3 e Awarding agency means (1) with respect to a grant, the Federal agency, and (2) with respect to a subgrant, the party that awarded the subgrant.

92.3 f Cash contributions means the grantee’s cash outlay, including the outlay of money contributed to the grantee or subgrantee by other public agencies and institutions, and private organizations and individuals. When authorized by Federal legislation, Federal funds received from other assistance agreements may be considered as grantee or subgrantee cash contributions.

92.3 g Contract means (except as used in the definitions for grant and subgrant in this section and except where qualified by Federal) a procurement contract under a

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grant or subgrant, and means a procurement subcontract under a contract.92.3 h Cost sharing or matching means the value of the third party in-kind contributions

and the portion of the costs of a federally assisted project or program not borne by the Federal Government.

92.3 i Cost-type contract means a contract or subcontract under a grant in which the contractor or subcontractor is paid on the basis of the costs it incurs, with or without a fee.

92.3 j Equipment means tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment provided that such definition would at least include all equipment defined above.

92.3 k Expenditure report means: (1) For nonconstruction grants, the SF–269 “Financial Status Report” (or other equivalent report); (2) for construction grants, the SF–271 “Outlay Report and Request for Reimbursement” (or other equivalent report).

92.3 l Federally recognized Indian tribal government means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs.

92.3 m Government means a State or local government or a federally recognized Indian tribal government.

92.3 n Grant means an award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible grantee. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, which the grantee is not required to account for.

92.3 o Grantee means the government to which a grant is awarded and which is accountable for the use of the funds provided. The grantee is the entire legal entity even if only a particular component of the entity is designated in the grant award document.

92.3 p Local government means a county, municipality, city, town, township, local public authority (including any public and Indian housing agency under the United States Housing Act of 1937) school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under state law), any other regional or interstate government entity, or any agency or instrumentality of a local government.

92.3 q Obligations means the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will

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require payment by the grantee during the same or a future period.92.3 r OMB means the United States Office of Management and Budget.92.3 s Outlays (expenditures) mean charges made to the project or program. They may be

reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursement for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the amount of cash advances and payments made to contractors and subgrantees. For reports prepared on an accrued expenditure basis, outlays are the sum of actual cash disbursements, the amount of indirect expense incurred, the value of inkind contributions applied, and the new increase (or decrease) in the amounts owed by the grantee for goods and other property received, for services performed by employees, contractors, subgrantees, subcontractors, and other payees, and other amounts becoming owed under programs for which no current services or performance are required, such as annuities, insurance claims, and other benefit payments.

92.3 t Percentage of completion method refers to a system under which payments are made for construction work according to the percentage of completion of the work, rather than to the grantee’s cost incurred.

92.3 u Prior approval means documentation evidencing consent prior to incurring specific cost.

92.3 v Real property means land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment.

92.3 w Share, when referring to the awarding agency’s portion of real property, equipment or supplies, means the same percentage as the awarding agency’s portion of the acquiring party’s total costs under the grant to which the acquisition costs under the grant to which the acquisition cost of the property was charged. Only costs are to be counted—not the value of third-party in-kind contributions.

92.3 x State means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments. The term does not include any public and Indian housing agency under United States Housing Act of 1937.

92.3 y Subgrant means an award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases, nor does it include any form of assistance which is excluded from the definition of grant in this part.

92.3 z Subgrantee means the government or other legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided.

92.3 aa Supplies means all tangible personal property other than equipment as defined in this part.

92.3 bb Suspension means depending on the context, either (1) temporary withdrawal of the authority to obligate grant funds pending corrective

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action by the grantee or subgrantee or a decision to terminate the grant, or (2) an action taken by a suspending official in accordance with agency regulations implementing E.O. 12549 to immediately exclude a person from participating in grant transactions for a period, pending completion of an investigation and such legal or debarment proceedings as may ensue.

92.3 cc Termination means permanent withdrawal of the authority to obligate previously-awarded grant funds before that authority would otherwise expire. It also means the voluntary relinquishment of that authority by the grantee or subgrantee. “Termination” does not include: (1) Withdrawal of funds awarded on the basis of the grantee’s underestimate of the unobligated balance in a prior period; (2) Withdrawal of the unobligated balance as of the expiration of a grant; (3) Refusal to extend a grant r award additional funds, to make a competing or noncompeting continuation, renewal, extension, or supplemental award; or (4) voiding of a grant upon determination that the award was obtained fraudulently, or was otherwise illegal or invalid from inception.

92.3 dd Terms of a grant or subgrant mean all requirements of the grant or subgrant, whether in statute, regulations, or the award document.

92.3 ee Third party in-kind contributions mean property or services which benefit a federally assisted project or program and which are contributed by non-Federal third parties without charge to the grantee, or a cost-type contractor under the grant agreement.

92.3 ff Unliquidated obligations for reports prepared on a cash basis mean the amount of obligations incurred by the grantee that has not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the grantee for which an outlay has not been recorded.

92.3 gg Unobligated balance means the portion of the funds authorized by the Federal agency that has not been obligated by the grantee and is determined by deducting the cumulative obligations from the cumulative funds authorized.

92.4 Applicability.92.4 a General. Subparts A through D of this part apply to all grants and subgrants to

governments, except where inconsistent with Federal statutes or with regulations authorized in accordance with the exception provision of §92.6, or:

92.4 a 1 Grants and subgrants to State and local institutions of higher education or State and local hospitals.

92.4 a 2 The block grants authorized by the Omnibus Budget Reconciliation Act of 1981 (Community Services; Preventive Health and Health Services; Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child Health Services; Social Services; Low-Income Home Energy Assistance; States’ Program of Community Development Block Grants for Small Cities; and Elementary and Secondary Education other than programs administered by the Secretary of Education under Title V, Subtitle D, Chapter 2, Section 583—the Secretary’s discretionary grant program) and Titles I-III of the Job Training Partnership Act of 1982 and under the Public Health Services Act (Section 1921), Alcohol and Drug Abuse Treatment and

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Rehabilitation Block Grant and Part C of Title V, Mental Health Service for the Homeless Block Grant).

92.4 a 3 Grants to local education agencies under 20 U.S.C. 236 through 241–1(a), and 242 through 244 (portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for Handicapped Children); and

92.4 a 4 Payments under the Veterans Administration’s State Home Per Diem Program (38 U.S.C. 641(a)).

92.4 b [Reserved] [53 FR 8079, 8087, Mar. 11, 1988, as amended at 65 FR 33632, May 24, 2000; 68 FR 52844, Sept. 8, 2003]

92.5 Effect on other issuances. All other grants administration provisions of codified program regulations, program manuals, handbooks and other nonregulatory materials which are inconsistent with this part are superseded, except to the extent they are required by statute, or authorized in accordance with the exception provision in 92.6.

92.6 Additions and exceptions.92.6 a For classes of grants and grantees subject to this part, Federal agencies may not

impose additional administrative requirements except in codified regulations published in the Federal Register.

92.6 b Exceptions for classes of grants or grantees may be authorized only by OMB.92.6 c Exceptions on a case-by-case basis and for subgrantees may be authorized by the

affected Federal agencies.Subpart B—Pre-Award Requirements

92.10 Forms for applying for grants.92.10 a Scope.92.10 a 1 This section prescribes forms and instructions to be used by governmental

organizations (except hospitals and institutions of higher education operated by a government) in applying for grants. This section is not applicable, however, to formula grant programs which do not require applicants to apply for funds on a project basis.

92.10 a 2 This section applies only to applications to Federal agencies for grants, and is not required to be applied by grantees in dealing with applicants for subgrants. However, grantees are encouraged to avoid more detailed or burdensome application requirements for subgrants.

92.10 b Authorized forms and instructions for governmental organizations.92.10 b 1 In applying for grants, applicants shall only use standard application forms or those

prescribed by the granting agency with the approval of OMB under the Paperwork Reduction Act of 1980.

92.10 b 2 Applicants are not required to submit more than the original and two copies of pre-applications or applications.

92.10 b 3 Applicants must follow all applicable instructions that bear OMB clearance

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numbers. Federal agencies may specify and describe the programs, functions, or activities that will be used to plan, budget, and evaluate the work under a grant. Other supplementary instructions may be issued only with the approval of OMB to the extent required under the Paperwork Reduction Act of 1980. For any standard form, except the SF–424 facesheet, Federal agencies may shade out or instruct the applicant to disregard any line item that is not needed.

92.10 b 4 When a grantee applies for additional funding (such as a continuation or supplemental award) or amends a previously submitted application, only the affected pages need be submitted. Previously submitted pages with information that is still current need not be resubmitted.

92.11 State plans.92.11 a Scope. The statutes for some programs require States to submit plans before

receiving grants. Under regulations implementing Executive Order 12372, “Intergovernmental Review of Federal Programs,” States are allowed to simplify, consolidate and substitute plans. This section contains additional provisions for plans that are subject to regulations implementing the Executive order.

92.11 b Requirements. A State need meet only Federal administrative or programmatic requirements for a plan that are in statutes or codified regulations.

92.11 c Assurances. In each plan the State will include an assurance that the State shall comply with all applicable Federal statutes and regulations in effect with respect to the periods for which it receives grant funding. For this assurance and other assurances required in the plan, the State may:

92.11 c 1 Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions,

92.11 c 2 Repeat the assurance language in the statutes or regulations, or92.11 c 3 Develop its own language to the extent permitted by law.92.11 d Amendments. A State will amend a plan whenever necessary to reflect:92.11 d 1 New or revised Federal statutes or regulations or92.11 d 2 a material change in any State law, organization, policy, or State agency operation.

The State will obtain approval for the amendment and its effective date but need submit for approval only the amended portions of the plan.

92.12 Special grant or subgrant conditions for “high-risk” grantees.92.12 a A grantee or subgrantee may be considered “high risk” if an awarding agency

determines that a grantee or subgrantee:92.12 a 1 Has a history of unsatisfactory performance, or92.12 a 2 Is not financially stable, or92.12 a 3 Has a management system which does not meet the management standards set forth

in this part, or92.12 a 4 Has not conformed to terms and conditions of previous awards, or92.12 a 5 Is otherwise not responsible; and if the awarding agency determines that an award

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will be made, special conditions and/or restrictions shall correspond to the high risk condition and shall be included in the award.

92.12 b Special conditions or restrictions may include:92.12 b 1 Payment on a reimbursement basis;92.12 b 2 Withholding authority to proceed to the next phase until receipt of evidence of

acceptable performance within a given funding period;92.12 b 3 Requiring additional, more detailed financial reports;92.12 b 4 Additional project monitoring;92.12 b 5 Requiring the grantee or subgrantee to obtain technical or management assistance;

or92.12 b 6 Establishing additional prior approvals.92.12 c If an awarding agency decides to impose such conditions, the awarding official will

notify the grantee or subgrantee as early as possible, in writing, of:92.12 c 1 The nature of the special conditions/restrictions;92.12 c 2 The reason(s) for imposing them;92.12 c 3 The corrective actions which must be taken before they will be removed and the

time allowed for completing the corrective actions and92.12 c 4 The method of requesting reconsideration of the conditions/restrictions imposed.92.13 Participation by faith-based organizations. The funds provided under this part shall

be administered in compliance with the standards set forth in part 87 (Equal Treatment for Faith-based Organizations) of this chapter. [69 FR 42592, July 16, 2004]

92.14 Compliance with Part 87. The funds provided under this part shall be administered in compliance with the standards set forth in part 87 (Equal Treatment for Faith-based Organizations) of this chapter. [69 FR 42592, July 16, 2004]

Subpart C: Post-Award Requirements92.20 Standards for financial management systems. FM1F

FM2AFM2DFM5A

92.20 a A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to--

92.20 a 1 Permit preparation of reports required by this part and the statutes authorizing the grant, and

92.20 a 2 Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes.

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92.20 b The financial management systems of other grantees and subgrantees must meet the following standards:

FM1FFM2AFM2DFM5A

92.20 b 1 Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant.

FM5A

92.20 b 2 Accounting records. Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.

FM5A

92.20 b 3 Internal control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized purposes.

FM1F

92.20 b 4 Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. If unit cost data are required, estimates based on available documentation will be accepted whenever possible.

FM1F

92.20 b 5 Allowable cost. Applicable OMB cost principles, agency program regulations, and the terms of grant and subgrant agreements will be followed in determining the reasonableness, allowability, and allocability of costs.

FM2A

92.20 b 6 Source documentation. Accounting records must be supported by such source documentation as canceled checks, paid bills, payrolls, time and attendance records, contract and subgrant award documents, etc.

92.20 b 7 Cash management. Procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of reports on subgrantees’ cash balances and cash disbursements in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by letter-of-credit or electronic transfer of funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the grantees.

FM2D

92.20 c An awarding agency may review the adequacy of the financial management system of any applicant for financial assistance as part of a pre-award review or at any time subsequent to award.

92.21 Payment.

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92.21 a Scope. This section prescribes the basic standard and the methods under which a Federal agency will make payments to grantees, and grantees will make payments to subgrantees and contractors.

92.21 b Basic standard. Methods and procedures for payment shall minimize the time elapsing between the transfer of funds and disbursement by the grantee or subgrantee, in accordance with Treasury regulations at 31 CFR part 205.

92.21 c Advances. Grantees and subgrantees shall be paid in advance, provided they maintain or demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their disbursement by the grantee or subgrantee.

92.21 d Reimbursement. Reimbursement shall be the preferred method when the requirements in paragraph c of this section are not met. Grantees and subgrantees may also be paid by reimbursement for any construction grant. Except as otherwise specified in regulation, Federal agencies shall not use the percentage of completion method to pay construction grants. The grantee or subgrantee may use that method to pay its construction contractor, and if it does, the awarding agency’s payments to the grantee or subgrantee will be based on the grantee’s or subgrantee’s actual rate of disbursement.

92.21 e Working capital advances. If a grantee cannot meet the criteria for advance payments described in paragraph c of this section, and the Federal agency has determined that reimbursement is not feasible because the grantee lacks sufficient working capital, the awarding agency may provide cash or a working capital advance basis. Under this procedure the awarding agency shall advance cash to the grantee to cover its estimated disbursement needs for an initial period generally geared to the grantee’s disbursing cycle. Thereafter, the awarding agency shall reimburse the grantee for its actual cash disbursements. The working capital advance method of payment shall not be used by grantees or subgrantees if the reason for using such method is the unwillingness or inability of the grantee to provide timely advances to the subgrantee to meet the subgrantee’s actual cash disbursements.

92.21 f Effect of program income, refunds, and audit recoveries on payment.92.21 f 1 Grantees and subgrantees shall disburse repayments to and interest earned on a

revolving fund before requesting additional cash payments for the same activity.92.21 f 2 Except as provided in paragraph f 1 of this section, grantees and subgrantees shall

disburse program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments.

92.21 g Withholding payments.92.21 g 1 Unless otherwise required by Federal statute, awarding agencies shall not withhold

payments for proper charges incurred by grantees or subgrantees unless--92.21 g 1 i The grantee or subgrantee has failed to comply with grant award conditions or92.21 g 1 ii The grantee or subgrantee is indebted to the United States.92.21 g 2 Cash withheld for failure to comply with grant award condition, but without

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suspension of the grant, shall be released to the grantee upon subsequent compliance. When a grant is suspended, payment adjustments will be made in accordance with Sec. 92.43 c.

92.21 g 3 A Federal agency shall not make payment to grantees for amounts that are withheld by grantees or subgrantees from payment to contractors to assure satisfactory completion of work. Payments shall be made by the Federal agency when the grantees or subgrantees actually disburse the withheld funds to the contractors or to escrow accounts established to assure satisfactory completion of work.

92.21 h Cash depositories.92.21 h 1 Consistent with the national goal of expanding the opportunities for minority

business enterprises, grantees and subgrantees are encouraged to use minority banks (a bank which is owned at least 50% by minority group members). A list of minority owned banks can be obtained from the Minority Business Development Agency, Department of Commerce, Washington, DC 20230.

92.21 h 2 A grantee or subgrantee shall maintain a separate bank account only when required by Federal-State agreement.

92.21 i Interest earned on advances. Except for interest earned on advances of funds exempt under the Intergovernmental Cooperation Act (31 U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 450), grantees and subgrantees shall promptly, but at least quarterly, remit interest earned on advances to the Federal agency. The grantee or subgrantee may keep interest amounts up to $100 per year for administrative expenses.

92.22 Allowable costs.92.22 a Limitation on use of funds. Grant funds may be used only for:92.22 a 1 The allowable costs of the grantees, subgrantees and cost-type contractors,

including allowable costs in the form of payments to fixed- price contractors; and92.22 a 2 Reasonable fees or profit to cost-type contractors but not any fee or profit (or other

increment above allowable costs) to the grantee or subgrantee.92.22 b Applicable cost principles. For each kind of organization, there is a set of Federal

principles for determining allowable costs. Allowable costs will be determined in accordance with the cost principles applicable to the organization incurring the costs. The following chart lists the kinds of organizations and the applicable cost principles. For the costs of a State, local or Indian tribal government, use the principles in OMB Circular A-87 [sic; now at 2CFR 225]. For the costs of a Private nonprofit organization other than an 1) institution of higher education, 2) hospital, or 3) organization named in OMB Circular A-122 [sic now at 2CFR 230] as not subject to that circular, use the principles in OMB Circular A-122. For the costs of Educational institutions, use the principles in OMB Circular A-21 [sic; now at 2CFR 220]. For the costs of a For-profit organization other than a hospital and an organization named in OMB Circular A-122 [sic now at 2CFR 230] as not subject to that circular, use the principles in 48 CFR Part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost accounting standards that comply with cost principles acceptable to the Federal agency.

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92.23 Period of availability of funds. FM2A92.23 a General. Where a funding period is specified, a grantee may charge to the award

only costs resulting from obligations of the funding period unless carryover of unobligated balances is permitted, in which case the carryover balances may be charged for costs resulting from obligations of the subsequent funding period.

FM2A

92.23 b Liquidation of obligations. A grantee must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period (or as specified in a program regulation) to coincide with the submission of the annual Financial Status Report (SF- 269). The Federal agency may extend this deadline at the request of the grantee.

92.24 Matching or cost sharing. FM2HFM2I

92.24 a Basic rule: Costs and contributions acceptable. With the qualifications and exceptions listed in paragraph b of this section, a matching or cost sharing requirement may be satisfied by either or both of the following:

FM2I

92.24 a 1 Allowable costs incurred by the grantee, subgrantee or a cost-type contractor under the assistance agreement. This includes allowable costs borne by non-Federal grants or by others cash donations from non- Federal third parties.

FM2I

92.24 a 2 The value of third party in-kind contributions applicable to the period to which the cost sharing or matching requirements applies.

92.24 b Qualifications and exceptions FM2HFM2I

92.24 b 1 Costs borne by other Federal grant agreements. Except as provided by Federal statute, a cost sharing or matching requirement may not be met by costs borne by another Federal grant. This prohibition does not apply to income earned by a grantee or subgrantee from a contract awarded under another Federal grant.

92.24 b 2 General revenue sharing. For the purpose of this section, general revenue sharing funds distributed under 31 U.S.C. 6702 are not considered Federal grant funds.

92.24 b 3 Cost or contributions counted towards other Federal costs- sharing requirements. Neither costs nor the values of third party in- kind contributions may count towards satisfying a cost sharing or matching requirement of a grant agreement if they have been or will be counted towards satisfying a cost sharing or matching requirement of another Federal grant agreement, a Federal procurement contract, or any other award of Federal funds.

92.24 b 4 Costs financed by program income. Costs financed by program income, as defined in Sec. 92.25, shall not count towards satisfying a cost sharing or matching requirement unless they are expressly permitted in the terms of the assistance agreement. (This use of general program income is described in Sec. 92.25 g.)

92.24 b 5 Services or property financed by income earned by contractors. Contractors under a grant may earn income from the activities carried out under the contract in addition to the amounts earned from the party awarding the contract. No costs of services or property supported by this income may count toward satisfying a cost sharing or

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matching requirement unless other provisions of the grant agreement expressly permit this kind of income to be used to meet the requirement.

92.24 b 6 Records. Costs and third party in-kind contributions counting towards satisfying a cost sharing or matching requirement must be verifiable from the records of grantees and subgrantee or cost-type contractors. These records must show how the value placed on third party in-kind contributions was derived. To the extent feasible, volunteer services will be supported by the same methods that the organization uses to support the allocability of regular personnel costs.

FM2H

92.24 b 7 Special standards for third party in-kind contributions. FM2I92.24 b 7 i Third party in-kind contributions count towards satisfying a cost sharing or

matching requirement only where, if the party receiving the contributions were to pay for them, the payments would be allowable costs.

FM2I

92.24 b 7 ii Some third party in-kind contributions are goods and services that, if the grantee, subgrantee, or contractor receiving the contribution had to pay for them, the payments would have been an indirect cost. Costs sharing or matching credit for such contributions shall be given only if the grantee, subgrantee, or contractor has established, along with its regular indirect cost rate, a special rate for allocating to individual projects or programs the value of the contributions.

92.24 b 7 iii

A third party in-kind contribution to a fixed-price contract may count towards satisfying a cost sharing or matching requirement only if it results in:

92.24 b 7 iii a

An increase in the services or property provided under the contract (without additional cost to the grantee or subgrantee) or

92.24 b 7 iii b

A cost savings to the grantee or subgrantee.

92.24 b 7 iv

The values placed on third party in-kind contributions for cost sharing or matching purposes will conform to the rules in the succeeding sections of this part. If a third party in-kind contribution is a type not treated in those sections, the value placed upon it shall be fair and reasonable.

92.24 c Valuation of donated services. FM2HFM2I

92.24 c 1 Volunteer services. Unpaid services provided to a grantee or subgrantee by individuals will be valued at rates consistent with those ordinarily paid for similar work in the grantee’s or subgrantee’s organization. If the grantee or subgrantee does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation.

FM2HFM2I

92.24 c 2 Employees of other organizations. When an employer other than a grantee, subgrantee, or cost-type contractor furnishes free of charge the services of an employee in the employee’s normal line of work, the services will be valued at the employee’s regular rate of pay exclusive of the employee’s fringe benefits and overhead costs. If the services are in a different line of work, paragraph c 1 of this section applies.

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92.24 d Valuation of third party donated supplies and loaned equipment or space. FM2H92.24 d 1 If a third party donates supplies, the contribution will be valued at the market value

of the supplies at the time of donation.FM2H

92.24 d 2 If a third party donates the use of equipment or space in a building but retains title the contribution will be valued at the fair rental rate of the equipment or space.

FM2H

92.24 e Valuation of third party donated equipment, buildings, and land. If a third party donates equipment, buildings, or land, and title passes to a grantee or subgrantee, the treatment of the donated property will depend upon the purpose of the grant or subgrant, as follows:

92.24 e 1 Awards for capital expenditures. If the purpose of the grant or subgrant is to assist the grantee or subgrantee in the acquisition of property, the market value of that property at the time of donation may be counted as cost sharing or matching.

92.24 e 2 Other awards. If assisting in the acquisition of property is not the purpose of the grant or subgrant, paragraph e 2 i and ii of this section apply:

92.24 e 2 i If approval is obtained from the awarding agency, the market value at the time of donation of the donated equipment or buildings and the fair rental rate of the donated land may be counted as cost sharing or matching. In the case of a subgrant, the terms of the grant agreement may require that the approval be obtained from the Federal agency as well as the grantee. In all cases, the approval may be given only if a purchase of the equipment or rental of the land would be approved as an allowable direct cost. If any part of the donated property was acquired with Federal funds, only the non-federal share of the property may be counted as cost-sharing or matching.

92.24 e 2 ii If approval is not obtained under paragraph e 2 i of this section, no amount may be counted for donated land, and only depreciation or use allowances may be counted for donated equipment and buildings. The depreciation or use allowances for this property are not treated as third party in-kind contributions. Instead, they are treated as costs incurred by the grantee or subgrantee. They are computed and allocated (usually as indirect costs) in accordance with the cost principles specified in Sec. 92.22, in the same way as depreciation or use allowances for purchased equipment and buildings. The amount of depreciation or use allowances for donated equipment and buildings is based on the property’s market value at the time it was donated.

92.24 f Valuation of grantee or subgrantee donated real property for construction/acquisition. If a grantee or subgrantee donates real property for a construction or facilities acquisition project, the current market value of that property may be counted as cost sharing or matching. If any part of the donated property was acquired with Federal funds, only the non-federal share of the property may be counted as cost sharing or matching.

92.24 g Appraisal of real property. In some cases under paragraph d, e and f of this section, it will be necessary to establish the market value of land or a building or the fair rental rate of land or of space in a building. In these cases, the Federal agency may require the market value or fair rental value be set by an independent appraiser, and that the value or rate be certified by the grantee. This requirement will also be imposed by the grantee on subgrantees.

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92.25 Program income.92.25 a General. Grantees are encouraged to earn income to defray program costs. Program

income includes income from fees for services performed, from the use or rental of real or personal property acquired with grant funds, from the sale of commodities or items fabricated under a grant agreement, and from payments of principal and interest on loans made with grant funds. Except as otherwise provided in regulations of the Federal agency, program income does not include interest on grant funds, rebates, credits, discounts, refunds, etc. and interest earned on any of them.

92.25 b Definition of program income. Program income means gross income received by the grantee or subgrantee directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period. “During the grant period” is the time between the effective date of the award and the ending date of the award reflected in the final financial report.

92.25 c Cost of generating program income. If authorized by Federal regulations or the grant agreement, costs incident to the generation of program income may be deducted from gross income to determine program income.

92.25 d Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised by a grantee or subgrantee are not program income unless the revenues are specifically identified in the grant agreement or Federal agency regulations as program income.

92.25 e Royalties. Income from royalties and license fees for copyrighted material, patents, and inventions developed by a grantee or subgrantee is program income only if the revenues are specifically identified in the grant agreement or Federal agency regulations as program income. (See Sec. 92.34.)

92.25 f Property. Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of Secs. 92.31 and 92.32.

92.25 g Use of program income. Program income shall be deducted from outlays which may be both Federal and non-Federal as described below, unless the Federal agency regulations or the grant agreement specify another alternative (or a combination of the alternatives). In specifying alternatives, the Federal agency may distinguish between income earned by the grantee and income earned by subgrantees and between the sources, kinds, or amounts of income. When Federal agencies authorize the alternatives in paragraph g 2 and 3 of this section, program income in excess of any limits stipulated shall also be deducted from outlays.

92.25 g 1 Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the net allowable costs. Program income shall be used for current costs unless the Federal agency authorizes otherwise. Program income which the grantee did not anticipate at the time of the award shall be used to reduce the Federal agency and grantee contributions rather than to increase the funds committed to the project.

92.25 g 2 Addition. When authorized, program income may be added to the funds committed to the grant agreement by the Federal agency and the grantee. The program income shall be used for the purposes and under the conditions of the grant agreement.

92.25 g 3 Cost sharing or matching. When authorized, program income may be used to meet

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the cost sharing or matching requirement of the grant agreement. The amount of the Federal grant award remains the same.

92.25 h Income after the award period. There are no Federal requirements governing the disposition of program income earned after the end of the award period (i.e., until the ending date of the final financial report, see paragraph a of this section), unless the terms of the agreement or the Federal agency regulations provide otherwise.

92.26 Non-Federal audit.92.26 a Basic rule. Grantees and subgrantees are responsible for obtaining audits in

accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.” The audits shall be made by an independent auditor in accordance with generally accepted government auditing standards covering financial audits.

92.26 b Subgrantees. State or local governments, as those terms are defined for purposes of the Single Audit Act Amendments of 1996, that provide Federal awards to a subgrantee, which expends $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall:

92.26 b 1 Determine whether State or local subgrantees have met the audit requirements of the Act and whether subgrantees covered by OMB Circular A-110, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,” [sic; now at 2CFR 215] have met the audit requirements of the Act. Commercial contractors (private for-profit and private and governmental organizations) providing goods and services to State and local governments are not required to have a single audit performed. State and local governments should use their own procedures to ensure that the contractor has complied with laws and regulations affecting the expenditure of Federal funds;

92.26 b 2 Determine whether the subgrantee spent Federal assistance funds provided in accordance with applicable laws and regulations. This may be accomplished by reviewing an audit of the subgrantee made in accordance with the Act, Circular A-110 [sic; now at 2CFR 215], or through other means (e.g., program reviews) if the subgrantee has not had such an audit;

92.26 b 3 Ensure that appropriate corrective action is taken within six months after receipt of the audit report in instance of noncompliance with Federal laws and regulations;

92.26 b 4 Consider whether subgrantee audits necessitate adjustment of the grantee’s own records; and

92.26 b 5 Require each subgrantee to permit independent auditors to have access to the records and financial statements.

92.26 c Auditor selection. In arranging for audit services, Sec. 92.36 shall be followed.92.30 Changes, Property, and Subawards. Changes. FM2L92.30 a General. Grantees and subgrantees are permitted to rebudget within the approved

direct cost budget to meet unanticipated requirements and may make limited program changes to the approved project. However, unless waived by the awarding

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agency, certain types of post-award changes in budgets and projects shall require the prior written approval of the awarding agency.

92.30 a 1 Approvals shall not be valid unless they are in writing, and signed by at least one of the following officials of the Department of Health and Human Services (HHS):

FM2L

92.30 a 1 i The responsible Grants Officer or his or her designee; FM2L92.30 a 1 ii The head of the HHS Operating or Staff Division that awarded the grant; or FM2L92.30 a 1 iii

The head of the Regional Office of the HHS Operating or Staff Division that awarded the grant.

FM2L

92.30 b Relation to cost principles. The applicable cost principles (see Sec. 92.22) contain requirements for prior approval of certain types of costs. Except where waived, those requirements apply to all grants and subgrants even if paragraphs c through f of this section do not.

FM2L

92.30 c Budget changes. FM2L92.30 c 1 Nonconstruction projects. Except as stated in other regulations or an award

document, grantees or subgrantees shall obtain the prior approval of the awarding agency whenever any of the following changes is anticipated under a nonconstruction award:

FM2L

92.30 c 1 i Any revision which would result in the need for additional funding. FM2L92.30 c 1 ii Unless waived by the awarding agency, cumulative transfers among direct cost

categories, or, if applicable, among separately budgeted programs, projects, functions, or activities which exceed or are expected to exceed ten percent of the current total approved budget, whenever the awarding agency’s share exceeds $100,000.

FM2L

92.30 c 1 iii

Transfer of funds allotted for training allowances (i.e., from direct payments to trainees to other expense categories).

FM2L

92.30 c 2 Construction projects. Grantees and subgrantees shall obtain prior written approval for any budget revision which would result in the need for additional funds.

FM2L

92.30 c 3 Combined construction and nonconstruction projects. When a grant or subgrant provides funding for both construction and nonconstruction activities, the grantee or subgrantee must obtain prior written approval from the awarding agency before making any fund or budget transfer from nonconstruction to construction or vice versa.

FM2L

92.30 d Programmatic changes. Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any of the following actions is anticipated:

FM2L

92.30 d 1 Any revision of the scope or objectives of the project (regardless of whether there is an associated budget revision requiring prior approval).

FM2L

92.30 d 2 Need to extend the period of availability of funds. FM2L92.30 d 3 Changes in key persons in cases where specified in an application or a grant award.

In research projects, a change in the project director or principal investigator shall always require approval unless waived by the awarding agency.

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92.30 d 4 Under nonconstruction projects, contracting out, subgranting (if authorized by law) or otherwise obtaining the services of a third party to perform activities which are central to the purposes of the award. This approval requirement is in addition to the approval requirements of Sec. 92.36 but does not apply to the procurement of equipment, supplies, and general support services.

FM2L

92.30 d 5 Providing medical care to individuals under research grants. FM2L92.30 e Additional prior approval requirements. The awarding agency may not require prior

approval for any budget revision which is not described in paragraph c of this section.

FM2L

92.30 f Requesting prior approval. FM2L92.30 f 1 A request for prior approval of any budget revision will be in the same budget

formal the grantee used in its application and shall be accompanied by a narrative justification for the proposed revision.

FM2L

92.30 f 2 A request for a prior approval under the applicable Federal cost principles (see Sec. 92.22) may be made by letter.

FM2L

92.30 f 3 A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee will promptly review such request and shall approve or disapprove the request in writing. A grantee will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result in a change to the grantee’s approved project which requires Federal prior approval, the grantee will obtain the Federal agency’s approval before approving the subgrantee’s request.

FM2L

92.31 Real property. FM3DFM3E

92.31 a Title. Subject to the obligations and conditions set forth in this section, title to real property acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.

FM3D

92.31 b Use. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not dispose of or encumber its title or other interests.

FM3DFM3E

92.31 c Disposition. When real property is no longer needed for the originally authorized purpose, the grantee or subgrantee will request disposition instructions from the awarding agency. The instructions will provide for one of the following alternatives:

FM3D

92.31 c 1 Retention of title. Retain title after compensating the awarding agency. The amount paid to the awarding agency will be computed by applying the awarding agency’s percentage of participation in the cost of the original purchase to the fair market value of the property. However, in those situations where a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, the net proceeds from the disposition may be used as an offset to the cost of the replacement property.

FM3D

92.31 c 2 Sale of property. Sell the property and compensate the awarding agency. The FM3D

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amount due to the awarding agency will be calculated by applying the awarding agency’s percentage of participation in the cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses. If the grant is still active, the net proceeds from sale may be offset against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return.

92.31 c 3 Transfer of title. Transfer title to the awarding agency or to a third-party designated/approved by the awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the grantee or subgrantee’s percentage of participation in the purchase of the real property to the current fair market value of the property.

FM3D

92.32 Equipment. FM3D92.32 a Title. Subject to the obligations and conditions set forth in this section, title to

equipment acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively.

FM3D

92.32 b States. A State will use, manage, and dispose of equipment acquired under a grant by the State in accordance with State laws and procedures. Other grantees and subgrantees will follow paragraphs c through e of this section.

FM3D

92.32 c Use. FM3D92.32 c 1 Equipment shall be used by the grantee or subgrantee in the program or project for

which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency.

FM3D

92.32 c 2 The grantee or subgrantee shall also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, providing such use will not interfere with the work on the projects or program for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by the awarding agency. User fees should be considered if appropriate.

FM3D

92.32 c 3 Notwithstanding the encouragement in Sec. 92.25 a to earn program income, the grantee or subgrantee must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted or contemplated by Federal statute.

FM3D

92.32 c 4 When acquiring replacement equipment, the grantee or subgrantee may use the equipment to be replaced as a trade-in or sell the property and use the proceeds to offset the cost of the replacement property, subject to the approval of the awarding agency.

FM3D

92.32 d Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part with grant funds, until disposition takes place will, as a minimum, meet the following requirements:

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92.32 d 1 Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.

FM3D

92.32 d 2 A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.

FM3D

92.32 d 3 A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated.

FM3D

92.32 d 4 Adequate maintenance procedures must be developed to keep the property in good condition.

FM3D

92.32 d 5 If the grantee or subgrantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.

FM3D

92.32 e Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the equipment will be made as follows:

FM3D

92.32 e 1 Items of equipment with a current per-unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency.

FM3D

92.32 e 2 Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency’s share of the equipment.

FM3D

92.32 e 3 In cases where a grantee or subgrantee fails to take appropriate disposition actions, the awarding agency may direct the grantee or subgrantee to take excess and disposition actions.

FM3D

92.32 f Federal equipment. In the event a grantee or subgrantee is provided federally-owned equipment:

FM3D

92.32 f 1 Title will remain vested in the Federal Government. FM3D92.32 f 2 Grantees or subgrantees will manage the equipment in accordance with Federal

agency rules and procedures, and submit an annual inventory listing.FM3D

92.32 f 3 When the equipment is no longer needed, the grantee or subgrantee will request disposition instructions from the Federal agency.

FM3D

92.32 g Right to transfer title. The Federal awarding agency may reserve the right to transfer title to the Federal Government or a third part named by the awarding agency when such a third party is otherwise eligible under existing statutes. Such transfers shall be subject to the following standards:

FM3D

92.32 g 1 The property shall be identified in the grant or otherwise made known to the grantee in writing.

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92.32 g 2 The Federal awarding agency shall issue disposition instruction within 120 calendar days after the end of the Federal support of the project for which it was acquired. If the Federal awarding agency fails to issue disposition instructions within the 120 calendar-day period the grantee shall follow Sec. 92.32 e.

FM3D

92.32 g 3 When title to equipment is transferred, the grantee shall be paid an amount calculated by applying the percentage of participation in the purchase to the current fair market value of the property.

FM3D

92.33 Supplies.92.33 a Title. Title to supplies acquired under a grant or subgrant will vest, upon

acquisition, in the grantee or subgrantee respectively.92.33 b Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in

total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other federally sponsored programs or projects, the grantee or subgrantee shall compensate the awarding agency for its share.

92.34 Copyrights. The Federal awarding agency reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, and to authorize others to use, for Federal Government purposes:

92.34 a The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant; and

92.34 b Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with grant support.

92.35 Subawards to debarred and suspended parties. Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any tier to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549, “Debarment and Suspension.”

92.36 Procurement. FM1EFM2JFM2K

92.36 a States. When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations. Other grantees and subgrantees will follow paragraphs b through i in this section.

92.36 b Procurement standards. FM1E92.36 b 1 Grantees and subgrantees will use their own procurement procedures which reflect

applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.

92.36 b 2 Grantees and subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and

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specifications of their contracts or purchase orders.92.36 b 3 Grantees and subgrantees will maintain a written code of standards of conduct

governing the performance of their employees engaged in the award and administration of contracts. No employee, officer or agent of the grantee or subgrantee shall participate in selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when:

FM1E

92.36 b 3 i The employee, officer or agent, FM1E92.36 b 3 ii Any member of his immediate family, FM1E92.36 b 3 iii

His or her partner, or FM1E

92.36 b 3 iv

An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award. The grantee’s or subgrantee’s officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subagreements. Grantee and subgrantees may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the extent permitted by State or local law or regulations, such standards or conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the grantee’s and subgrantee’s officers, employees, or agents, or by contractors or their agents. The awarding agency may in regulation provide additional prohibitions relative to real, apparent, or potential conflicts of interest.

FM1E

92.36 b 4 Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid purchase of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

92.36 b 5 To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services.

92.36 b 6 Grantees and subgrantees are encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs.

92.36 b 7 Grantees and subgrantees are encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost.

92.36 b 8 Grantees and subgrantees will make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor

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integrity, compliance with public policy, record of past performance, and financial and technical resources.

92.36 b 9 Grantees and subgrantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.

92.36 b 10 Grantees and subgrantees will use time and material type contracts only–92.36 b 10 i

After a determination that no other contract is suitable, and

92.36 b 10 ii

If the contract includes a ceiling price that the contractor exceeds at its own risk.

92.36 b 11 Grantees and subgrantees alone will be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to source evaluation, protests, disputes, and claims. These standards do not relieve the grantee or subgrantee of any contractual responsibilities under its contracts. Federal agencies will not substitute their judgment for that of the grantee or subgrantee unless the matter is primarily a Federal concern. Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction.

92.36 b 12 Grantees and subgrantees will have protest procedures to handle and resolve disputes relating to their procurements and shall in all instances disclose information regarding the protest to the awarding agency. A protestor must exhaust all administrative remedies with the grantee and subgrantee before pursuing a protest with the Federal agency. Reviews of protests by the Federal agency will be limited to:

92.36 b 12 i

Violations of Federal law or regulations and the standards of this section (violations of State or local law will be under the jurisdiction of State or local authorities) and

92.36 b 12 ii

Violations of the grantee’s or subgrantee’s protest procedures for failure to review a complaint or protest. Protests received by the Federal agency other than those specified above will be referred to the grantee or subgrantee.

92.36 c Competition. FM2JFM2K

92.36 c 1 All procurement transactions will be conducted in a manner providing full and open competition consistent with the standards of Sec. 92.36. Some of the situations considered to be restrictive of competition include but are not limited to:

FM2K

92.36 c 1 i Placing unreasonable requirements on firms in order for them to qualify to do business,

FM2K

92.36 c 1 ii Requiring unnecessary experience and excessive bonding, FM2K92.36 c 1 iii

Noncompetitive pricing practices between firms or between affiliated companies, FM2K

92.36 c 1 iv Noncompetitive awards to consultants that are on retainer contracts, FM2K

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92.36 c 1 v Organizational conflicts of interest, FM2K92.36 c 1 vi Specifying only a “brand name” product instead of allowing “an equal” product to

be offered and describing the performance of other relevant requirements of the procurement, and

FM2K

92.36 c 1 vii

Any arbitrary action in the procurement process. FM2K

92.36 c 2 Grantees and subgrantees will conduct procurements in a manner that prohibits the use of statutorily or administratively imposed in State or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts State licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criteria provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

FM2K

92.36 c 3 Grantees will have written selection procedures for procurement transactions. These procedures will ensure that all solicitations:

FM2JFM2K

92.36 c 3 i Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a “brand name or equal” description may be used as a means to define the performance or other salient requirements of a procurement. The specific features of the named brand which must be met by offerors shall be clearly stated; and

FM2JFM2K

92.36 c 3 ii Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

FM2JFM2K

92.36 c 4 Grantees and subgrantees will ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also, grantees and subgrantees will not preclude potential bidders from qualifying during the solicitation period.

FM2K

92.36 d Methods of procurement to be followed--92.36 d 1 Procurement by small purchase procedures. Small purchase procedures are those

relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources.

92.36 d 2 Procurement by sealed bids (formal advertising). Bids are publicly solicited and a

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firm-fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in Sec. 92.36 d 2 i apply.

92.36 d 2 i In order for sealed bidding to be feasible, the following conditions should be present:

92.36 d 2 I a

A complete, adequate, and realistic specification or purchase description is available;

92.36 d 2 I b

Two or more responsible bidders are willing and able to compete effectively and for the business; and

92.36 d 2 I c

The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price.

92.36 d 2 ii If sealed bids are used, the following requirements apply:92.36 d 2 ii a

The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;

92.36 d 2 ii b

The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond;

92.36 d 2 ii c

All bids will be publicly opened at the time and place prescribed in the invitation for bids;

92.36 d 2 ii d

A firm fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and

92.36 d 2 ii e

Any or all bids may be rejected if there is a sound documented reason.

92.36 d 3 Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:

92.36 d 3 i Requests for proposals will be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;

92.36 d 3 ii Proposals will be solicited from an adequate number of qualified sources;92.36 d 3 iii

Grantees and subgrantees will have a method for conducting technical evaluations of the proposals received and for selecting awardees;

92.36 d 3 Awards will be made to the responsible firm whose proposal is most advantageous

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iv to the program, with price and other factors considered; and92.36 d 3 v Grantees and subgrantees may use competitive proposal procedures for

qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

92.36 d 4 Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.

92.36 d 4 i Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies:

92.36 d 4 I a

The item is available only from a single source;

92.36 d 4 I b

The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

92.36 d 4 I c

The awarding agency authorizes noncompetitive proposals; or

92.36 d 4 I d

After solicitation of a number of sources, competition is determined inadequate.

92.36 d 4 ii Cost analysis, i.e., verifying the proposed cost data, the projections of the data, and the evaluation of the specific elements of costs and profits, is required.

92.36 d 4 iii

Grantees and subgrantees may be required to submit the proposed procurement to the awarding agency for pre-award review in accordance with paragraph g of this section.

92.36 e Contracting with small and minority firms, women’s business enterprise and labor surplus area firms.

92.36 e 1 The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms, women’s business enterprises, and labor surplus area firms are used when possible.

92.36 e 2 Affirmative steps shall include:92.36 e 2 i Placing qualified small and minority businesses and women’s business enterprises

on solicitation lists;92.36 e 2 ii Assuring that small and minority businesses, and women’s business enterprises are

solicited whenever they are potential sources;92.36 e 2 iii

Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business, and women’s business enterprises;

92.36 e 2 iv Establishing delivery schedules, where the requirement permits, which encourage

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participation by small and minority business, and women’s business enterprises;92.36 e 2 v Using the services and assistance of the Small Business Administration, and the

Minority Business Development Agency of the Department of Commerce; and92.36 e 2 vi Requiring the prime contractor, if subcontracts are to be let, to take the affirmative

steps listed in paragraph e 2 i through v of this section.92.36 f Contract cost and price.92.36 f 1 Grantees and subgrantees must perform a cost or price analysis in connection with

every procurement action including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, grantees must make independent estimates before receiving bids or proposals. A cost analysis must be performed when the offeror is required to submit the elements of his estimated cost, e.g., under professional, consulting, and architectural engineering services contracts. A cost analysis will be necessary when adequate price competition is lacking, and for sole source procurements, including contract modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation. A price analysis will be used in all other instances to determine the reasonableness of the proposed contract price.

92.36 f 2 Grantees and subgrantees will negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration will be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor’s investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

92.36 f 3 Costs or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices are consistent with Federal cost principles (see Sec. 92.22). Grantees may reference their own cost principles that comply with the applicable Federal cost principles.

92.36 f 4 The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used.

92.36 g Awarding agency review.92.36 g 1 Grantees and subgrantees must make available, upon request of the awarding

agency, technical specifications on proposed procurements where the awarding agency believes such review is needed to ensure that the item and/or service specified is the one being proposed for purchase. This review generally will take place prior to the time the specification is incorporated into a solicitation document. However, if the grantee or subgrantee desires to have the review accomplished after a solicitation has been developed, the awarding agency may still review the specifications, with such review usually limited to the technical aspects of the proposed purchase.

92.36 g 2 Grantees and subgrantees must on request make available for awarding agency pre-

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award review procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc. when:

92.36 g 2 i A grantee’s or subgrantee’s procurement procedures or operation fails to comply with the procurement standards in this section; or

92.36 g 2 ii The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation; or

92.36 g 2 iii

The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product; or

92.36 g 2 iv

The proposed award is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or

92.36 g 2 v A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold.

92.36 g 3 A grantee or subgrantee will be exempt from the pre-award review in paragraph g 2 of this section if the awarding agency determines that its procurement systems comply with the standards of this section.

92.36 g 3 i A grantee or subgrantee may request that its procurement system be reviewed by the awarding agency to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews shall occur where there is a continuous high-dollar funding, and third-party contracts are awarded on a regular basis.

92.36 g 3 ii A grantee or subgrantee may self-certify its procurement system. Such self-certification shall not limit the awarding agency’s right to survey the system. Under a self-certification procedure, awarding agencies may wish to rely on written assurances from the grantee or subgrantee that it is complying with these standards. A grantee or subgrantee will cite specific procedures, regulations, standards, etc., as being in compliance with these requirements and have its system available for review.

92.36 h Bonding requirements. For construction or facility improvement contracts or subcontracts exceeding the simplified acquisition threshold, the awarding agency may accept the bonding policy and requirements of the grantee or subgrantee provided the awarding agency has made a determination that the awarding agency’s interest is adequately protected. If such a determination has not been made, the minimum requirements shall be as follows:

92.36 h 1 A bid guarantee from each bidder equivalent to five percent of the bid price. The “bid guarantee” shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.

92.36 h 2 A performance bond on the part of the contractor for 100% of the contract price. A “performance bond” is one executed in connection with a contract to secure fulfillment of all the contractor’s obligations under such contract.

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92.36 h 3 A payment bond on the part of the contractor for 100% of the contract price. A “payment bond” is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract.

92.36 i Contract provisions. A grantee’s and subgrantee’s contracts must contain provisions in paragraph i of this section. Federal agencies are permitted to require changes, remedies, changed conditions, access and records retention, suspension of work, and other clauses approved by the Office of Federal Procurement Policy.

92.36 i 1 Administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate. (Contracts more than the simplified acquisition threshold)

92.36 i 2 Termination for cause and for convenience by the grantee or subgrantee including the manner by which it will be effected and the basis for settlement. (All contracts in excess of $10,000)

92.36 i 3 Compliance with Executive Order 11246 of September 24, 1965, entitled “Equal Employment Opportunity,” as amended by Executive Order 11375 of October 13, 1967, and as supplemented in Department of Labor regulations (41 CFR chapter 60). (All construction contracts awarded in excess of $10,000 by grantees and their contractors or subgrantees)

92.36 i 4 Compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR Part 3). (All contracts and subgrants for construction or repair)

92.36 i 5 Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) as supplemented by Department of Labor regulations (29 CFR Part 5). (Construction contracts in excess of $2000 awarded by grantees and subgrantees when required by Federal grant program legislation)

92.36 i 6 Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-330) as supplemented by Department of Labor regulations (29 CFR Part 5). (Construction contracts awarded by grantees and subgrantees in excess of $2000, and in excess of $2500 for other contracts which involve the employment of mechanics or laborers)

92.36 i 7 Notice of awarding agency requirements and regulations pertaining to reporting.92.36 i 8 Notice of awarding agency requirements and regulations pertaining to patent rights

with respect to any discovery or invention which arises or is developed in the course of or under such contract.

92.36 i 9 Awarding agency requirements and regulations pertaining to copyrights and rights in data.

92.36 i 10 Access by the grantee, the subgrantee, the Federal grantor agency, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract for the purpose of making audit, examination, excerpts, and transcriptions.

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92.36 i 11 Retention of all required records for three years after grantees or subgrantees make final payments and all other pending matters are closed.

92.36 i 12 Compliance with all applicable standards, orders, or requirements issued under section 306 of the Clean Air Act (42 U.S.C. 1857 h), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency regulations (40 CFR part 15). (Contracts, subcontracts, and subgrants of amounts in excess of $100,000)

92.36 i 13 Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 89 Stat. 871).

92.37 Subgrants.92.37 a States. States shall follow state law and procedures when awarding and

administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. States shall:

92.37 a 1 Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations;

92.37 a 2 Ensure that subgrantees are aware of requirements imposed upon them by Federal statute and regulation;

92.37 a 3 Ensure that a provision for compliance with Sec. 92.42 is placed in every cost reimbursement subgrant; and

92.37 a 4 Conform any advances of grant funds to subgrantees substantially to the same standards of timing and amount that apply to cash advances by Federal agencies.

92.37 b All other grantees. All other grantees shall follow the provisions of this part which are applicable to awarding agencies when awarding and administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. Grantees shall:

92.37 b 1 Ensure that every subgrant includes a provision for compliance with this part;92.37 b 2 Ensure that every subgrant includes any clauses required by Federal statute and

executive orders and their implementing regulations; and92.37 b 3 Ensure that subgrantees are aware of requirements imposed upon them by Federal

statutes and regulations.92.37 c Exceptions. By their own terms, certain provisions of this part do not apply to the

award and administration of subgrants:92.37 c 1 Section 92.10; 92.37 c 2 Section 92.11;92.37 c 3 The letter-of-credit procedures specified in Treasury Regulations at 31 CFR part

205, cited in Sec. 92.21; and92.37 c 4 Section 92.50 [sic].92.40 Reports, Records Retention, and Enforcement. Monitoring and reporting program

performance.

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92.40 a Monitoring by grantees. Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity.

92.40 b Nonconstruction performance reports. The Federal agency may, if it decides that performance information available from subsequent applications contains sufficient information to meet its programmatic needs, require the grantee to submit a performance report only upon expiration or termination of grant support. Unless waived by the Federal agency this report will be due on the same date as the final Financial Status Report.

92.40 b 1 Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi-annual reports. However, performance reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for unnecessary performance reports may be waived by the Federal agency.

92.40 b 2 Performance reports will contain, for each grant, brief information on the following:92.40 b 2 i A comparison of actual accomplishments to the objectives established for the

period. Where the output of the project can be quantified, a computation of the cost per unit of output may be required if that information will be useful.

92.40 b 2 ii The reasons for slippage if established objectives were not met.92.40 b 2 iii

Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.

92.40 b 3 Grantees will not be required to submit more than the original and two copies of performance reports.

92.40 b 4 Grantees will adhere to the standards in this section in prescribing performance reporting requirements for subgrantees.

92.40 c Construction performance reports. For the most part, on-site technical inspections and certified percentage-of-completion data are relied on heavily by Federal agencies to monitor progress under construction grants and subgrants. The Federal agency will require additional formal performance reports only when considered necessary, and never more frequently than quarterly.

92.40 d Significant developments. Events may occur between the scheduled performance reporting dates which have significant impact upon the grant or subgrant supported activity. In such cases, the grantee must inform the Federal agency as soon as the following types of conditions become known:

92.40 d 1 Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the award. This disclosure must include a statement of the action taken, or contemplated, and any assistance needed to resolve the situation.

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92.40 d 2 Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more beneficial results than originally planned.

92.40 e Federal agencies may make site visits as warranted by program needs.92.40 f Waivers, extensions.92.40 f 1 Federal agencies may waive any performance report required by this part if not

needed.92.40 f 2 The grantee may waive any performance report from a subgrantee when not needed.

The grantee may extend the due date for any performance report from a subgrantee if the grantee will still be able to meet its performance reporting obligations to the Federal agency.

92.41 Financial reporting. FM5B92.41 a General.92.41 a 1 Except as provided in paragraph a 2 and 5 of this section, grantees will use only the

forms specified in paragraph a through e of this section, and such supplementary or other forms as may from time to time be authorized by OMB, for:

92.41 a 1 i Submitting financial reports to Federal agencies, or92.41 a 1 ii Requesting advances or reimbursements when letters of credit are not used.92.41 a 2 Grantees need not apply the forms prescribed in this section in dealing with their

subgrantees. However, grantees shall not impose more burdensome requirements on subgrantees.

92.41 a 3 Grantees shall follow all applicable standard and supplemental Federal agency instructions approved by OMB to the extend required under the Paperwork Reduction Act of 1980 for use in connection with forms specified in paragraphs b through e of this section. Federal agencies may issue substantive supplementary instructions only with the approval of OMB. Federal agencies may shade out or instruct the grantee to disregard any line item that the Federal agency finds unnecessary for its decisionmaking purposes.

92.41 a 4 Grantees will not be required to submit more than the original and two copies of forms required under this part.

92.41 a 5 Federal agencies may provide computer outputs to grantees to expedite or contribute to the accuracy of reporting. Federal agencies may accept the required information from grantees in machine usable format or computer printouts instead of prescribed forms.

92.41 a 6 Federal agencies may waive any report required by this section if not needed.92.41 a 7 Federal agencies may extend the due date of any financial report upon receiving a

justified request from a grantee.92.41 b Financial Status Report FM5B92.41 b 1 Form. Grantees will use Standard Form 269 or 269A, Financial Status Report, to

report the status of funds for all nonconstruction grants and for construction grants

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when required in accordance with Sec. 92.41 e 2 iii.92.41 b 2 Accounting basis. Each grantee will report program outlays and program income on

a cash or accrual basis as prescribed by the awarding agency. If the Federal agency requires accrual information and the grantee’s accounting records are not normally kept on the accrual basis, the grantee shall not be required to convert its accounting system but shall develop such accrual information through and analysis of the documentation on hand.

92.41 b 3 Frequency. The Federal agency may prescribe the frequency of the report for each project or program. However, the report will not be required more frequently than quarterly. If the Federal agency does not specify the frequency of the report, it will be submitted annually. A final report will be required upon expiration or termination of grant support.

92.41 b 4 Due date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support.

FM5B

92.41 c Federal Cash Transactions Report FM5B92.41 c 1 Form.92.41 c 1 i For grants paid by letter or credit, Treasury check advances or electronic transfer of

funds, the grantee will submit the Standard Form 272, Federal Cash Transactions Report, and when necessary, its continuation sheet, Standard Form 272a, unless the terms of the award exempt the grantee from this requirement.

92.41 c 1 ii These reports will be used by the Federal agency to monitor cash advanced to grantees and to obtain disbursement or outlay information for each grant from grantees. The format of the report may be adapted as appropriate when reporting is to be accomplished with the assistance of automatic data processing equipment provided that the information to be submitted is not changed in substance.

92.41 c 2 Forecasts of Federal cash requirements. Forecasts of Federal cash requirements may be required in the “Remarks” section of the report.

92.41 c 3 Cash in hands of subgrantees. When considered necessary and feasible by the Federal agency, grantees may be required to report the amount of cash advances in excess of three days’ needs in the hands of their subgrantees or contractors and to provide short narrative explanations of actions taken by the grantee to reduce the excess balances.

92.41 c 4 Frequency and due date. Grantees must submit the report no later than 15 working days following the end of each quarter. However, where an advance either by letter of credit or electronic transfer of funds is authorized at an annualized rate of one million dollars or more, the Federal agency may require the report to be submitted within 15 working days following the end of each month.

FM5B

92.41 d Request for advance or reimbursement92.41 d 1 Advance payments. Requests for Treasury check advance payments will be

submitted on Standard Form 270, Request for Advance or Reimbursement. (This

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form will not be used for drawdowns under a letter of credit, electronic funds transfer or when Treasury check advance payments are made to the grantee automatically on a predetermined basis.)

92.41 d 2 Reimbursements. Requests for reimbursement under nonconstruction grants will also be submitted on Standard Form 270. (For reimbursement requests under construction grants, see paragraph e 1 of this section.)

92.41 d 3 The frequency for submitting payment requests is treated in Sec. 92.41 b 3. 92.41 e Outlay report and request for reimbursement for construction programs92.41 e 1 Grants that support construction activities paid by reimbursement method.92.41 e 1 i Requests for reimbursement under construction grants will be submitted on

Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. Federal agencies may, however, prescribe the Request for Advance or Reimbursement form, specified in Sec. 92.41 d, instead of this form.

92.41 e 1 ii The frequency for submitting reimbursement requests is treated in Sec. 92.41 b 3.92.41 e 2 Grants that support construction activities paid by letter of credit, electronic funds

transfer or Treasury check advance.92.41 e 2 i When a construction grant is paid by letter of credit, electronic funds transfer or

Treasury check advances, the grantee will report its outlays to the Federal agency using Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. The Federal agency will provide any necessary special instruction. However, frequency and due date shall be governed by Sec. 92.41 b 3 and 4.

92.41 e 2 ii When a construction grant is paid by Treasury check advances based on periodic requests from the grantee, the advances will be requested on the form specified in Sec. 92.41 d.

92.41 e 2 iii

The Federal agency may substitute the Financial Status Report specified in Sec. 92.41 b for the Outlay Report and Request for Reimbursement for Construction Programs.

92.41 e 3 Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by Sec. 92.41 b 2.

92.42 Retention and access requirements for records.92.42 a Applicability.92.42 a 1 This section applies to all financial and programmatic records, supporting

documents, statistical records, and other records of grantees or subgrantees which are:

92.42 a 1 i Required to be maintained by the terms of this part, program regulations or the grant agreement, or

92.42 a 1 ii Otherwise reasonably considered as pertinent to program regulations or the grant agreement.

92.42 a 2 This section does not apply to records maintained by contractors or subcontractors.

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For a requirement to place a provision concerning records in certain kinds of contracts, see Sec. 92.36 i 10.

92.42 b Length of retention period.92.42 b 1 Except as otherwise provided, records must be retained for three years from the

starting date specified in paragraph c of this section.92.42 b 2 If any litigation, claim, negotiation, audit or other action involving the records has

been started before the expiration of the 3-year period, the records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular 3-year period, whichever is later.

92.42 b 3 To avoid duplicate recordkeeping, awarding agencies may make special arrangements with grantees and subgrantees to retain any records which are continuously needed for joint use. The awarding agency will request transfer of records to its custody when it determines that the records possess long-term retention value. When the records are transferred to or maintained by the Federal agency, the 3-year retention requirement is not applicable to the grantee or subgrantee.

92.42 c Starting date of retention period92.42 c 1 General. When grant support is continued or renewed at annual or other intervals,

the retention period for the records of each funding period starts on the day the grantee or subgrantee submits to the awarding agency its single or last expenditure report for that period. However, if grant support is continued or renewed quarterly, the retention period for each year’s records starts on the day the grantee submits its expenditure report for the last quarter of the Federal fiscal year. In all other cases, the retention period starts on the day the grantee submits its final expenditure report. If an expenditure report has been waived, the retention period starts on the day the report would have been due.

92.42 c 2 Real property and equipment records. The retention period for real property and equipment records starts from the date of the disposition or replacement or transfer at the direction of the awarding agency.

92.42 c 3 Records for income transactions after grant or subgrant support. In some cases grantees must report income after the period of grant support. Where there is such a requirement, the retention period for the records pertaining to the earning of the income starts from the end of the grantee’s fiscal year in which the income is earned.

92.42 c 4 Indirect cost rate proposals, cost allocations plans, etc. This paragraph applies to the following types of documents, and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates).

92.42 c 4 i If submitted for negotiation. If the proposal, plan, or other computation is required to be submitted to the Federal Government (or to the grantee) to form the basis for negotiation of the rate, then the 3-year retention period for its supporting records starts from the date of such submission.

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92.42 c 4 ii If not submitted for negotiation. If the proposal, plan, or other computation is not required to be submitted to the Federal Government (or to the grantee) for negotiation purposes, then the 3-year retention period for the proposal plan, or computation and its supporting records starts from end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.

92.42 d Substitution of microfilm. Copies made by microfilming, photocopying, or similar methods may be substituted for the original records.

92.42 e Access to records92.42 e 1 Records of grantees and subgrantees. The awarding agency and the Comptroller

General of the United States, or any of their authorized representatives, shall have the right of access to any pertinent books, documents, papers, or other records of grantees and subgrantees which are pertinent to the grant, in order to make audits, examinations, excerpts, and transcripts.

92.42 e 2 Expiration of right of access. The rights of access in this section must not be limited to the required retention period but shall last as long as the records are retained.

92.42 f Restrictions on public access. The Federal Freedom of Information Act (5 U.S.C. 552) does not apply to records unless required by Federal, State, or local law, grantees and subgrantees are not required to permit public access to their records.

92.43 Enforcement.92.43 a Remedies for noncompliance. If a grantee or subgrantee materially fails to comply

with any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere, the awarding agency may take one or more of the following actions, as appropriate in the circumstances:

92.43 a 1 Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee or more severe enforcement action by the awarding agency,

92.43 a 2 Disallow (that is, deny both use of funds and matching credit for) all or part of the cost of the activity or action not in compliance,

92.43 a 3 Wholly or partly suspend or terminate the current award for the grantee’s or subgrantee’s program,

92.43 a 4 Withhold further awards for the program, or92.43 a 5 Take other remedies that may be legally available.92.43 b Hearings, appeals. In taking an enforcement action, the awarding agency will

provide the grantee or subgrantee an opportunity for such hearing, appeal, or other administrative proceeding to which the grantee or subgrantee is entitled under any statute or regulation applicable to the action involved.

92.43 c Effects of suspension and termination. Costs of grantee or subgrantee resulting from obligations incurred by the grantee or subgrantee during a suspension or after termination of an award are not allowable unless the awarding agency expressly authorizes them in the notice of suspension or termination or subsequently. Other grantee or subgrantee costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if:

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92.43 c 1 The costs result from obligations which were properly incurred by the grantee or subgrantee before the effective date of suspension or termination, are not in anticipation of it, and, in the case of a termination, are noncancellable, and,

92.43 c 2 The costs would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect.

92.43 d Relationship to debarment and suspension. The enforcement remedies identified in this section, including suspension and termination, do not preclude grantee or subgrantee from being subject to “Debarment and Suspension” under E.O. 12549 (see Sec. 92.35).

92.44 Termination for convenience. Except as provided in Sec. 92.43 awards may be terminated in whole or in part only as follows:

92.44 a By the awarding agency with the consent of the grantee or subgrantee in which case the two parties shall agree upon the termination conditions, including the effective date and in the case of partial termination, the portion to be terminated, or

92.44 b By the grantee or subgrantee upon written notification to the awarding agency, setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. However, if, in the case of a partial termination, the awarding agency determines that the remaining portion of the award will not accomplish the purposes for which the award was made, the awarding agency may terminate the award in its entirety under either Sec. 92.43 or paragraph a of this section.

* * *

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The Head Start Act (Reauthorized December, 2007)

The Head Start Act (12/2007)


Act 635[42 U.S.C. 9801]

SHORT TITLE.This subchapter may be cited as the “Head Start Act”.

Act 636[42 U.S.C. 9831]

STATEMENT OF PURPOSEIt is the purpose of this subchapter to promote the school readiness of low-income children by enhancing their cognitive, social, and emotional development--

Act 636 1 in a learning environment that supports children's growth in language, literacy, mathematics, science, social and emotional functioning, creative arts, physical skills, and approaches to learning; and

Act 636 2 through the provision to low-income children and their families of health, educational, nutritional, social, and other services that are determined, based on family needs assessments, to be necessary.

Act 637[42 U.S.C. 9832]

DEFINITIONS For purposes of this subchapter:

Act 637 1 The term “child with a disability” means--Act 637 1 A a child with a disability, as defined in section 602(3) [sic; see 300.8] of the

Individuals with Disabilities Education Act; andAct 637 1 B an infant or toddler with a disability, as defined in section 632(5) [sic; see

300.25] of such Act.Act 637 2 The term 'deficiency' means-- Act 637 2 A a systemic or substantial material failure of an agency in an area of

performance that the Secretary determines involves--Act 637 2 A i a threat to the health, safety, or civil rights of children or staff;Act 637 2 A ii a denial to parents of the exercise of their full roles and responsibilities

related to program operations;Act 637 2 A iii a failure to comply with standards related to early childhood development

and health services, family and community partnerships, or program design and management;

Act 637 2 A iv the misuse of funds received under this subchapter;Act 637 2 A v loss of legal status (as determined by the Secretary) or financial viability,

loss of permits, debarment from receiving Federal grants or contracts, or the improper use of Federal funds; or

Act 637 2 A vi failure to meet any other Federal or State requirement that the agency has shown an unwillingness or inability to correct, after notice from the Secretary, within the period specified;

Act 637 2 B systemic or material failure of the governing body of an agency to fully exercise its legal and fiduciary responsibilities; or

Act 637 2 C an unresolved area of noncompliance.

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Act 637 3 The term “delegate agency” means a public, private nonprofit (including a community based organization, as defined in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801), or for profit organization or agency to which a grantee has delegated all or part of the responsibility of the grantee for operating a Head Start program.

Act 637 4 The term “family literacy services” means services that are of sufficient intensity in terms of hours, and of sufficient duration, to make sustainable changes in a family, and that integrate all of the following activities:

Act 637 4 A Interactive literacy activities between parents and their children.Act 637 4 B Training for parents regarding how to be the primary teacher for their

children and full partners in the education of their children.Act 637 4 C Parent literacy training that leads to economic self-sufficiency and financial

literacy.Act 637 4 D An age-appropriate education to prepare children for success in school and

life experiences.Act 637 5 The term “financial assistance” includes assistance provided by grant,

agreement, or contract, and payments may be made in installments and in advance or by way of reimbursement with necessary adjustments on account of overpayments or underpayments.

Act 637 6 The term “full-calendar-year” means all days of the year other than Saturday, Sunday, and a legal public holiday.

Act 637 7 The term “full-working-day” means not less than 10 hours per day. Nothing in this paragraph shall be construed to require an agency to provide services to a child who has not reached the age of compulsory school attendance for more than the number of hours per day permitted by State law (including regulation) for the provision of services to such a child.

Act 637 8 The term “Head Start classroom” means a group of children supervised and taught by two paid staff members (a teacher and a teacher's aide or two teachers) and, where possible, a volunteer.

Act 637 9 The term “Head Start family day care” means Head Start services provided in a private residence other than the residence of the child receiving such services.

Act 637 10 The term “home-based Head Start program” means a Head Start program that provides Head Start services in the private residence of the child receiving such services.

Act 637 11 The term “homeless children” has the meaning given the term “homeless children and youths” in section 725 2 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)).

Act 637 12 The term “Indian tribe” means any tribe, band, nation, pueblo, or other organized group or community of Indians, including any Native village described in section 3(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(c)) or established pursuant to such Act (43 U.S.C. 1601 et

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seq.), that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.

Act 637 13 The term 'institution of higher education' has the meaning given the term in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)).

Act 637 14 The term “interrater reliability” means the extent to which 2 or more independent raters or observers consistently obtain the same result when using the same assessment tool.

Act 637 15 The term “limited English proficient”, used with respect to a child, means a child--

Act 637 15 A i who was not born in the United States or whose native language is a language other than English;

Act 637 15 A ii I who is a Native American (as defined in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801)), an Alaska Native, or a native resident of an outlying area (as defined in such section 9101); and

Act 637 15 A ii II who comes from an environment where a language other than English has had a significant impact on the child’s level of English language proficiency; or

Act 637 15A iii who is migratory, whose native language is a language other than English, and who comes from an environment where a language other than English is dominant; and

Act 637 15 B whose difficulties in speaking or understanding the English language may be sufficient to deny such child--

Act 637 15 B i the ability to successfully achieve in a classroom in which the language of instruction is English; or

Act 637 15 B ii the opportunity to participate fully in society.Act 637 16 The term “local educational agency” has the meaning given such term in the

Elementary and Secondary Education Act of 1965.Act 637 17 The term “migrant or seasonal Head Start program” means--Act 637 17 A with respect to services for migrant farmworkers, a Head Start program that

serves families who are engaged in agricultural labor and who have changed their residence from one geographic location to another in the preceding 2-year period; and

Act 637 17 B with respect to services for seasonal farmworkers, a Head Start program that serves families who are engaged primarily in seasonal agricultural labor and who have not changed their residence to another geographic location in the preceding 2-year period.

Act 637 18 The term “mobile Head Start program” means the provision of Head Start services utilizing transportable equipment set up in various community-based locations on a routine, weekly schedule, operating in conjunction with home-based Head Start programs, or as a Head Start classroom.

Act 637 19 The term “poverty line” means the official poverty line (as defined by the

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Office of Management and Budget)--Act 637 19 A adjusted to reflect the percentage change in the Consumer Price Index For

All Urban Consumers, issued by the Bureau of Labor Statistics, occurring in the 1-year period or other interval immediately preceding the date such adjustment is made; and

Act 637 19 B adjusted for family size.Act 637 20 The term “principles of scientific research” means principles of research

that-- Act 637 20 A apply rigorous, systematic, and objective methodology to obtain reliable and

valid knowledge relevant to education activities and programs;Act 637 20 B present findings and make claims that are appropriate to and supported by

methods that have been employed; andAct 637 20 C include, as appropriate to the research being conducted--Act 637 20 C i use of systematic, empirical methods that draw on observation or

experiment;Act 637 20 C ii use of data analyses that are adequate to support the general findings;Act 637 20 C iii reliance on measurements or observational methods that provide reliable and

generalizable findings;Act 637 20 C iv strong claims of causal relationships, only with research designs that

eliminate plausible competing explanations for observed results, such as, but not limited to, random assignment experiments;

Act 637 20 C v presentation of studies and methods in sufficient detail and clarity to allow for replication or, at a minimum, to offer the opportunity to build systematically on the findings of the research;

Act 637 20 C vi acceptance by a peer-reviewed journal or critique by a panel of independent experts through a comparably rigorous, objective, and scientific review; and

Act 637 20 C vii consistency of findings across multiple studies or sites to support the generality of results and conclusions.

Act 637 21 The term “professional development” means high-quality activities that will improve the knowledge and skills of Head Start teachers and staff, as relevant to their roles and functions, in program administration and the provision of services and instruction, as appropriate, in a manner that improves service delivery to enrolled children and their families, including activities that--

Act 637 21 A are part of a sustained effort to improve overall program quality and outcomes for enrolled children and their families;

Act 637 21 B are developed or selected with extensive participation of administrators and teachers from Head Start programs;

Act 637 21 C are developmentally appropriate for the children being served;Act 637 21 D include instruction in ways that Head Start teachers and staff may work

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more effectively with parents, as appropriate;Act 637 21 E are designed to give Head Start teachers and staff the knowledge and skills

to provide instruction and appropriate support services to children of diverse backgrounds, as appropriate;

Act 637 21 F may include a 1-day or short-term workshop or conference, if the workshop or conference is consistent with the goals in the professional development plan described in section 648A f and will be delivered by an institution of higher education or other entity, with expertise in delivering training in early childhood development, training in family support, and other assistance designed to improve the delivery of Head Start services; and

Act 637 21 G in the case of teachers, assist teachers with--Act 637 21 G i the acquisition of the content knowledge and teaching strategies needed to

provide effective instruction and other school readiness services regarding early language and literacy, early mathematics, early science, cognitive skills, approaches to learning, creative arts, physical health and development, and social and emotional development linked to school readiness;

Act 637 21 G ii meeting the requirements in paragraphs 1 and 2 of section 648A a, as appropriate;

Act 637 21 G iii improving classroom management skills, as appropriate;Act 637 21 G iv advancing their understanding of effective instructional strategies that are--Act 637 21 G iv I based on scientifically valid research; andAct 637 21 G iv II aligned with--Act 637 21 G iv II aa

the Head Start Child Outcomes Framework developed by the Secretary and, as appropriate, State early learning standards; and

Act 637 21 G iv II bb

curricula, ongoing assessments, and other instruction and services, designed to help meet the standards described in section 641A a 1;

Act 637 21 G v acquiring the knowledge and skills to provide instruction and appropriate language and support services to increase the English language skills of limited English proficient children, as appropriate; or

Act 637 21 G vi methods of teaching children with disabilities, as appropriate.Act 637 22 The term “scientifically based reading research”--Act 637 22 A means the application of rigorous, systematic and objective procedures to

obtain valid knowledge relevant to reading development, reading instruction, and reading difficulties; and

Act 637 22 B shall include research that--Act 637 22 B i employs systematic, empirical methods that draw on observation or

experiment;Act 637 22 B ii involves rigorous data analyses that are adequate to test the stated

hypotheses and justify the general conclusions drawn;

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Act 637 22 B iii relies on measurements or observational methods that provide valid data across evaluators and observers and across multiple measurements and observations; and

Act 637 22 B iv has been accepted by a peer-reviewed journal or approved by a panel of independent experts through a comparably rigorous, objective, and scientific review.

Act 637 23 The term “scientifically valid research” includes applied research, basic research, and field-initiated research in which the rationale, design, and interpretation are soundly developed in accordance with principles of scientific research.

Act 637 24 The term “Secretary” means the Secretary of Health and Human Services.Act 637 25 The term “State” means a State, the Commonwealth of Puerto Rico, the

District of Columbia, Guam, American Samoa, the Virgin Islands of the United States, and the Commonwealth of the Northern Mariana Islands. The term includes the Republic of Palau for fiscal years 2008 and 2009, and (if the legislation described in section 640 a 2 B v has not been enacted by September 30, 2009) for fiscal years 2010 through 2012.

Act 637 26 The term “unresolved area of noncompliance” means failure to correct a noncompliance item within 120 days, or within such additional time (if any) as is authorized by the Secretary, after receiving from the Secretary notice of such noncompliance item, pursuant to section 641A c.

Act 638[42 U.S.C. 9833]

FINANCIAL ASSISTANCE FOR HEAD START PROGRAMS.

Act 638 a The Secretary may, upon application by an agency which is eligible for designation as a Head Start agency pursuant to section 641, provide financial assistance to such agency for a period of 5 years for the planning, conduct, administration and evaluation of a Head Start program focused primarily upon the children from low-income families who have not reached the age of compulsory school attendance which:

Act 638 a 1 will provide such comprehensive health, education, parental involvement, nutritional, social, and other services as will enable the children to attain their full potential and attain school readiness; and

Act 638 a 2 will provide for direct participation of the parents of such children in the development, conduct, and overall program direction at the local level.

Act 639[42 U.S.C. 9834]

AUTHORIZATION OF APPROPRIATIONS. There are authorized to be appropriated to carry out this subchapter (other than section 657B) $7,350,000,000 for fiscal year 2008, $7,650,000,000 for fiscal year 2009, $7,995,000,000 for fiscal year 2010, and such sums as may be necessary for each of fiscal years 2011 and 2012.

Act 640[42 USC 9835]

ALLOTMENT OF FUNDS; LIMITATIONS ON ASSISTANCE. ER1F

Act 640 a 1 Using the sums appropriated pursuant to section 639 for a fiscal year, the

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Secretary shall allocate such sums in accordance with paragraph 2 through 5.

Act 640 a 2 A The Secretary shall determine an amount for each fiscal year for each State that is equal to the amount received through base grants for the prior fiscal year by the Head Start agencies (including Early Head Start agencies) in the State that are not described in clause ii or iii of subparagraph B.

Act 640 a 2 B The Secretary shall reserve for each fiscal year such sums as are necessary--Act 640 a 2 B i to provide each amount determined for a State under subparagraph A to the

Head Start agencies (including Early Head Start agencies) in the State that are not described in clause ii or iii, by allotting to each agency described in this clause an amount equal to that agency’s base grant for the prior fiscal year;

Act 640 a 2 B ii to provide an amount for the Indian Head Start programs that is equal to the amount provided for base grants for such programs under this subchapter for the prior fiscal year, by allotting to each Head Start agency (including each Early Head Start agency) administering an Indian Head Start program an amount equal to that agency’s base grant for the prior fiscal year;

Act 640 a 2 B iii to provide an amount for the migrant and seasonal Head Start programs, on a nationwide basis, that is equal to the amount provided nationwide for base grants for such programs under this subchapter for the prior fiscal year, by allotting to each Head Start agency administering a migrant or seasonal Head Start program an amount equal to that agency’s base grant for the prior fiscal year;

Act 640 a 2 B iv to provide an amount for each of Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands of the United States (for Head Start agencies (including Early Head Start agencies) in the jurisdiction) that is equal to the amount provided for base grants for such jurisdiction under this subchapter for the prior fiscal year, by allotting to each agency described in this clause an amount equal to that agency’s base grant for the prior fiscal year;

Act 640 a 2 B v to provide an amount for the Republic of Palau (for Head Start agencies (including Early Head Start agencies) in the jurisdiction) for each of fiscal years 2008 and 2009, and (if legislation approving a new agreement regarding United States assistance for the Republic of Palau has not been enacted by September 30, 2009) for each of fiscal years 2010 through 2012, that is equal to the amount provided for base grants for such jurisdiction under this subchapter for the prior fiscal year, by allotting to each agency described in this clause an amount equal to that agency’s base grant for the prior fiscal year; and

Act 640 a 2 B vi to provide an amount for a collaboration grant under section 642B a for each State, for the Indian Head Start programs, and for the migrant and seasonal Head Start programs, in the same amount as the corresponding collaboration grant provided under this subchapter for fiscal year 2007.

Act 640 a 2 C i The Secretary shall reserve for each fiscal year an amount that is not less

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than 2.5% and not more than 3% of the sums appropriated pursuant to section 639 for that fiscal year, to fund training and technical assistance activities, from which reserved amount--

Act 640 a 2 C i I the Secretary shall set aside a portion, but not less than 20%, to be used to fund training and technical assistance activities for Early Head Start programs, in accordance with section 645A g 2; and

Act 640 a 2 C i II the Secretary shall set aside a portion, equal to the rest of the reserved amount, to fund training and technical assistance activities for other Head Start programs, in accordance with section 648, of which portion--

Act 640 a 2 C i II aa

not less than 50% shall be made available to Head Start agencies to use directly, which may include at their discretion the establishment of local or regional agreements with community experts, institutions of higher education, or private consultants, to make program improvements identified by such agencies, by carrying out the training and technical assistance activities described in section 648_d;

Act 640 a 2 C i II bb

not less than 25% shall be available to the Secretary to support a State-based training and technical assistance system, or a national system, described in section 648 e for supporting program quality; and

Act 640 a 2 C i II cc

the remainder of the portion set aside under this subclause shall be available to the Secretary to assist Head Start agencies in meeting and exceeding the standards described in section 641A a 1 by carrying out activities described in subsections a, b, c, f, and g of section 648, including helping Head Start programs address weaknesses identified by monitoring activities conducted by the Secretary under section 641A c, except that not less than $3,000,000 of the remainder shall be made available to carry out activities described in section 648 a 3 B ii.

Act 640 a 2 C ii In determining the portion set aside under clause i I and the amount reserved under this subparagraph, the Secretary shall consider the number of Early Head Start programs newly funded for that fiscal year.

Act 640 a 2 D The Secretary shall reserve not more than $20,000,000 to fund research, demonstration, and evaluation activities under section 649, of which not more than $7,000,000 for each of fiscal years 2008 through 2012 shall be available to carry out impact studies under section 649 g.

Act 640 a 2 E The Secretary shall reserve not more than $42,000,000 for discretionary payments by the Secretary, including payments for all costs (other than compensation of Federal employees) for activities carried out under subsection c or e of section 641A.

Act 640 a 2 F If the sums appropriated under section 639 are not sufficient to provide the amounts required to be reserved under subparagraphs B through E, the amounts shall be reduced proportionately.

Act 640 a 2 G Nothing in this section shall be construed to deny the Secretary the authority, consistent with sections 641, 641A, and 646 to terminate, suspend, or reduce funding to a Head Start agency.

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Act 640 a 3 A From any amount remaining for a fiscal year after the Secretary carries out paragraph 2 (referred to in this paragraph as the ‘remaining amount’), the Secretary shall--

Act 640 a 3 A i subject to clause ii--Act 640 a 3 A i I provide a cost of living increase for each Head Start agency (including each

Early Head Start agency) funded under this subchapter for that fiscal year, to maintain the level of services provided during the prior year; and

Act 640 a 3 A i II subject to subparagraph B, provide $10,000,000 for Indian Head Start programs (including Early Head Start programs), and $10,000,000 for migrant and seasonal Head Start programs, to increase enrollment in the programs involved;

Act 640 a 3 A ii subject to clause iii, if the remaining amount is not sufficient to carry out clause i--

Act 640 a 3 A ii I for each of fiscal years 2008, 2009, and 2010--Act 640 a 3 A ii I aa

subject to subparagraph B, provide 5% of that amount for Indian Head Start programs (including Early Head Start programs), and 5% of that amount for migrant and seasonal Head Start programs, to increase enrollment in the programs involved; and

Act 640 a 3 A ii I bb

use 90% of that amount to provide, for each Head Start agency (including each Early Head Start agency) funded as described in clause i I, the same percentage (but not less than 50%) of the cost of living increase described in clause i; and

Act 640 a 3 A ii II for fiscal year 2011 and each subsequent fiscal year--Act 640 a 3 A ii II aa

provide, for each Head Start agency (including each Early Head Start agency) funded as described in clause i I, the cost of living increase described in clause i; and

Act 640 a 3 A ii II bb

subject to subparagraph B, with any portion of the remaining amount that is not used under item aa, provide equal amounts for Indian Head Start programs (including Early Head Start programs), and for migrant and seasonal Head Start programs, to increase enrollment in the programs involved; and

Act 640 a 3 A iii if the remaining amount is not sufficient to carry out clause ii for the fiscal year involved, use that amount to provide, for each Head Start agency (including each Early Head Start agency) funded as described in clause i I, the same percentage of the cost of living increase described in clause i.

Act 640 a 3 B i Notwithstanding any other provision of this paragraph, the Indian Head Start programs shall not receive more than a total cumulative amount of $50,000,000 for all fiscal years, and the migrant and seasonal Head Start programs shall not receive more than a total cumulative amount of $50,000,000 for all fiscal years, under clause i II, and subclauses I aa and II bb of clause ii, of sub paragraph A (referred to in this subsection as the ‘special expansion provisions’), to increase enrollment in the programs

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involved. Act 640 a 3 B ii I Funds that are appropriated under section 639 for a fiscal year, and made

available to Indian Head Start programs or migrant or seasonal Head Start programs under the special expansion provisions, shall remain available until the end of the following fiscal year.

Act 640 a 3 B ii II For purposes of subclause I--Act 640 a 3 B ii II aa

if no portion is reallocated under clause iii, those funds shall remain available to the programs involved; or

Act 640 a 3 B ii II bb

if a portion is reallocated under clause iii, the portion shall remain available to the recipients of the portion.

Act 640 a 3 B iii Of the funds made available as described in clause ii, the Secretary shall reallocate the portion that the Secretary determines is unobligated 18 months after the funds are made available. The Secretary shall add that portion to the balance described in paragraph 4, and reallocate the portion in accordance with paragraph 4, for the following fiscal year referred to in clause ii.

Act 640 a 4 A Except as provided in subparagraph B, from any amount remaining for a fiscal year after the Secretary carries out paragraphs 2 and 3 (referred to in this paragraph as the ‘balance’), the Secretary shall--

Act 640 a 4 A i reserve 40% to carry out subparagraph C and paragraph 5;Act 640 a 4 A ii reserve 45% to carry out subparagraph D andAct 640 a 4 A iii reserve 15% (which shall remain available through the end of fiscal year

2012) to provide funds for carrying out section 642B b 2.Act 640 a 4 B i Under the circumstances described in clause ii, from the balance, the

Secretary shall--Act 640 a 4 B i I reserve 45% to carry out subparagraph C and paragraph 5; andAct 640 a 4 B i II reserve 55% to carry out subparagraph D.Act 640 a 4 B ii The Secretary shall make the reservations described in clause i for a fiscal

year if--Act 640 a 4 B ii I the total cumulative amount reserved under subparagraph A iii for all

preceding fiscal years equals $100,000,000; orAct 640 a 4 B ii II in the 2-year period preceding such fiscal year, funds were reserved under

subparagraph A iii in an amount that totals not less than $15,000,000 and the Secretary received no approvable applications for such funds.

Act 640 a 4 B iii The total cumulative amount reserved under subparagraph A iii for all fiscal years may not be greater than $100,000,000.

Act 640 a 4 C The Secretary shall fund the quality improvement activities described in paragraph 5 using the amount reserved under subparagraph A i or B i I, as appropriate, of which--

Act 640 a 4 C i a portion that is less than 10% may be reserved by the Secretary to provide

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funding to Head Start agencies (including Early Head Start agencies) that demonstrate the greatest need for additional funding for such activities, as determined by the Secretary; and

Act 640 a 4 C ii a portion that is not less than 90% shall be reserved by the Secretary to allot, to each Head Start agency (including each Early Head Start agency), an amount that bears the same ratio to such portion as the number of enrolled children served by the agency involved bears to the number of enrolled children served by all the Head Start agencies (including Early Head Start agencies), except that the Secretary shall account for the additional costs of serving children in Early Head Start programs and may consider whether an agency is providing a full-day program or whether an agency is providing a full-year program.

Act 640 a 4 D The Secretary shall fund expansion of Head Start programs (including Early Head Start programs) using the amount reserved under subparagraph A ii or subparagraph B i II, as appropriate, of which the Secretary shall--

Act 640 a 4 D i use 0.2% for Head Start programs funded under clause iv or v of paragraph 2 B (other than Early Head Start programs);

Act 640 a 4 D ii for any fiscal year after the last fiscal year for which Indian Head Start programs receive funds under the special expansion provisions, use 3% for Head Start programs funded under paragraph 2 B ii (other than Early Head Start programs), except that the Secretary may increase that percentage if the Secretary determines that the results of the study conducted under section 649 k indicate that the percentage should be increased;

Act 640 a 4 D iii for any fiscal year after the last fiscal year for which migrant or seasonal Head Start programs receive funds under the special expansion provisions, use 4.5% for Head Start programs funded under paragraph 2 B iii (other than Early Head Start programs), except that the Secretary may increase that percentage if the Secretary determines that the results of the study conducted under section 649 l indicate that the percentage should be increased; and

Act 640 a 4 D iv from the remainder of the reserved amount--Act 640 a 4 D iv I use 50% for Head Start programs funded under paragraph 2 B i (other than

Early Head Start programs), of which--Act 640 a 4 D iv I aa

the covered percentage shall be allocated among the States serving less than 60% (as determined by the Secretary) of children who are 3 or 4 years of age from families whose income is below the poverty line, by allocating to each of those States an amount that bears the same relationship to that covered percentage as the number of children who are less than 5 years of age from families whose income is below the poverty line (referred to in this subclause as ‘young low-income children’) in that State bears to the number of young low-income children in all those States; and

Act 640 a 4 D iv I bb

the remainder shall be allocated proportionately among the States on the basis of the number of young low-income children; and

Act 640 a 4 D iv II use 50% for Early Head Start programs.

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Act 640 a 4 E In this paragraph, the term “covered percentage” means-- Act 640 a 4 E i for fiscal year 2008, 30%;Act 640 a 4 E ii for fiscal year 2009, 40%;Act 640 a 4 E iii for fiscal year 2010, 50%;Act 640 a 4 E iv for fiscal year 2011, 55%; andAct 640 a 4 E v for fiscal year 2012, 55%.Act 640 a 5 A Not less than 50% of the amount reserved under subparagraph A i or B i I,

as appropriate, of paragraph 4 to carry out quality improvement activities under paragraph 4 C and this paragraph shall be used to improve the compensation (including benefits) of educational personnel, family service workers, and child counselors, as described in sections 644 a and 653, in the manner determined by the Head Start agencies (including Early Head Start agencies) involved, to--

Act 640 a 5 A i ensure that compensation is adequate to attract and retain qualified staff for the programs involved in order to enhance program quality;

Act 640 a 5 A ii improve staff qualifications and assist with the implementation of career development programs for staff that support ongoing improvement of their skills and expertise; and

Act 640 a 5 A iii provide education and professional development to enable teachers to be fully competent to meet the professional standards established under section 648A a 1, including--

Act 640 a 5 A iii I providing assistance to complete postsecondary course work;Act 640 a 5 A iii II improving the qualifications and skills of educational personnel to become

certified and licensed as bilingual education teachers, or as teachers of English as a second language; and

Act 640 a 5 A iii III

improving the qualifications and skills of educational personnel to teach and provide services to children with disabilities.

Act 640 a 5 B Any remaining funds from the reserved amount described in subparagraph A shall be used to carry out any of the following activities:

Act 640 a 5 B i Supporting staff training, child counseling, and other services, necessary to address the challenges of children from immigrant, refugee, and asylee families, homeless children, children in foster care, limited English proficient children, children of migrant or seasonal farmworker families, children from families in crisis, children referred to Head Start programs (including Early Head Start programs) by child welfare agencies, and children who are exposed to chronic violence or substance abuse.

Act 640 a 5 B ii Ensuring that the physical environments of Head Start programs are conducive to providing effective program services to children and families, and are accessible to children with disabilities and other individuals with disabilities.

Act 640 a 5 B iii Employing additional qualified classroom staff to reduce the child-to-

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teacher ratio in the classroom and additional qualified family service workers to reduce the family-to-staff ratio for those workers.

Act 640 a 5 B iv Ensuring that Head Start programs have qualified staff that promote the language skills and literacy growth of children and that provide children with a variety of skills that have been identified, through scientifically based reading research, as predictive of later reading achievement.

Act 640 a 5 B v Increasing hours of program operation, including--Act 640 a 5 B v I conversion of part-day programs to full-working day programs; andAct 640 a 5 B v II increasing the number of weeks of operation in a calendar year.Act 640 a 5 B vi Improving communitywide strategic planning and needs assessments for

Head Start programs and collaboration efforts for such programs, including outreach to children described in clause i.

Act 640 a 5 B vii Transporting children in Head Start programs safely, except that not more than 10% of funds made available to carry out this paragraph may be used for such purposes.

Act 640 a 5 B viii Improving the compensation and benefits of staff of Head Start agencies, in order to improve the quality of Head Start programs.

Act 640 a 6 No sums appropriated under this subchapter may be combined with funds appropriated under any provision other than this subchapter if the purpose of combining funds is to make a single discretionary grant or a single discretionary payment, unless such sums appropriated under this subchapter are separately identified in such grant or payment and are used for the purposes of this subchapter.

Act 640 a 7 In this subsection:Act 640 a 7 A The term “base grant”, used with respect to a fiscal year, means the amount

of permanent ongoing funding (other than funding described in sections 645A g 2 A i and paragraph 2 C i II aa provided to a Head Start agency (including an Early Head Start agency) under this subchapter for that fiscal year.

Act 640 a 7 B The term “cost-of-living increase”, used with respect to an agency for a fiscal year, means an increase in the funding for that agency, based on the percentage change in the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) for the prior fiscal year, calculated on the amount of the base grant for that agency for the prior fiscal year.

Act 640 a 7 C For the purposes of this subsection, the term “State” does not include Guam, American Samoa, the Virgin Islands of the United States, the Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.

Act 640 b Financial assistance extended under this subchapter for a Head Start program shall not exceed 80% of the approved costs of the assisted program or activities, except that the Secretary may approve assistance in excess of such percentage if the Secretary determines that such action is required in

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furtherance of the purposes of this subchapter. For the purpose of making such determination, the Secretary shall take into consideration with respect to the Head Start program involved--

Act 640 b 1 the lack of resources available in the community that may prevent the Head Start agency from providing all or a portion of the non-Federal contribution that may be required under this subsection;

Act 640 b 2 the impact of the cost the Head Start agency may incur in initial years it carries out such program;

Act 640 b 3 the impact of an unanticipated increase in the cost the Head Start agency may incur to carry out such program;

Act 640 b 4 whether the Head Start agency is located in a community adversely affected by a major disaster; and

Act 640 b 5 the impact on the community that would result if the Head Start agency ceased to carry out such program. Non-Federal contributions may be in cash or in kind, fairly evaluated, including plant, equipment, or services. The Secretary shall not require non-Federal contributions in excess of 20% of the approved costs of programs or activities assisted under this subchapter.

Act 640 c No programs shall be approved for assistance under this subchapter unless the Secretary is satisfied that the services to be provided under such program will be in addition to, and not in substitution for, comparable services previously provided without Federal assistance. The requirement imposed by the preceding sentence shall be subject to such regulations as the Secretary may prescribe.

Act 640 d MINIMUM ENROLLMENT REQUIREMENT FOR CHILDREN WITH DISABILITIES.

ER1F

Act 640 d 1 The Secretary shall establish policies and procedures to assure that, for fiscal year 2009 and thereafter, not less than 10% of the total number of children actually enrolled by each Head Start agency and each delegate agency will be children with disabilities who are determined to be eligible for special education and related services, or early intervention services, as appropriate, as determined under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.), by the State or local agency providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.).

ER1F

Act 640 d 2 Such policies and procedures shall ensure the provision of early intervening services, such as educational and behavioral services and supports, to meet the needs of children with disabilities, prior to an eligibility determination under the Individuals with Disabilities Education Act.

Act 640 d 3 Such policies and procedures shall require Head Start agencies to provide timely referral to and collaborate with the State or local agency providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] to ensure the provision of special education and

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related services and early intervention services, and the coordination of programmatic efforts, to meet the special needs of such children.

Act 640 d 4 The Secretary shall establish policies and procedures to provide Head Start agencies with waivers of the requirements of paragraph 1 for not more than 3 years. Such policies and procedures shall require Head Start agencies, in order to receive such waivers, to provide evidence demonstrating that the Head Start agencies are making reasonable efforts on an annual basis to comply with the requirements of that paragraph.

Act 640 d 5 Nothing in this subsection shall be construed to limit or create a right to a free appropriate public education under the Individuals with Disabilities Education Act.

Act 640 e The Secretary shall adopt appropriate administrative measures to assure that the benefits of this subchapter will be distributed equitably between residents of rural and urban areas.

Act 640 f 1 Not later than 1 year after the date of enactment of the Improving Head Start for School Readiness Act of 2007, the Secretary shall establish procedures to enable Head Start agencies to develop locally designed or specialized service delivery models to address local community needs, including models that leverage the capacity and capabilities of the delivery system of early childhood education and development services or programs.

Act 640 f 2 In establishing the procedures the Secretary shall establish procedures to provide for--

Act 640 f 2 A the conversion of part-day programs to full-working day programs or part-day slots to full-working-day slots; and

Act 640 f 2 B serving additional infants and toddlers pursuant to section 645 a 5.Act 640 g Additional Funds.Act 640 g 1 For the purpose of expanding Head Start programs, the Secretary shall take

into consideration--Act 640 g 1 A the quality of the applicant’s programs (including Head Start and other child

care or child development programs) in existence on the date of the allocation, including, in the case of Head Start programs in existence on the date of the allocation, the extent to which such programs meet or exceed standards described in section 641A a 1 and other requirements under this subchapter, and the performance history of the applicant in providing services under other Federal programs (other than the program carried out under this subchapter);

Act 640 g 1 B the applicant’s capacity to expand services (including, in the case of Head Start programs in existence on the date of the allocation, whether the applicant accomplished any prior expansions in an effective and timely manner);

Act 640 g 1 C the extent to which the applicant has undertaken a community-wide strategic planning and needs assessment involving other entities, including

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community organizations, and Federal, State, and local public agencies (including the local educational agency liaison designated under section 722 g 1 J ii of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11432(g)(1)(J)(ii))), that provide services to children and families, such as--

Act 640 g 1 C i family support services;Act 640 g 1 C ii child abuse prevention services;Act 640 g 1 C iii protective services;Act 640 g 1 C iv foster care;Act 640 g 1 C v services for families in whose homes English is not the language

customarily spoken;Act 640 g 1 C vi services for children with disabilities; andAct 640 g 1 C vii services for homeless children;Act 640 g 1 D the extent to which the family needs assessment and community-wide

strategic planning and needs assessment of the applicant reflect a need to provide full-working-day or full-calendar-year services and the extent to which, and manner in which, the applicant demonstrates the ability to collaborate and participate with the State and local community providers of child care or preschool services to provide full-working-day full calendar year services.

Act 640 g 1 E the number of eligible children, as described in clause i or ii of section 645 a 1 B, in each community who are not participating in a Head Start program or any other publicly funded early childhood education and development program;

Act 640 g 1 F the concentration of low-income families in each community;Act 640 g 1 G the extent to which the applicant proposes to foster partnerships with other

service providers in a manner that will leverage the existing delivery systems of such services and enhance the resource capacity of the applicant; and

Act 640 g 1 H the extent to which the applicant, in providing services, successfully coordinated activities with the local educational agency serving the community involved (including the local educational agency liaison designated under section 722 g 1 J ii of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11432(g)(1)(J)(ii))), and with schools in which children participating in such applicant’s program will enroll following such program, with respect to such services and the education services provided by such local educational agency.

Act 640 g 2 Notwithstanding paragraph 1, in using funds made available for expansion under subsection a 4 D, the Secretary shall first allocate the funds to qualified applicants proposing to use such funds to serve children from families with incomes below the poverty line. Agencies that receive such funds are subject to the eligibility and enrollment requirements under section 645 a 1.

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Act 640 g 3 A In the event that the amount appropriated to carry out the program under this subchapter for a fiscal year does not exceed the amount appropriated for the prior fiscal year, or is not sufficient to maintain services comparable to the services provided under this subchapter during the prior fiscal year, a Head Start agency may negotiate with the Secretary a reduced funded enrollment level without a reduction in the amount of the grant received by the agency under this subchapter, if such agency can reasonably demonstrate that such reduced funded enrollment level is necessary to maintain the quality of services.

Act 640 g 3 B In accordance with this paragraph, the Secretary shall set up a process for Head Start agencies to negotiate the reduced funded enrollment levels referred to in subparagraph A for the fiscal year involved.

Act 640 g 3 C In the event described in subparagraph A, the Secretary shall be required to notify Head Start agencies of their ability to negotiate the reduced funded enrollment levels if such an agency can reasonably demonstrate that such reduced funded enrollment level is necessary to maintain the quality of services.

Act 640 h Financial assistance provided under this subchapter may be used by each Head Start program to provide full-working-day Head Start services to any eligible child throughout the full-calendar-year.

Act 640 i The Secretary shall issue regulations establishing requirements for the safety features, and the safe operation, of vehicles used by Head Start agencies to transport children participating in Head Start programs. The regulations shall also establish requirements to ensure the appropriate supervision of, and appropriate background checks for, individuals with whom the agencies contract to transport those children.

Act 640 j Any agency that receives financial assistance under this subchapter to improve the compensation of staff who provide services under this subchapter shall use the financial assistance to improve the compensation of such staff, regardless of whether the agency has the ability to improve the compensation of staff employed by the agency who do not provide Head Start services.

Act 640 k 1 The Secretary shall allow center-based Head Start programs the flexibility to satisfy the total number of hours of service required by the regulations in effect on the date of enactment of the Human Services Amendments of 1994, to be provided to children in Head Start programs so long as such agencies do not--

Act 640 k 1 A provide less than 3 hours of service per day;Act 640 k 1 B reduce the number of days of service per week; orAct 640 k 1 C reduce the number of days of service per year.Act 640 k 2 The provisions of this subsection shall not be construed to restrict the

authority of the Secretary to fund alternative program variations authorized under section 1306.35 of title 45 of the Code of Federal Regulations in

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effect on the date of enactment of the Human Services Amendments of 1994.

Act 640 l 1 With funds made available under this subchapter to expand migrant or seasonal Head Start programs, the Secretary shall give priority to migrant or seasonal Head Start programs that serve eligible children of migrant and seasonal farmworker families whose work requires them to relocate most frequently.

Act 640 l 2 In determining the need and demand for migrant and seasonal Head Start programs (and services provided through such programs), the Secretary shall consult with appropriate entities, including providers of services for migrant and seasonal Head Start programs. The Secretary shall, after taking into consideration the need and demand for migrant and seasonal Head Start programs (and such services), ensure that there is an adequate level of such services for eligible children of migrant farmworker families before approving an increase in the allocation of funds provided under this subchapter for unserved eligible children of seasonal farmworker families. In serving the eligible children of seasonal farmworker families, the Secretary shall ensure that services provided by migrant and seasonal Head Start programs do not duplicate or overlap with other Head Start services available to eligible children of such farmworker families.

Act 640 l 3 In carrying out this subchapter, the Secretary shall continue the administrative arrangement at the national level for meeting the needs of Indian children and children of migrant and seasonal farmworker families and shall ensure--

Act 640 l 3 A the provision of training and technical assistance by staff with knowledge of and experience in working with such populations; and

Act 640 l 3 B the appointment of a national Indian Head Start collaboration director and a national migrant and seasonal Head Start collaboration director.

Act 640 l 4 A For the purposes of paragraph 3, the Secretary shall conduct an annual consultation in each affected Head Start region, with tribal governments operating Head Start (including Early Head Start) programs.

Act 640 l 4 B The consultations shall be for the purpose of better meeting the needs of Indian, including Alaska Native, children and their families, in accordance with this subchapter, taking into consideration funding allocations, distribution formulas, and other issues affecting the delivery of Head Start services in their geographic locations.

Act 640 l 4 C The Secretary shall publish a notification of the consultations in the Federal Register before conducting the consultations.

Act 640 l 4 D The Secretary shall ensure that a detailed report of each consultation shall be prepared and made available, within 90 days after the consultation, to all tribal governments receiving funds under this subchapter.

Act 640 m The Secretary shall issue rules to establish policies and procedures to remove barriers to the enrollment and participation of homeless children in

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Head Start programs. Such rules shall require Head Start agencies--Act 640 m 1 to implement policies and procedures to ensure that homeless children are

identified and prioritized for enrollment;Act 640 m 2 to allow families of homeless children to apply to, enroll in, and attend Head

Start programs while required documents, such as proof of residency, immunization and other medical records, birth certificates, and other documents, are obtained within a reasonable time frame; and

Act 640 m 3 to coordinate individual Head Start programs with efforts to implement subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.).

Act 640 n Nothing in this subchapter shall be construed to require a State to establish a publicly funded program of early childhood education and development, or to require any child to participate in such a publicly funded program, including a State-funded preschool program, or to participate in any initial screening before participating in a publicly funded program of early childhood education and development, except as provided under sections 612 a 3 [=300.111] and 635 a 5 [=303.165] of the Individuals with Disabilities Education Act (20 U.S.C. 1412(a)(3), 1435(a)(5)).

Act 640 o All curricula funded under this subchapter shall be based on scientifically valid research, and be age and developmentally appropriate. The curricula shall reflect all areas of child development and learning and be aligned with the Head Start Child Outcomes Framework. Parents shall have the opportunity to examine any such curricula or instructional materials funded under this subchapter.

Act 641 DESIGNATION OF HEAD START AGENCIES. [42 U.S.C. 9836]Act 641 a AUTHORITY TO DESIGNATE.Act 641 a 1 IN GENERAL. -- The Secretary is authorized to designate as a Head Start

agency any local public or private nonprofit agency, including community-based and faith-based organizations, or for-profit agency, within a community, pursuant to the requirements of this section.

Act 641 a 2 INTERIM POLICY.—Notwithstanding paragraph 1, until such time as the Secretary develops and implements the system for designation renewal under this section, the Secretary is authorized to designate as a Head Start agency, any local public or private nonprofit agency, including community-based and faith-based organizations, or for-profit agency, within a community, in the manner and process utilized by the Secretary prior to the enactment of the Improving Head Start for School Readiness Act of 2007.

Act 641 b APPLICATION FOR DESIGNATION RENEWAL. -- To be considered for designation renewal, an entity shall submit an application to the Secretary, at such time and in such manner as the Secretary may require.

Act 641 c SYSTEM FOR DESIGNATION RENEWALAct 641 c 1 IN GENERAL - The Secretary shall develop a system for designation

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renewal that integrates the recommendations of the expert panel convened under paragraph 2 to determine if a Head Start agency is delivering a high-quality and comprehensive Head Start program that meets the educational, health, nutritional, and social needs of the children and families it serves, and meets program and financial management requirements and standards described in section 641A a 1, based on--

Act 641 c 1 A annual budget and fiscal management data;Act 641 c 1 B program reviews conducted under section 641A c;Act 641 c 1 C annual audits required under section 647;Act 641 c 1 D classroom quality as measured under section 641A c 2 F; andAct 641 c 1 E Program Information Reports.Act 641 c 2 EXPERT PANEL - Not later than 3 months after the date of enactment of

the Improving Head Start for School Readiness Act of 2007, the Secretary shall convene an expert panel of 7 members to make recommendations to the Secretary on the development of a transparent, reliable, and valid system for designation renewal.

Act 641 c 3 COMPOSITION OF EXPERT PANEL - The Secretary, in convening such panel, shall appoint the following:

Act 641 c 3 A i One member, who has demonstrated competency, as evidenced by training, expertise, and experience, in early childhood program accreditation.

Act 641 c 3 A ii One member, who has demonstrated competency (as so evidenced) in research on early childhood development.

Act 641 c 3 A iii One member, who has demonstrated competency (as so evidenced) in governance and finance of nonprofit organizations.

Act 641 c 3 A iv One member, who has demonstrated competency (as so evidenced) in delivery of services to populations of children with special needs and their families.

Act 641 c 3 A v One member, who has demonstrated competency (as so evidenced) in assessment and evaluation of programs serving young children.

Act 641 c 3 B An employee from the Office of Head Start.Act 641 c 3 C An executive director of a Head Start agency.Act 641 c 4 EXPERT PANEL REPORT - Within 9 months after being convened by the

Secretary, the expert panel shall issue a report to the Secretary that provides recommendations on a proposed system for designation renewal that takes into account the criteria in subparagraphs A through E of paragraph 1 to evaluate whether a Head Start agency is fulfilling its mission to deliver a high-quality and comprehensive Head Start program, including adequately meeting its governance, legal, and financial management requirements.

Act 641 c 5 PUBLIC COMMENT AND CONSIDERATION - Not later than 3 months after receiving the report described in paragraph 4, the Secretary shall publish a notice describing a proposed system for designation renewal in the

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Federal Register, including a proposal for the transition to such system, providing at least 90 days for public comment. The Secretary shall review and consider public comments prior to finalizing the system for designation renewal described in this subsection.

Act 641 c 6 DESIGNATION RENEWAL SYSTEM - Not later than 12 months after publishing a notice describing the proposed system under paragraph 5, the Secretary shall implement the system for designation renewal and use that system to determine--

Act 641 c 6 A whether a Head Start grantee is successfully delivering a high-quality and comprehensive Head Start program; and

Act 641 c 6 B whether the grantee has any unresolved deficiencies found during the last triennial review under section 641A c.

Act 641 c 7 IMPLEMENTATION OF THE DESIGNATION RENEWAL SYSTEM.--Act 641 c 7 A IN GENERAL - A grantee who is determined under such system--Act 641 c 7 A i to be delivering a high-quality and comprehensive Head Start program shall

be designated (consistent with section 643) as a Head Start agency for the period of 5 years described in section 638;

Act 641 c 7 A ii to not be delivering a high-quality and comprehensive Head Start program shall be subject to an open competition as described in subsection d; and

Act 641 c 7 A iii in the case of an Indian Head Start agency, to not be delivering a high-quality and comprehensive Head Start program shall (notwithstanding clause ii) be subject to the requirements of subparagraph B.

Act 641 c 7 B TRIBAL GOVERNMENT CONSULTATION AND REEVALUATION - On making a determination described in subparagraph A iii, the Secretary shall engage in government-to-government consultation with the appropriate tribal government or governments for the purpose of establishing a plan to improve the quality of Head Start programs operated by the Indian Head Start agency. Such plan shall be established and implemented within 6 months after the Secretary’s determination. Not more than 6 months after the implementation of that plan, the Secretary shall reevaluate the performance of the Indian Head Start agency. If the Indian Head Start agency is still not delivering a high-quality and comprehensive Head Start program, the Secretary shall conduct an open competition as described in subsection d, subject to the limitations described in subsection e.

Act 641 c 8 TRANSPARENCY, RELIABILITY, AND VALIDITY - The Secretary shall ensure the system for designation renewal is fair, consistent, and transparent and is applied in a manner that renews designations, in a timely manner, grantees as Head Start agencies for periods of 5 years if such grantees are delivering high-quality and comprehensive Head Start programs. The Secretary shall periodically evaluate whether the criteria of the system are being applied in a manner that is transparent, reliable, and valid.

Act 641 c 9 TRANSITION.--

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Act 641 c 9 A IN GENERAL - Each Head Start agency shall be reviewed under the system for designation renewal described in paragraph 6, not later than 3 years after the implementation of such system.

Act 641 c 9 B LIMITATION - A Head Start agency shall not be subject to the requirements of the system for designation renewal prior to 18 months after the date of enactment of the Improving Head Start for School Readiness Act of 2007.

Act 641 c 9 C SCHEDULE - The Secretary shall establish and implement a schedule for reviewing each Head Start agency under the system for designation renewal described in paragraph 6, consistent with subparagraphs A and B.

Act 641 c 10 REPORTS TO CONGRESS - The Secretary shall--Act 641 c 10 A make available to the Committee on Education and Labor of the House of

Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate the report described in paragraph 4;

Act 641 c 10 B concurrently with publishing a notice in the Federal Register as described in paragraph 5, provide a report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate that provides a detailed description of the proposed system described in paragraph 5, including a clear rationale for any differences between the proposed system and the recommendations of the expert panel, if any such differences exist; and

Act 641 c 10 C prior to implementing the system for designation renewal, provide a report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate--

Act 641 c 10 C i summarizing the public comment on the proposed system and the Secretary’s response to such comment; and

Act 641 c 10 C ii describing the final system for designation renewal and the plans for implementation of such system.

Act 641 d DESIGNATION WHEN NO ENTITY IS RENEWED.--Act 641 d 1 IN GENERAL - If no entity in a community is determined to be

successfully delivering a high-quality and comprehensive Head Start program, as specified in subsection c, the Secretary shall, after conducting an open competition, designate for a 5-year period a Head Start agency from among qualified applicants in such community.

Act 641 d 2 CONSIDERATIONS FOR DESIGNATION - In selecting from among qualified applicants for designation as a Head Start agency, the Secretary shall consider the effectiveness of each such applicant to provide Head Start services, based on--

Act 641 d 2 A any past performance of such applicant in providing services comparable to Head Start services, including how effectively such applicant provided such comparable services;

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Act 641 d 2 B the plan of such applicant to provide comprehensive health, educational, nutritional, social, and other services needed to aid participating children in attaining their full potential, and to prepare children to succeed in school;

Act 641 d 2 C the plan of such applicant to attract and retain qualified staff capable of delivering, including implementing, a high-quality and comprehensive program, including the ability to carry out a research based curriculum aligned with the Head Start Child Outcomes Framework and, as appropriate, State early learning standards;

Act 641 d 2 D the ability of such applicant to maintain child-to-teacher ratios and family service worker caseloads that reflect best practices and are tied to high-quality service delivery;

Act 641 d 2 E the capacity of such applicant to serve eligible children with--Act 641 d 2 E i curricula that are based on scientifically valid research, that are

developmentally appropriate, and that promote the school readiness of children participating in the program involved; and

Act 641 d 2 E ii teaching practices that are based, as appropriate, on scientifically valid research, that are developmentally appropriate, and that promote the school readiness of children participating in the program involved;

Act 641 d 2 F the plan of such applicant to meet standards described in section 641A a 1, with particular attention to the standards described in subparagraphs A and B of such section;

Act 641 d 2 G the proposed budget of the applicant and plan of such applicant to maintain strong fiscal controls and cost-effective fiscal management;

Act 641 d 2 H the plan of such applicant to coordinate and collaborate with other public or private entities providing early childhood education and development programs and services for young children in the community involved, including--

Act 641 d 2 H i programs implementing grant agreements under the Early Reading First and Even Start programs under subparts 2 and 3 of part B of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6371 et seq., 6381 et seq.);

Act 641 d 2 H ii other preschool programs under title I of that Act (20 U.S.C. 6301 et seq.);Act 641 d 2 H iii programs under section 619 and part C of the Individuals with Disabilities

Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.);Act 641 d 2 H iv State prekindergarten programs;Act 641 d 2 H v child care programs;Act 641 d 2 H vi the educational programs that the children in the Head Start program

involved will enter at the age of compulsory school attendance; andAct 641 d 2 H vii local entities, such as a public or school library, for--Act 641 d 2 H vii I conducting reading readiness programs;

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Act 641 d 2 H vii II

developing innovative programs to excite children about the world of books, including providing fresh books in the Head Start classroom;

Act 641 d 2 H vii III

assisting in literacy training for Head Start teachers; or

Act 641 d 2 H vii IV

supporting parents and other caregivers in literacy efforts;

Act 641 d 2 I the plan of such applicant to coordinate the Head Start program that the applicant proposes to carry out, with public and private entities that are willing to commit resources to assist the Head Start program in meeting its program needs;

Act 641 d 2 J the plan of such applicant--Act 641 d 2 J i to facilitate the involvement of parents (including grandparents and kinship

caregivers, as appropriate) of children participating in the proposed Head Start program, in activities (at home and, if practicable, at the location of the Head Start program) designed to help such parents become full partners in the education of their children;

Act 641 d 2 J ii to afford such parents the opportunity to participate in the development and overall conduct of the program at the local level, including transportation assistance, as appropriate;

Act 641 d 2 J iii to offer (directly or through referral to local entities, such as entities carrying out Even Start programs under subpart 3 of part B of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6381 et seq.), public and school libraries, and entities carrying out family support programs) to such parents--

Act 641 d 2 J iii I family literacy services; andAct 641 d 2 J iii II parenting skills training;Act 641 d 2 J iv to offer to parents of participating children substance abuse counseling

(either directly or through referral to local entities), if needed, including information on the effect of drug exposure on infants and fetal alcohol syndrome;

Act 641 d 2 J v at the option of such applicant, to offer (directly or through referral to local entities) to such parents--

Act 641 d 2 J v I training in basic child development (including cognitive, social, and emotional development);

Act 641 d 2 J v II assistance in developing literacy and communication skills;Act 641 d 2 J v III opportunities to share experiences with other parents (including parent-

mentor relationships);Act 641 d 2 J v IV regular in-home visitation;Act 641 d 2 J v V health services, including information on maternal depression; orAct 641 d 2 J v VI any other activity designed to help such parents become full partners in the

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education of their children;Act 641 d 2 J vi to provide, with respect to each participating family, a family needs

assessment that includes consultation with such parents (including foster parents, grandparents, and kinship caregivers, where applicable), in a manner and language that such parents can understand, to the extent practicable, about the benefits of parent involvement and about the activities described in this subparagraph in which such parents may choose to become involved (taking into consideration their specific family needs, work schedules, and other responsibilities); and

Act 641 d 2 J vii to extend outreach to fathers (including father figures), in appropriate cases, in order to strengthen the role of those fathers in families, in the education of young children, and in the Head Start program, by working directly with the fathers through activities such as--

Act 641 d 2 J vii I in appropriate cases, including the fathers in home visits and providing opportunities for direct father-child interactions; and

Act 641 d 2 J vii II targeting increased male participation in the conduct of the program;Act 641 d 2 K the plan of such applicant to meet the needs of limited English proficient

children and their families, including procedures to identify such children, plans to provide trained personnel, and plans to provide services to assist the children in making progress toward the acquisition of the English language, while making meaningful progress in attaining the knowledge, skills, abilities, and development described in section 641A a 1 B;

Act 641 d 2 L the plan of such applicant to meet the diverse needs of the population served;

Act 641 d 2 M the plan of such applicant who chooses to assist younger siblings of children who will participate in the Head Start program to obtain health services from other sources;

Act 641 d 2 N the plan of such applicant to meet the needs of children with disabilities, including procedures to identify such children, procedures for referral of such children for evaluation to State or local agencies providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.), and plans for collaboration with those State or local agencies;

Act 641 d 2 O the plan of such applicant to meet the needs of homeless children, including transportation needs, and the needs of children in foster care; and

Act 641 d 2 P other factors related to the requirements of this subchapter.Act 641 d 3 PRIORITY - In selecting from among qualified applicants for designation as

a Head Start agency, the Secretary shall give priority to applicants that have demonstrated capacity in providing effective comprehensive, and well-coordinated early childhood education and development services and programs to children and their families.

Act 641 e PROHIBITION AGAINST NON-INDIAN HEAD START AGENCY

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RECEIVING A GRANT FOR AN INDIAN HEAD START PROGRAM.--Act 641 e 1 IN GENERAL - Notwithstanding any other provision of law, except as

provided in paragraph 2, under no condition may a non-Indian Head Start agency receive a grant to carry out an Indian Head Start program.

Act 641 e 2 EXCEPTION - In a community in which there is no Indian Head Start agency available for designation to carry out an Indian Head Start program, a non-Indian Head Start agency may receive a grant to carry out an Indian Head Start program but only until such time as an Indian Head Start agency in such community becomes available and is designated pursuant to this section.

Act 641 f INTERIM PROVIDER - If no agency in a community is designated under subsection d, and there is no qualified applicant in the community, the Secretary shall designate a qualified agency to carry out the Head Start program in the community on an interim basis until a qualified applicant from the community is designated under subsection d.

Act 641 g PARENT AND COMMUNITY PARTICIPATION - The Secretary shall require that the practice of significantly involving parents and community residents in the area affected by the program involved, in the selection of Head Start agencies, be continued.

Act 641 h COMMUNITY - For purposes of this subchapter, a community may be a city, county, or multicity or multicounty unit within a State, an Indian reservation (including Indians in any off-reservation area designated by an appropriate tribal government in consultation with the Secretary), or a neighborhood or other area (irrespective of boundaries or political subdivisions) that provides a suitable organizational base and possesses the commonality of interest needed to operate a Head Start program.

Act 641A[42 U.S.C. 9836A]

QUALITY STANDARDS; MONITORING OF HEAD START AGENCIES AND PROGRAMS

ER1GPDM3A

Act 641A a STANDARDS.--Act 641A a 1 CONTENT OF STANDARDS - The Secretary shall modify, as necessary,

program performance standards by regulation applicable to Head Start agencies and programs under this subchapter, including--

Act 641A a 1 A performance standards with respect to services required to be provided, including health, parental involvement, nutritional, and social services, transition activities described in section 642A, and other services;

Act 641A a 1 B scientifically based and developmentally appropriate education performance standards related to school readiness that are based on the Head Start Child Outcomes Framework to ensure that the children participating in the program, at a minimum, develop and demonstrate--

Act 641A a 1 B i language knowledge and skills, including oral language and listening comprehension;

Act 641A a 1 B ii literacy knowledge and skills, including phonological awareness, print

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awareness and skills, and alphabetic knowledge;Act 641A a 1 B iii mathematics knowledge and skills;Act 641A a 1 B iv science knowledge and skills;Act 641A a 1 B v cognitive abilities related to academic achievement and child development;Act 641A a 1 B vi approaches to learning related to child development and early learning;Act 641A a 1 B vii social and emotional development related to early learning, school success,

and social problem-solving;Act 641A a 1 B viii

abilities in creative arts;

Act 641A a 1 B ix physical development; andAct 641A a 1 B x in the case of limited English proficient children, progress toward

acquisition of the English language while making meaningful progress in attaining the knowledge, skills, abilities, and development described in clauses i through ix, including progress made through the use of culturally and linguistically appropriate instructional services;

Act 641A a 1 C administrative and financial management standards;Act 641A a 1 D standards relating to the condition and location of facilities (including

indoor air quality assessment standards, where appropriate) for such agencies, and programs, including regulations that require that the facilities used by Head Start agencies (including Early Head Start agencies and any delegate agencies) for regularly scheduled center-based and combination program option classroom activities--

Act 641A a 1 D i shall meet or exceed State and local requirements concerning licensing for such facilities; and

Act 641A a 1 D ii shall be accessible by State and local authorities for purposes of monitoring and ensuring compliance, unless State or local laws prohibit such access; and

Act 641A a 1 E such other standards as the Secretary finds to be appropriate.Act 641A a 2 CONSIDERATIONS REGARDING STANDARDS - In developing any

modifications to standards required under paragraph 1, the Secretary shall--Act 641A a 2 A consult with experts in the fields of child development, early childhood

education, child health care, family services (including linguistically and culturally appropriate services to non-English speaking children and their families), administration, and financial management, and with persons with experience in the operation of Head Start programs;

Act 641A a 2 B take into consideration--Act 641A a 2 B i past experience with use of the standards in effect under this subchapter on

the date of enactment of the Improving Head Start for School Readiness Act of 2007;

Act 641A a 2 B ii changes over the period since October 27, 1998, in the circumstances and

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problems typically facing children and families served by Head Start agencies;

Act 641A a 2 B iii recommendations from the study on Developmental Outcomes and Assessments for Young Children by the National Academy of Sciences, consistent with section 649 j;

Act 641A a 2 B iv developments concerning research-based practices with respect to early childhood education and development, children with disabilities, homeless children, children in foster care, and family services, and best practices with respect to program administration and financial management;

Act 641A a 2 B v projected needs of an expanding Head Start program;Act 641A a 2 B vi guidelines and standards that promote child health services and physical

development, including participation in outdoor activity that supports children’s motor development and overall health and nutrition;

Act 641A a 2 B vii changes in the characteristics of the population of children who are eligible to participate in Head Start programs, including country of origin, language background, and family structure of such children, and changes in the population and number of such children who are in foster care or are homeless children;

Act 641A a 2 B viii

mechanisms to ensure that children participating in Head Start programs make a successful transition to the schools that the children will be attending;

Act 641A a 2 B ix the need for Head Start agencies to maintain regular communications with parents, including conducting periodic meetings to discuss the progress of individual children in Head Start programs; and

Act 641A a 2 B x the unique challenges faced by individual programs, including those programs that are seasonal or short term and those programs that serve rural populations;

Act 641A a 2 C i review and revise as necessary the standards in effect under this subsection; and

Act 641A a 2 C ii ensure that any such revisions in the standards will not result in the elimination of or any reduction in quality, scope, or types of health, educational, parental involvement, nutritional, social, or other services required to be provided under such standards as in effect on the date of enactment of the Improving Head Start for School Readiness Act of 2007; and

Act 641A a 2 D consult with Indian tribes, including Alaska Natives, experts in Indian, including Alaska Native, early childhood education and development, linguists, and the National Indian Head Start Directors Association on the review and promulgation of standards under paragraph 1 (including standards for language acquisition and school readiness).

Act 641A a 3 STANDARDS RELATING TO OBLIGATIONS TO DELEGATE AGENCIES - In developing any modifications to standards under paragraph

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1, the Secretary shall describe the obligations of a Head Start agency to a delegate agency to which the Head Start agency has delegated responsibility for providing services under this subchapter.

Act 641A b MEASURES.--Act 641A b 1 IN GENERAL - The Secretary, in consultation with representatives of Head

Start agencies and with experts in the fields of early childhood education and development, family services, and program management, shall use the study on Developmental Outcomes and Assessments for Young Children by the National Academy of Sciences and other relevant research to inform, revise, and provide guidance to Head Start agencies for utilizing, scientifically based measures that support, as appropriate--

Act 641A b 1 A classroom instructional practices;Act 641A b 1 B identification of children with special needs;Act 641A b 1 C program evaluation; andAct 641A b 1 D administrative and financial management practices.Act 641A b 2 CHARACTERISTICS OF MEASURES - The measures under this

subsection shall--Act 641A b 2 A be developmentally, linguistically, and culturally appropriate for the

population served;Act 641A b 2 B be reviewed periodically, based on advances in the science of early

childhood development;Act 641A b 2 C be consistent with relevant, nationally recognized professional and technical

standards related to the assessment of young children;Act 641A b 2 D be valid and reliable in the language in which they are administered;Act 641A b 2 E be administered by staff with appropriate training for such administration;Act 641A b 2 F provide for appropriate accommodations for children with disabilities and

children who are limited English proficient;Act 641A b 2 G be high-quality research-based measures that have been demonstrated to

assist with the purposes for which they were devised; andAct 641Ab2H be adaptable, as appropriate, for use in the self-assessment of Head Start

agencies, including in the evaluation of administrative and financial management practices.

Act 641A b 3 USE OF MEASURES; LIMITATIONS ON USE.--Act 641A b 3 A USE - The measures shall be designed, as appropriate, for the purpose of--Act 641A b 3 A i helping to develop the skills, knowledge, abilities, and development

described in subsection a 1 B of children participating in Head Start programs, with an emphasis on measuring skills that scientifically valid research has demonstrated are related to children’s school readiness and later success in school;

Act 641A b 3 A ii improving classroom practices, including reviewing children’s strengths and

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weaknesses and individualizing instruction to better meet the needs of the children involved;

Act 641A b 3 A iii identifying the special needs of children; andAct 641A b 3 A iv improving overall program performance in order to help programs identify

problem areas that may require additional training and technical assistance resources.

Act 641A b 3 B LIMITATIONS - Such measures shall not be used to exclude children from Head Start programs.

Act 641A b 4 CONFIDENTIALITY.--Act 641A b 4 A IN GENERAL - The Secretary, through regulation, shall ensure the

confidentiality of any personally identifiable data, information, and records collected or maintained under this subchapter by the Secretary and any Head Start agency. Such regulations shall provide the policies, protections, and rights equivalent to those provided to a parent, student, or educational agency or institution under section 444 of the General Education Provisions Act (20 U.S.C. 1232g).

Act 641A b 4 B PROHIBITION ON NATIONWIDE DATABASE - Nothing in this subsection shall be construed to authorize the development of a nationwide database of personally identifiable data, information, or records on children resulting from the use of measures under this subsection.

Act 641A b 5 SPECIAL RULE.--Act 641A b 5 A PROHIBITION - The use of assessment items and data on any assessment

authorized under this subchapter by any agent of the Federal Government is prohibited for the purposes of--

Act 641A b 5 A i ranking, comparing, or otherwise evaluating individual children for purposes other than research, training, or technical assistance; and

Act 641A b 5 A ii providing rewards or sanctions for individual children or teachers.Act 641A b 5 B RESULTS - The Secretary shall not use the results of a single assessment as

the sole method for assessing program effectiveness or making agency funding determinations at the national, regional, or local level under this subchapter.

Act 641A c MONITORING OF LOCAL AGENCIES AND PROGRAMS.--Act 641A c 1 IN GENERAL - To determine whether Head Start agencies meet standards

described in subsection a 1 established under this subchapter with respect to program, administrative, financial management, and other requirements, and in order to help the programs identify areas for improvement and areas of strength as part of their ongoing self-assessment process, the Secretary shall conduct the following reviews of Head Start agencies, including the Head Start programs operated by such agencies:

Act 641A c 1 A A full review, including the use of a risk-based assessment approach, of each such agency at least once during each 3-year period.

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Act 641A c 1 B A review of each newly designated Head Start agency immediately after the completion of the first year such agency carries out a Head Start program.

Act 641A c 1 C Follow-up reviews, including--Act 641A c 1 C i return visits to Head Start agencies with 1 or more findings of deficiencies,

not later than 6 months after the Secretary provides notification of such findings, or not later than 12 months after such notification if the Secretary determines that additional time is necessary for an agency to address such a deficiency prior to the review; and

Act 641A c 1 C ii a review of Head Start agencies with significant areas of noncompliance.Act 641A c 1 D Other reviews, including unannounced site inspections of Head Start

centers, as appropriate.Act 641A c 2 CONDUCT OF REVIEWS - The Secretary shall ensure that reviews

described in sub paragraph s A through C of paragraph 1--Act 641A c 2 A are conducted by review teams that--Act 641A c 2 A i include individuals who are knowledgeable about Head Start programs and,

to the maximum extent practicable, individuals who are knowledgeable about--

Act 641A c 2 A i I other early childhood education and development programs, personnel management, financial accountability, and systems development and monitoring; and

Act 641A c 2 A i II the diverse (including linguistic and cultural) needs of eligible children (including children with disabilities, homeless children, children in foster care, and limited English proficient children) and their families;

Act 641A c 2 A ii include, to the maximum extent practicable, current or former employees of the Department of Health and Human Services who are knowledgeable about Head Start programs; and

Act 641A c 2 A iii shall receive periodic training to ensure quality and consistency across reviews;

Act 641A c 2 B include as part of the reviews, a review and assessment of program strengths and areas in need of improvement;

Act 641A c 2 C include as part of the reviews, a review and assessment of whether programs have adequately addressed population and community needs (including those of limited English proficient children and children of migrant or seasonal farmworker families);

Act 641A c 2 D include as part of the reviews, an assessment of the extent to which the programs address the communitywide strategic planning and needs assessment described in section 640 g 1 C;

Act 641A c 2 E include information on the innovative and effective efforts of the Head Start agencies to collaborate with the entities providing early childhood and development services or programs in the community and any barriers to such collaboration that the agencies encounter;

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Act 641A c 2 F include as part of the reviews, a valid and reliable research-based observational instrument, implemented by qualified individuals with demonstrated reliability, that assesses classroom quality, including assessing multiple dimensions of teacher-child interactions that are linked to positive child development and later achievement;

Act 641A c 2 G are conducted in a manner that evaluates program performance, quality, and overall operations with consistency and objectivity, are based on a transparent and reliable system of review, and are conducted in a manner that includes periodic interrater reliability checks, to ensure quality and consistency, across and within regions, of the reviews and of noncompliance and deficiency determinations;

Act 641A c 2 H in the case of reviews of Early Head Start agencies and programs, are conducted by a review team that includes individuals who are knowledgeable about the development of infants and toddlers;

Act 641A c 2 I include as part of the reviews a protocol for fiscal management that shall be used to assess compliance with program requirements for--

Act 641A c 2 I i using Federal funds appropriately;Act 641A c 2 I ii using Federal funds specifically to purchase property (consistent with

section 644 f) and to compensate personnel;Act 641A c 2 I iii securing and using qualified financial officer support; andAct 641A c 2 I iv reporting financial information and implementing appropriate internal

controls to safeguard Federal funds;Act 641A c 2 J include as part of the reviews of the programs, a review and assessment of

whether the programs are in conformity with the eligibility requirements under section 645 a 1, including regulations promulgated under such section and whether the programs have met the requirements for the outreach and enrollment policies and procedures, and selection criteria, in such section, for the participation of children in programs assisted under this subchapter;

Act 641A c 2 K include as part of the reviews, a review and assessment of whether agencies have adequately addressed the needs of children with disabilities, including whether the agencies involved have met the 10% minimum enrollment requirement specified in section 640 d and whether the agencies have made sufficient efforts to collaborate with State and local agencies providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.); and

Act 641A c 2 L include as part of the reviews, a review and assessment of child outcomes and performance as they relate to agency-determined school readiness goals described in subsection g 2, consistent with subsection b 5.

Act 641A c 3 STANDARDS RELATING TO OBLIGATIONS TO DELEGATE AGENCIES - In conducting a review described in paragraph 1 A of a Head Start agency, the Secretary shall determine whether the agency complies with the obligations described in subsection a 3. The Secretary shall consider such compliance in determining whether to renew financial

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assistance to the Head Start agency under this subchapter.Act 641A c 4 USE OF REVIEW FINDINGS - The findings of a review described in

paragraph 1 of a Head Start agency shall, at a minimum--Act 641A c 4 A be presented to the agency in a timely, transparent, and uniform manner that

conveys information of program strengths and weaknesses and assists with program improvement; and

Act 641A c 4 B be used by the agency to inform the development and implementation of its plan for training and technical assistance.

Act 641A d EVALUATIONS AND CORRECTIVE ACTION FOR DELEGATE AGENCIES.--

Act 641A d 1 PROCEDURES - Each Head Start agency shall establish, subject to paragraph 4, procedures relating to its delegate agencies, including--

Act 641A d 1 A procedures for evaluating delegate agencies;Act 641A d 1 B procedures for defunding delegate agencies; andAct 641A d 1 C procedures for a delegate agency to appeal a defunding decision.Act 641A d 2 EVALUATION - Each Head Start agency--Act 641A d 2 A shall evaluate its delegate agencies using the procedures established under

this subsection; andAct 641A d 2 B shall inform the delegate agencies of the deficiencies identified through the

evaluation that are required to be corrected.Act 641A d 3 REMEDIES TO ENSURE CORRECTIVE ACTIONS - In the event that the

Head Start agency identifies a deficiency for a delegate agency through the evaluation, the Head Start agency shall take action, which may include--

Act 641A d 3 A initiating procedures to terminate the designation of the agency unless the agency corrects the deficiency;

Act 641A d 3 B conducting monthly monitoring visits to such delegate agency until all deficiencies are corrected or the Head Start agency decides to defund such delegate agency; and

Act 641A d 3 C releasing funds to such delegate agency--Act 641A d 3 C i only as reimbursements except that, upon receiving a request from the

delegate agency accompanied by assurances satisfactory to the Head Start agency that the funds will be appropriately safeguarded, the Head Start agency shall provide to the delegate agency a working capital advance in an amount sufficient to cover the estimated expenses involved during an agreed upon disbursing cycle; and

Act 641A d 3 C ii only if there is continuity of services.Act 641A d 4 TERMINATION - The Head Start agency may not terminate a delegate

agency’s contract or reduce a delegate agency’s service area without showing cause or demonstrating the cost-effectiveness of such a decision.

Act 641A d 5 RULE OF CONSTRUCTION - Nothing in this subsection shall be

208



construed to limit the powers, duties, or functions of the Secretary with respect to Head Start agencies or delegate agencies that receive financial assistance under this subchapter.

Act 641A e CORRECTIVE ACTION FOR HEAD START AGENCIES.--Act 641A e 1 DETERMINATION - If the Secretary determines, on the basis of a review

pursuant to subsection c, that a Head Start agency designated pursuant to this subchapter fails to meet the standards described in subsection a 1 or fails to address the communitywide strategic planning and needs assessment, the Secretary shall--

Act 641A e 1 A inform the agency of the deficiencies that shall be corrected and identify the assistance to be provided consistent with paragraph 3;

Act 641A e 1 B with respect to each identified deficiency, require the agency--Act 641A e 1 B i to correct the deficiency immediately, if the Secretary finds that the

deficiency threatens the health or safety of staff or program participants or poses a threat to the integrity of Federal funds;

Act 641A e 1 B ii to correct the deficiency not later than 90 days after the identification of the deficiency if the Secretary finds, in the discretion of the Secretary, that such a 90-day period is reasonable, in light of the nature and magnitude of the deficiency; or

Act 641A e 1 B iii in the discretion of the Secretary (taking into consideration the seriousness of the deficiency and the time reasonably required to correct the deficiency), to comply with the requirements of paragraph 2 concerning a quality improvement plan; and

Act 641A e 1 C initiate proceedings to terminate the designation of the agency unless the agency corrects the deficiency.

Act 641A e 2 QUALITY IMPROVEMENT PLAN.--Act 641A e 2 A AGENCY AND PROGRAM RESPONSIBILITIES - To retain a

designation as a Head Start agency under this subchapter, or in the case of a Head Start program to continue to receive funds from such agency, a Head Start agency that is the subject of a determination described in paragraph 1, or a Head Start program that is determined to have a deficiency under subsection d 2 (excluding an agency required to correct a deficiency immediately or during a 90-day period under clause i or ii of paragraph 1 B) shall--

Act 641A e 2 A i develop in a timely manner, a quality improvement plan that shall be subject to the approval of the Secretary, or in the case of a program, the sponsoring agency, and that shall specify--

Act 641A e 2 A i I the deficiencies to be corrected;Act 641A e 2 A i II the actions to be taken to correct such deficiencies; andAct 641Ae 2 A i III

the timetable for accomplishment of the corrective actions specified; and

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Act 641A e 2 A ii correct each deficiency identified, not later than the date for correction of such deficiency specified in such plan (which shall not be later than 1 year after the date the agency or Head Start program that is determined to have a deficiency received notice of the determination and of the specific deficiency to be corrected).

Act 641A e 2 B SECRETARIAL RESPONSIBILITY - Not later than 30 days after receiving from a Head Start agency a proposed quality improvement plan pursuant to subparagraph A, the Secretary shall either approve such proposed plan or specify the reasons why the proposed plan cannot be approved.

Act 641A e 2 C AGENCY RESPONSIBILITY - Not later than 30 days after receiving from a Head Start program a proposed quality improvement plan pursuant to subparagraph A, the Head Start agency involved shall either approve such proposed plan or specify the reasons why the proposed plan cannot be approved.

Act 641A e 3 TRAINING AND TECHNICAL ASSISTANCE - The Secretary shall provide training and technical assistance to Head Start agencies and programs with respect to the development or implementation of such quality improvement plans to the extent the Secretary finds such provision to be feasible and appropriate given available funding and other statutory responsibilities.

Act 641A f SUMMARIES OF MONITORING OUTCOMES.--Act 641A f 1 IN GENERAL - Not later than 120 days after the end of each fiscal year, the

Secretary shall publish a summary report on the findings of reviews conducted under subsection c and on the outcomes of quality improvement plans implemented under subsection e, during such fiscal year.

Act 641A f 2 REPORT AVAILABILITY - Such report shall be made widely available to--

Act 641A f 2 A parents with children receiving assistance under this subchapter--Act 641A f 2 A i in an understandable and uniform format; andAct 641A f 2 A ii to the extent practicable, in a language that the parents understand; andAct 641A f 2 B the public through means such as--Act 641A f 2 B i distribution through public agencies; andAct 641Af 2 B ii posting such information on the Internet.Act 641A f 3 REPORT INFORMATION - Such report shall contain detailed data--Act 641A f 3 A on compliance with specific standards and measures; andAct 641A f 3 B sufficient to allow Head Start agencies to use such data to improve the

quality of their programs.Act 641A g SELF-ASSESSMENTS.-- PDM3AAct 641A g 1 IN GENERAL - Not less frequently than once each program year, with the

consultation and participation of policy councils and, as applicable, policy PDM3A

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committees and, as appropriate, other community members, each Head Start agency, and each delegate agency, that receives financial assistance under this subchapter shall conduct a comprehensive self-assessment of its effectiveness and progress in meeting program goals and objectives and in implementing and complying with standards described in subsection a 1.

Act 641A g 2 GOALS, REPORTS, AND IMPROVEMENT PLANS.-- PDM3AAct 641A g 2 A GOALS - An agency conducting a self-assessment shall establish agency-

determined program goals for improving the school readiness of children participating in a program under this subchapter, including school readiness goals that are aligned with the Head Start Child Outcomes Framework, State early learning standards as appropriate, and requirements and expectations of the schools the children will be attending.

PDM3A

Act 641A g 2 B IMPROVEMENT PLAN - The agency shall develop, and submit to the Secretary a report containing, an improvement plan approved by the governing body of the agency to strengthen any areas identified in the self-assessment as weaknesses or in need of improvement.

PDM3A

Act 641A g 3 ONGOING MONITORING - Each Head Start agency (including each Early Head Start agency) and each delegate agency shall establish and implement procedures for the ongoing monitoring of their respective programs, to ensure that the operations of the programs work toward meeting program goals and objectives and standards described in subsection a 1.

Act 641A h REDUCTION OF GRANTS AND REDISTRIBUTION OF FUNDS IN CASES OF UNDERENROLLMENT.--

ER1G

Act 641A h 1 DEFINITIONS - In this subsection:Act 641A h 1 A ACTUAL ENROLLMENT - The term ‘actual enrollment’ means, with

respect to the program of a Head Start agency, the actual number of children enrolled in such program and reported by the agency (as required in paragraph 2) in a given month.

Act 641A h 1 B BASE GRANT - The term ‘base grant’ has the meaning given the term in section 640 a 7.

Act 641A h 1 C FUNDED ENROLLMENT - The term ‘funded enrollment’ means, with respect to the program of a Head Start agency in a fiscal year, the number of children that the agency is funded to serve through a grant for the program during such fiscal year, as indicated in the grant agreement.

Act 641A h 2 ENROLLMENT REPORTING REQUIREMENT - Each entity carrying out a Head Start program shall report on a monthly basis to the Secretary and the relevant Head Start agency--

ER1G

Act 641A h 2 A the actual enrollment in such program; and ER1GAct 641A h 2 B if such actual enrollment is less than the funded enrollment, any apparent

reason for such enrollment shortfall.ER1G

Act 641A h 3 SECRETARIAL REVIEW AND PLAN - The Secretary shall--Act 641A h 3 A on a semiannual basis, determine which Head Start agencies are operating

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with an actual enrollment that is less than the funded enrollment based on not less than 4 consecutive months of data;

Act 641A h 3 B for each such Head Start agency operating a program with an actual enrollment that is less than its funded enrollment, as determined under subparagraph A, develop, in collaboration with such agency, a plan and timetable for reducing or eliminating underenrollment taking into consideration--

Act 641A h 3 B i the quality and extent of the outreach, recruitment, and communitywide strategic planning and needs assessment conducted by such agency;

Act 641A h 3 B ii changing demographics, mobility of populations, and the identification of new underserved low-income populations;

Act 641A h 3 B iii facilities-related issues that may impact enrollment;Act 641A h 3 B iv the ability to provide full-working-day programs, where needed, through

funds made available under this subchapter or through collaboration with entities carrying out other early childhood education and development programs, or programs with other funding sources (where available);

Act 641A h 3 B v the availability and use by families of other early childhood education and development options in the community served; and

Act 641A h 3 B vi agency management procedures that may impact enrollment; andAct 641A h 3 C provide timely and ongoing technical assistance to each agency described in

subparagraph B for the purpose of assisting the Head Start agency to implement the plan described in such subparagraph.

Act 641A h 4 IMPLEMENTATION - Upon receipt of the technical assistance described in paragraph 3 C, a Head Start agency shall immediately implement the plan described in paragraph 3 B. The Secretary shall, where determined appropriate, continue to provide technical assistance to such agency.

Act 641A h 5 SECRETARIAL REVIEW AND ADJUSTMENT FOR CHRONIC UNDERENROLLMENT.--

Act 641A h 5 A IN GENERAL - If, after receiving technical assistance and developing and implementing the plan as described in paragraph 3 and 4 for 12 months, a Head Start agency is operating a program with an actual enrollment that is less than 97% of its funded enrollment, the Secretary may--

Act 641A h 5 A i designate such agency as chronically underenrolled; andAct 641A h 5 A ii recapture, withhold, or reduce the base grant for the program by a

percentage equal to the percentage difference between funded enrollment and actual enrollment for the program for the most recent year for which the agency is determined to be underenrolled under paragraph 3 A.

Act 641A h 5 B WAIVER OR LIMITATION OF REDUCTIONS - The Secretary may, as appropriate, waive or reduce the percentage recapturing, withholding, or reduction otherwise required by subparagraph A, if, after the implementation of the plan described in paragraph 3 B, the Secretary finds that--

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Act 641A h 5 B i the causes of the enrollment shortfall, or a portion of the shortfall, are related to the agency’s serving significant numbers of highly mobile children, or are other significant causes as determined by the Secretary;

Act 641A h 5 B ii the shortfall can reasonably be expected to be temporary; orAct 641A h 5 B iii the number of slots allotted to the agency is small enough that

underenrollment does not create a significant shortfall.Act 641A h 6 REDISTRIBUTION OF FUNDS.--Act 641A h 6 A IN GENERAL - Funds held by the Secretary as a result of recapturing,

withholding, or reducing a base grant in a fiscal year shall be redistributed by the end of the following fiscal year as follows:

Act 641A h 6 A i INDIAN HEAD START PROGRAMS - If such funds are derived from an Indian Head Start program, then such funds shall be redistributed to increase enrollment by the end of the following fiscal year in 1 or more Indian Head Start programs.

Act 641A h 6 A ii MIGRANT AND SEASONAL HEAD START PROGRAMS - If such funds are derived from a migrant or seasonal Head Start program, then such funds shall be redistributed to increase enrollment by the end of the following fiscal year in 1 or more programs of the type from which such funds are derived.

Act 641A h 6 A iii EARLY HEAD START PROGRAMS - If such funds are derived from an Early Head Start program in a State, then such funds shall be redistributed to increase enrollment by the end of the following fiscal year in 1 or more Early Head Start programs in that State. If such funds are derived from an Indian Early Head Start program, then such funds shall be redistributed to increase enrollment by the end of the following fiscal year in 1 or more Indian Early Head Start programs.

Act 641A h 6 A iv OTHER HEAD START PROGRAMS - If such funds are derived from a Head Start program in a State (excluding programs described in clauses i through iii), then such funds shall be redistributed to increase enrollment by the end of the following fiscal year in 1 or more Head Start programs (excluding programs described in clauses i through iii) that are carried out in such State.

Act 641A h 6 B ADJUSTMENT TO FUNDED ENROLLMENT - The Secretary shall adjust as necessary the requirements relating to funded enrollment indicated in the grant agreement of a Head Start agency receiving redistributed funds under this paragraph.

Act 642[42 U.S.C. 9837]

POWERS AND FUNCTIONS OF HEAD START AGENCIES FCS3AFM1AFM1BFM1C

PDM1APDM1BPDM1C

213


In FY 2010 Monitoring Protocol?PDM1DPDM1EPDM1FPDM1GPDM2APDM2BPDM2CPDM2EPDM2F

Act 642 a AUTHORITY - To be designated as a Head Start agency under this subchapter, an agency shall have authority under its charter or applicable law to receive and administer funds under this subchapter, funds and contributions from private or local public sources that may be used in support of a Head Start program, and funds under any Federal or State assistance program pursuant to which a public or private nonprofit or for-profit agency (as the case may be) organized in accordance with this subchapter, could act as grantee, contractor, or sponsor of projects appropriate for inclusion in a Head Start program. Such an agency shall also be empowered to transfer funds so received, and to delegate powers to other agencies, subject to the powers of its governing board and its overall program responsibilities. The power to transfer funds and delegate powers shall include the power to make transfers and delegations covering component projects in all cases where this will contribute to efficiency and effectiveness or otherwise further program objectives.

Act 642 b FAMILY AND COMMUNITY INVOLVEMENT; FAMILY SERVICES - To be so designated, a Head Start agency shall, at a minimum, do all the following to involve and serve families and communities:

FCS3A

Act 642 b 1 Provide for the regular and direct participation of parents and community residents in the implementation of the Head Start program, including decisions that influence the character of such program, consistent with paragraph 2 D and 3 C of subsection c.

Act 642 b 2 Seek the involvement of parents, community residents, and local business in the design and implementation of the program.

Act 642 b 3 Establish effective procedures--Act 642 b 3 A to facilitate and seek the involvement of parents of participating children in

activities designed to help such parents become full partners in the education of their children; and

Act 642 b 3 B to afford such parents the opportunity to participate in the development and overall conduct of the program at the local level, including transportation assistance as appropriate.

Act 642 b 4 Offer (directly or through referral to local entities, such as entities carrying out Even Start programs under subpart 3 of part B of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6381 et seq.), public and school libraries, and entities carrying out family support

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programs) to such parents--Act 642 b 4 A family literacy services; andAct 642 b 4 B parenting skills training.Act 642 b 5 Offer to parents of participating children substance abuse counseling (either

directly or through referral to local entities), if needed, including information on the effect of drug exposure on infants and fetal alcohol syndrome.

Act 642 b 6 At the option of such agency, offer (directly or through referral to local entities) to such parents--

Act 642 b 6 A training in basic child development (including cognitive, social, and emotional development);

Act 642 b 6 B assistance in developing literacy and communication skills;Act 642 b 6 C opportunities to share experiences with other parents (including parent-

mentor relationships);Act 642 b 6 D health services, including information on maternal depression;Act 642 b 6 E regular in-home visitation; orAct 642 b 6 F any other activity designed to help such parents become full partners in the

education of their children.Act 642 b 7 Provide, with respect to each participating family, a family needs

assessment that includes consultation with such parents (including foster parents, grandparents, and kinship caregivers, where applicable), in a manner and language that such parents can understand (to the extent practicable), about the benefits of parent involvement and about the activities described in this subsection in which such parents may choose to be involved (taking into consideration their specific family needs, work schedules, and other responsibilities).

FCS3A

Act 642 b 8 Consider providing services to assist younger siblings of children participating in its Head Start program to obtain health services from other sources.

Act 642 b 9 Perform community outreach to encourage individuals previously unaffiliated with Head Start programs to participate in its Head Start program as volunteers.

Act 642 b 10 A Inform custodial parents in single-parent families that participate in programs, activities, or services carried out or provided under this subchapter about the availability of child support services for purposes of establishing paternity and acquiring child support.

Act 642 b 10 B Refer eligible parents to the child support offices of State and local governments.

Act 642 b 11 Provide to parents of limited English proficient children outreach and information, in an understandable and uniform format and, to the extent practicable, in a language that the parents can understand.

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Act 642 b 12 Provide technical and other support needed to enable parents and community residents to secure, on their own behalf, available assistance from public and private sources.

Act 642 b 13 Promote the continued involvement of the parents (including foster parents, grandparents, and kinship caregivers, as appropriate) of children that participate in Head Start programs in the education of their children upon transition of their children to school, by working with the local educational agency--

Act 642 b 13 A to provide training to the parents--Act 642 b 13 A i to inform the parents about their rights and responsibilities concerning the

education of their children; andAct 642 b 13 A ii to enable the parents--Act 642 b 13 A ii I to understand and work with schools in order to communicate with teachers

and other school personnel;Act 642 b 13 A ii II

to support the schoolwork of their children; and

Act 642 b 13 A ii III

to participate as appropriate in decisions relating to the education of their children; and

Act 642 b 13 B to take other actions, as appropriate and feasible, to support the active involvement of the parents with schools, school personnel, and school-related organizations.

Act 642 b 14 Establish effective procedures for timely referral of children with disabilities to the State or local agency providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.), and collaboration with that agency, consistent with section 640 d 3.

Act 642 b 15 Establish effective procedures for providing necessary early intervening services to children with disabilities prior to an eligibility determination by the State or local agency responsible for providing services under section 619 or part C of such Act, consistent with section 640 d 2.

Act 642 b 16 At the option of the Head Start agency, partner with an institution of higher education and a nonprofit organization to provide college students with the opportunity to serve as mentors or reading partners for Head Start participants.

Act 642 c PROGRAM GOVERNANCE - Upon receiving designation as a Head Start agency, the agency shall establish and maintain a formal structure for program governance, for the oversight of quality services for Head Start children and families and for making decisions related to program design and implementation. Such structure shall include the following:

FM1AFM1BFM1C

PDM1APDM1DPDM1EPDM1FPDM1G

216






In FY 2010 Monitoring Protocol?PDM2APDM2BPDM2CPDM2F

Act 642 c 1 GOVERNING BODY.-- FM1AFM1BFM1C

PDM1APDM1DPDM1EPDM1FPDM1G

Act 642 c 1 A IN GENERAL - The governing body shall have legal and fiscal responsibility for the Head Start agency.

FM1C

Act 642 c 1 B COMPOSITION - The governing body shall be composed as follows: FM1BPDM1A

Act 642 c 1 B i Not less than 1 member shall have a background and expertise in fiscal management or accounting.

FM1B

Act 642 c 1 B ii Not less than 1 member shall have a background and expertise in early childhood education and development.

PDM1A

Act 642 c 1 B iii Not less than 1 member shall be a licensed attorney familiar with issues that come before the governing body.

PDM1A

Act 642 c 1 B iv Additional members shall-- PDM1AAct 642 c 1 B iv I reflect the community to be served and include parents of children who are

currently, or were formerly, enrolled in Head Start programs; andPDM1A

Act 642 c 1 B iv II are selected for their expertise in education, business administration, or community affairs.

PDM1A

Act 642 c 1 B v Exceptions shall be made to the requirements of clauses i through iv for members of a governing body when those members oversee a public entity and are selected to their positions with the public entity by public election or political appointment.

Act 642 c 1 B vi If a person described in clause i, ii, or iii is not available to serve as a member of the governing body, the governing body shall use a consultant, or an other individual with relevant expertise, with the qualifications described in that clause, who shall work directly with the governing body.

FM1BPDM1A

Act 642 c 1 C CONFLICT OF INTEREST - Members of the governing body shall-- FM1AAct 642 c 1 C i not have a financial conflict of interest with the Head Start agency

(including any delegate agency);FM1A

Act 642 c 1 C ii not receive compensation for serving on the governing body or for providing services to the Head Start agency;

FM1A

Act 642 c 1 C iii not be employed, nor shall members of their immediate family be employed, FM1A

217



by the Head Start agency (including any delegate agency); andAct 642 c 1 C iv operate as an entity independent of staff employed by the Head Start agency. FM1AAct 642 c 1 D EXCEPTION - If an individual holds a position as a result of public election

or political appointment, and such position carries with it a concurrent appointment to serve as a member of a Head Start agency governing body, and such individual has any conflict of interest described in clause ii or iii of subparagraph C--

Act 642 c 1 D i such individual shall not be prohibited from serving on such body and the Head Start agency shall report such conflict to the Secretary; and

Act 642 c 1 D ii if the position held as a result of public election or political appointment provides compensation, such individual shall not be prohibited from receiving such compensation.

Act 642 c 1 E RESPONSIBILITIES - The governing body shall-- FM1AFM1C

PDM1DPDM1EPDM1FPDM1G

Act 642 c 1 E i have legal and fiscal responsibility for administering and overseeing programs under this subchapter, including the safeguarding of Federal funds;

FM1CPDM1G

Act 642 c 1 E ii adopt practices that assure active, independent, and informed governance of the Head Start agency, including practices consistent with subsection d 1, and fully participate in the development, planning, and evaluation of the Head Start programs involved;

PDM1G

Act 642 c 1 E iii be responsible for ensuring compliance with Federal laws (including regulations) and applicable State, tribal, and local laws (including regulations); and

PDM1G

Act 642 c 1 E iv be responsible for other activities, including-- FM1APDM1DPDM1EPDM1FPDM1G

Act 642 c 1 E iv I selecting delegate agencies and the service areas for such agencies; PDM1DPDM1G

Act 642 c 1 E iv II establishing procedures and criteria for recruitment, selection, and enrollment of children;

PDM1DPDM1G

Act 642 c 1 E iv III reviewing all applications for funding and amendments to applications for funding for programs under this subchapter;

PDM1DPDM1G

Act 642 c 1 E iv IV establishing procedures and guidelines for accessing and collecting information described in subsection d 2;

PDM1G

Act 642 c 1 E iv V reviewing and approving all major policies of the agency, including-- PDM1E

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In FY 2010 Monitoring Protocol?PDM1G

Act 642 c 1 E iv V aa

the annual self-assessment and financial audit; PDM1EPDM1G

Act 642 c 1 E iv V bb

such agency’s progress in carrying out the programmatic and fiscal provisions in such agency’s grant application, including implementation of corrective actions; and

PDM1EPDM1G

Act 642 c 1 E iv V cc

personnel policies of such agencies regarding the hiring, evaluation, termination, and compensation of agency employees;

PDM1EPDM1G

Act 642 c 1 E iv VI developing procedures for how members of the policy council are selected, consistent with paragraph 2 B;

PDM1DPDM1G

Act 642 c 1 E iv VII

approving financial management, accounting, and reporting policies, and compliance with laws and regulations related to financial statements, including the--

PDM1FPDM1G

Act 642 c 1 E iv VII aa

approval of all major financial expenditures of the agency; PDM1FPDM1G

Act 642 c 1 E iv VII bb

annual approval of the operating budget of the agency; PDM1FPDM1G

Act 642 c 1 E iv VII cc

selection (except when a financial auditor is assigned by the State under State law or is assigned under local law) of independent financial auditors who shall report all critical accounting policies and practices to the governing body; and

PDM1FPDM1G

Act 642 c 1 E iv VII dd

monitoring of the agency’s actions to correct any audit findings and of other action necessary to comply with applicable laws (including regulations) governing financial statement and accounting practices;

PDM1FPDM1G

Act 642 c 1 E iv VIII

reviewing results from monitoring conducted under section 641A c, including appropriate follow-up activities;

PDM1EPDM1G

Act 642 c 1 E iv IX approving personnel policies and procedures, including policies and procedures regarding the hiring, evaluation, compensation, and termination of the Executive Director, Head Start Director, Director of Human Resources, Chief Fiscal Officer, and any other person in an equivalent position with the agency;

PDM1EPDM1G

Act 642 c 1 E iv X establishing, adopting, and periodically updating written standards of conduct that establish standards and formal procedures for disclosing, addressing, and resolving--

FM1APDM1DPDM1G

Act 642 c 1 E iv X aa

any conflict of interest, and any appearance of a conflict of interest, by members of the governing body, officers and employees of the Head Start agency, and consultants and agents who provide services or furnish goods to the Head Start agency; and

FM1APDM1DPDM1G

Act 642 c 1 E iv X bb

complaints, including investigations, when appropriate; and PDM1DPDM1G

Act 642 c 1 E iv XI to the extent practicable and appropriate, at the discretion of the governing PDM1G

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body, establishing advisory committees to oversee key responsibilities related to program governance and improvement of the Head Start program involved.

Act 642 c 2 POLICY COUNCIL.-- PDM2APDM2BPDM2CPDM2F

Act 642 c 2 A IN GENERAL - Consistent with paragraph 1 E, each Head Start agency shall have a policy council responsible for the direction of the Head Start program, including program design and operation, and long- and short-term planning goals and objectives, taking into account the annual communitywide strategic planning and needs assessment and self-assessment.

PDM2B

Act 642 c 2 B COMPOSITION AND SELECTION.-- PDM2AAct 642 c 2 B i The policy council shall be elected by the parents of children who are

currently enrolled in the Head Start program of the Head Start agency.PDM2A

Act 642 c 2 B ii The policy council shall be composed of-- PDM2AAct 642 c 2 B ii I parents of children who are currently enrolled in the Head Start program of

the Head Start agency (including any delegate agency), who shall constitute a majority of the members of the policy council; and

PDM2A

Act 642 c 2 B ii II members at large of the community served by the Head Start agency (including any delegate agency), who may include parents of children who were formerly enrolled in the Head Start program of the agency.

PDM2A

Act 642 c 2 C CONFLICT OF INTEREST - Members of the policy council shall-- PDM2CAct 642 c 2 C i not have a conflict of interest with the Head Start agency (including any

delegate agency); andPDM2C

Act 642 c 2 C ii not receive compensation for serving on the policy council or for providing services to the Head Start agency.

PDM2C

Act 642 c 2 D RESPONSIBILITIES - The policy council shall approve and submit to the governing body decisions about each of the following activities:

PDM2F

Act 642 c 2 D i Activities to support the active involvement of parents in supporting program operations, including policies to ensure that the Head Start agency is responsive to community and parent needs.

Act 642 c 2 D ii Program recruitment, selection, and enrollment priorities. PDM2FAct 642 c 2 D iii Applications for funding and amendments to applications for funding for

programs under this subchapter, prior to submission of applications described in this clause.

PDM2F

Act 642 c 2 D iv Budget planning for program expenditures, including policies for reimbursement and participation in policy council activities.

PDM2F

Act 642 c 2 D v Bylaws for the operation of the policy council. PDM2F

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Act 642 c 2 D vi Program personnel policies and decisions regarding the employment of program staff, consistent with paragraph 1 E iv IX, including standards of conduct for program staff, contractors, and volunteers and criteria for the employment and dismissal of program staff.

PDM2F

Act 642 c 2 D vii Developing procedures for how members of the policy council of the Head Start agency will be elected.

PDM2F

Act 642 c 2 D viii Recommendations on the selection of delegate agencies and the service areas for such agencies.

PDM2F

Act 642 c 3 POLICY COMMITTEES - Each delegate agency shall create a policy committee, which shall--

PDM2APDM2C

Act 642 c 3 A be elected and composed of members, consistent with paragraph 2 B (with respect to delegate agencies);

PDM2A

Act 642 c 3 B follow procedures to prohibit conflict of interest, consistent with clauses i and ii of paragraph 2 C (with respect to delegate agencies); and

PDM2C

Act 642 c 3 C be responsible for approval and submission of decisions about activities as they relate to the delegate agency, consistent with paragraph 2 D (with respect to delegate agencies).

Act 642 d PROGRAM GOVERNANCE ADMINISTRATION.-- PDM1BPDM1CPDM2E

Act 642 d 1 IMPASSE POLICIES.--The Secretary shall develop policies, procedures, and guidance for Head Start agencies concerning--

Act 642 d 1 A the resolution of internal disputes, including any impasse in the governance of Head Start programs; and

Act 642 d 1 B the facilitation of meaningful consultation and collaboration about decisions of the governing body and policy council.

Act 642 d 2 CONDUCT OF RESPONSIBILITIES - Each Head Start agency shall ensure the sharing of accurate and regular information for use by the governing body and the policy council, about program planning, policies, and Head Start agency operations, including--

PDM1CPDM2E

Act 642 d 2 A monthly financial statements, including credit card expenditures; PDM1CPDM2E

Act 642 d 2 B monthly program information summaries; PDM1CPDM2E

Act 642 d 2 C program enrollment reports, including attendance reports for children whose care is partially subsidized by another public agency;

PDM1CPDM2E

Act 642 d 2 D monthly reports of meals and snacks provided through programs of the Department of Agriculture;

PDM1CPDM2E

Act 642 d 2 E the financial audit; PDM1CPDM2E

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Act 642 d 2 F the annual self-assessment, including any findings related to such assessment;

PDM1CPDM2E

Act 642 d 2 G the community-wide strategic planning and needs assessment of the Head Start agency, including any applicable updates;

PDM1CPDM2E

Act 642 d 2 H communication and guidance from the Secretary; and PDM1CPDM2E

Act 642 d 2 I the program information reports. PDM1CPDM2E

Act 642 d 3 TRAINING AND TECHNICAL ASSISTANCE - Appropriate training and technical assistance shall be provided to the members of the governing body and the policy council to ensure that the members understand the information the members receive and can effectively oversee and participate in the programs of the Head Start agency.

PDM1B

Act 642 e COLLABORATION AND COORDINATION - To be so designated, a Head Start agency shall collaborate and coordinate with public and private entities, to the maximum extent practicable, to improve the availability and quality of services to Head Start children and families, including carrying out the following activities:

Act 642 e 1 Conduct outreach to schools in which children participating in the Head Start program will enroll following the program, local educational agencies, the local business community, community-based organizations, faith-based organizations, museums, and libraries to generate support and leverage the resources of the entire local community in order to improve school readiness.

Act 642 e 2 A In communities where both a public prekindergarten program and a Head Start program operate, collaborate and coordinate activities with the local educational agency or other public agency responsible for the operation of the prekindergarten program and providers of prekindergarten, including outreach activities to identify eligible children.

Act 642 e 2 B With the permission of the parents of children enrolled in the Head Start program, regularly communicate with the schools in which the children will enroll following the program, to--

Act 642 e 2 B i share information about such children;Act 642 e 2 B ii collaborate with the teachers in such schools regarding professional

development and instructional strategies, as appropriate; andAct 642 e 2 B iii ensure a smooth transition to school for such children.Act 642 e 3 Coordinate activities and collaborate with programs under the Child Care

and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.), the agencies responsible for administering section 106 of the Child Abuse Prevention and Treatment Act (42 U.S.C. 5106a) and parts B and E of title IV of the Social Security Act (42 U.S.C. 621 et seq., 670 et seq.), programs under subtitle B of title VII of the McKinney-Vento Homeless Assistance

222



Act (42 U.S.C. 11431 et seq.), Even Start programs under subpart 3 of part B of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6381 et seq.), programs under section 619 and part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.), and other entities providing early childhood education and development programs or services, serving the children and families served by the Head Start agency.

Act 642 e 4 Take steps to coordinate activities with the local educational agency serving the community involved and with schools in which children participating in the Head Start program will enroll following the program, including--

Act 642 e 4 A collaborating on the shared use of transportation and facilities, in appropriate cases;

Act 642 e 4 B collaborating to reduce the duplication and enhance the efficiency of services while increasing the program participation of underserved populations of eligible children; and

Act 642 e 4 C exchanging information on the provision of noneducational services to such children.

Act 642 e 5 Enter into a memorandum of understanding, not later than 1 year after the date of enactment of the Improving Head Start for School Readiness Act of 2007, with the appropriate local entity responsible for managing publicly funded preschool programs in the service area of the Head Start agency, that shall--

Act 642 e 5 A i provide for a review of each of the activities described in clause ii; andAct 642 e 5 A ii include plans to coordinate, as appropriate, activities regarding--Act 642 e 5 A ii I educational activities, curricular objectives, and instruction;Act 642 e 5 A ii II public information dissemination and access to programs for families

contacting the Head Start program or any of the preschool programs;Act 642 e 5 A ii III selection priorities for eligible children to be served by programs;Act 642 e 5 A ii IV service areas;Act 642 e 5 A ii V staff training, including opportunities for joint staff training on topics such

as academic content standards, instructional methods, curricula, and social and emotional development;

Act 642 e 5 A ii VI program technical assistance;Act 642 e 5 A ii VII

provision of additional services to meet the needs of working parents, as applicable;

Act 642 e 5 A ii VIII

communications and parent outreach for smooth transitions to kindergarten as required in paragraph 3 and 6 of section 642A a;

Act 642 e 5 A ii IX provision and use of facilities, transportation, and other program elements; and

Act 642 e 5 A ii X other elements mutually agreed to by the parties to such memorandum;

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Act 642 e 5 B be submitted to the Secretary and the State Director of Head Start Collaboration not later than 30 days after the parties enter into such memorandum, except that--

Act 642 e 5 B i where there is an absence of publicly funded preschool programs in the service area of a Head Start agency, this paragraph shall not apply; or

Act 642 e 5 B ii where the appropriate local entity responsible for managing the publicly funded preschool programs is unable or unwilling to enter into such a memorandum, this paragraph shall not apply and the Head Start agency shall inform the Secretary and the State Director of Head Start Collaboration of such inability or unwillingness; and

Act 642 e 5 C be revised periodically and renewed biennially by the parties to such memorandum, in alignment with the beginning of the school year.

Act 642 f QUALITY STANDARDS, CURRICULA, AND ASSESSMENT - To be so designated, each Head Start agency shall--

Act 642 f 1 take steps to ensure, to the maximum extent practicable, that children maintain the developmental and educational gains achieved in Head Start programs and build upon such gains in further schooling;

Act 642 f 2 establish a program with the standards set forth in section 641A a 1, with particular attention to the standards set forth in subparagraphs A and B of such section;

Act 642 f 3 implement a research-based early childhood curriculum that--Act 642 f 3 A promotes young children’s school readiness in the areas of language and

cognitive development, early reading and mathematics skills, socio-emotional development, physical development, and approaches to learning;

Act 642 f 3 B is based on scientifically valid research and has standardized training procedures and curriculum materials to support implementation;

Act 642 f 3 C is comprehensive and linked to ongoing assessment, with developmental and learning goals and measurable objectives;

Act 642 f 3 D is focused on improving the learning environment, teaching practices, family involvement, and child outcomes across all areas of development; and

Act 642 f 3 E is aligned with the Head Start Child Outcomes Framework developed by the Secretary and, as appropriate, State early learning standards;

Act 642 f 4 implement effective interventions and support services that help promote the school readiness of children participating in the program;

Act 642 f 5 use research-based assessment methods that reflect the characteristics described in section 641A b 2 in order to support the educational instruction and school readiness of children in the program;

Act 642 f 6 use research-based developmental screening tools that have been demonstrated to be standardized, reliable, valid, and accurate for the child being assessed, to the maximum extent practicable, for the purpose of

224




meeting the relevant standards described in section 641A a 1;Act 642 f 7 adopt, in consultation with experts in child development and with classroom

teachers, an evaluation to assess whether classroom teachers have mastered the functions discussed in section 648A a 1;

Act 642 f 8 use the information provided from the assessment conducted under section 641A c 2 F to inform professional development plans, as appropriate, that lead to improved teacher effectiveness;

Act 642 f 9 establish goals and measurable objectives for the provision of health, educational, nutritional, and social services provided under this subchapter and related to the program mission and to promote school readiness; and

Act 642 f 10 develop procedures for identifying children who are limited English proficient, and informing the parents of such children about the instructional services used to help children make progress towards acquiring the knowledge and skills described in section 641A a 1 B and acquisition of the English language.

Act 642 g FUNDED ENROLLMENT; WAITING LIST - Each Head Start agency shall enroll 100% of its funded enrollment and maintain an active waiting list at all times with ongoing outreach to the community and activities to identify underserved populations.

Act 642 h TECHNICAL ASSISTANCE AND TRAINING PLAN - In order to receive funds under this subchapter, a Head Start agency shall develop an annual technical assistance and training plan. Such plan shall be based on the agency’s self-assessment, the communitywide strategic planning and needs assessment, the needs of parents and children to be served by such agency, and the results of the reviews conducted under section 641A c.

Act 642 i FINANCIAL MANAGEMENT - In order to receive funds under this subchapter, a Head Start agency shall document strong fiscal controls, including the employment of well-qualified fiscal staff with a history of successful management of a public or private organization.

Act 642A[42 U.S.C. 9837A]

HEAD START TRANSITION AND ALIGNMENT WITH K-12 EDUCATION.

FCS5C

Act 642A a IN GENERAL - Each Head Start agency shall take steps to coordinate with the local educational agency serving the community involved and with schools in which children participating in a Head Start program operated by such agency will enroll following such program to promote continuity of services and effective transitions, including--

FCS5C

Act 642A a 1 developing and implementing a systematic procedure for transferring, with parental consent, Head Start program records for each participating child to the school in which such child will enroll;

Act 642A a 2 establishing ongoing channels of communication between Head Start staff and their counterparts in the schools (including teachers, social workers, local educational agency liaisons designated under section 722 g 1 J ii of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11432(g)(1)(J)(ii)),

225



and health staff) to facilitate coordination of programs;Act 642A a 3 establishing ongoing communications between the Head Start agency and

local educational agency for developing continuity of developmentally appropriate curricular objectives (which for the purpose of the Head Start program shall be aligned with the Head Start Child Outcomes Framework and, as appropriate, State early learning standards) and for shared expectations for children’s learning and development as the children transition to school;

Act 642A a 4 organizing and participating in joint training, including transition-related training for school staff and Head Start staff;

Act 642A a 5 establishing comprehensive transition policies and procedures that support children transitioning to school, including by engaging the local educational agency in the establishment of such policies;

DS5AFCS5C

Act 642A a 6 conducting outreach to parents and elementary school (such as kindergarten) teachers to discuss the educational, developmental, and other needs of individual children;

Act 642A a 7 helping parents of limited English proficient children understand--Act 642A a 7 A the instructional and other services provided by the school in which such

child will enroll after participation in Head Start; andAct 642A a 7 B as appropriate, the information provided to parents of limited English

proficient children under section 3302 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7012);

Act 642A a 8 developing and implementing a family outreach and support program, in cooperation with entities carrying out parental involvement efforts under title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.), and family outreach and support efforts under subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.), taking into consideration the language needs of parents of limited English proficient children;

Act 642A a 9 assisting families, administrators, and teachers in enhancing educational and developmental continuity and continuity of parental involvement in activities between Head Start services and elementary school classes;

Act 642A a 10 linking the services provided in such Head Start program with educational services, including services relating to language, literacy, and numeracy, provided by such local educational agency;

Act 642A a 11 helping parents (including grandparents and kinship caregivers, as appropriate) to understand the importance of parental involvement in a child’s academic success while teaching them strategies for maintaining parental involvement as their child moves from Head Start to elementary school;

Act 642A a 12 helping parents understand the instructional and other services provided by the school in which their child will enroll after participation in the Head

226








Start program;Act 642A a 13 developing and implementing a system to increase program participation of

underserved populations of eligible children; andAct 642A a 14 coordinating activities and collaborating to ensure that curricula used in the

Head Start program are aligned with--Act 642A a 14 A the Head Start Child Outcomes Framework, as developed by the Secretary;

andAct 642A a 14 B State early learning standards, as appropriate, with regard to cognitive,

social, emotional, and physical competencies that children entering kindergarten are expected to demonstrate.

Act 642A b CONSTRUCTION - In this section, a reference to a Head Start agency, or its program, services, facility, or personnel, shall not be construed to be a reference to an Early Head Start agency, or its program, services, facility, or personnel.

Act 642A c DISSEMINATION AND TECHNICAL ASSISTANCE - The Secretary, in consultation with the Secretary of Education, shall--

Act 642A c 1 disseminate to Head Start agencies information on effective policies and activities relating to the transition of children from Head Start programs to public schools; and

Act 642A c 2 provide technical assistance to such agencies to promote and assist such agencies to adopt and implement such effective policies and activities.

Act 642B HEAD START COLLABORATION; STATE EARLY EDUCATION AND CARE

Act 642B a 1 From amounts made available under section 640 a 2 B vi, the Secretary shall award the collaboration grants described in paragraphs 2, 3, and 4.

Act 642B a 2 A The Secretary shall award, upon submission of a written request, a collaboration grant to each State and to each national administrative office serving Indian Head Start programs and migrant or seasonal Head Start programs to facilitate collaboration among Head Start agencies (including Early Head Start agencies) and entities that carry out activities designed to benefit low-income children from birth to school entry, and their families. The national administrative offices shall use the funds made available through the grants to carry out the authorities and responsibilities described in subparagraph B and paragraphs 3 and 4, as appropriate.

Act 642B a 2 B Grants described in subparagraph A shall be used to--Act 642B a 2 B i assist Head Start agencies to collaborate with entities involved in State and

local planning processes to better meet the needs of low-income children from birth to school entry, and their families;

Act 642B a 2 B ii assist Head Start agencies to coordinate activities with the State agency responsible for administering the State program carried out under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.) and entities providing resource and referral services in the State, to make

227




full working-day and full calendar year services available to children;Act 642B a 2 B iii promote alignment of curricula used in Head Start programs and continuity

of services with the Head Start Child Outcomes Framework and, as appropriate, State early learning standards;

Act 642B a 2 B iv promote better linkages between Head Start agencies and other child and family agencies, including agencies that provide health, mental health, or family services, or other child or family supportive services, such as services provided under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.); and

Act 642B a 2 B v carry out the activities of the State Director of Head Start Collaboration authorized in paragraph 4.

Act 642B a 3 In order to improve coordination and delivery of early childhood education and development to children in the State, a State that receives a collaboration grant under paragraph 2 shall--

Act 642B a 3 A appoint or designate an individual to serve as, or carry out the responsibilities of, the State Director of Head Start Collaboration;

Act 642B a 3 B ensure that the State Director of Head Start Collaboration holds a position with sufficient authority and access to ensure that the collaboration described in paragraph 2 is effective and involves a range of State agencies; and

Act 642B a 3 C involve the State Head Start Association in the selection of the Director and involve the Association in determinations relating to the ongoing direction of the collaboration office involved.

Act 642B a 4 The State Director of Head Start Collaboration shall--Act 642B a 4 A not later than 1 year after the State receives a collaboration grant under

paragraph 2, conduct an assessment that--Act 642B a 4A i addresses the needs of Head Start agencies in the State with respect to

collaboration, coordination and alignment of services, and alignment of curricula and assessments used in Head Start programs with the Head Start Child Outcomes Framework and, as appropriate, State early learning standards;

Act 642B a 4A ii shall be updated on an annual basis; andAct 642B a 4A iii shall be made available to the general public within the State;Act 642B a 4 B develop a strategic plan that is based on the assessment described in

subparagraph A that will--Act 642B a 4 B i enhance collaboration and coordination of Head Start services by Head Start

agencies with other entities providing early childhood education and development (such as child care or services offered by museums), health care, mental health care, welfare, child protective services, education and community service activities, family literacy services, reading readiness programs (including such programs offered by public and school libraries), services relating to children with disabilities, other early childhood

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education and development for limited English proficient children and homeless children, and services provided for children in foster care and children referred to Head Start programs by child welfare agencies, including agencies and State officials responsible for services described in this clause;

Act 642B a 4 B ii assist Head Start agencies to develop a plan for the provision of full working-day, full calendar year services for children enrolled in Head Start programs who need such services;

Act 642B a 4 B iii assist Head Start agencies to align curricula and assessments used in Head Start programs with the Head Start Child Outcomes Framework and, as appropriate, State early learning standards;

Act 642B a 4 B iv enable Head Start agencies to better access professional development opportunities for Head Start staff, such as by working with Head Start agencies to enable the agencies to meet the degree requirements described in section 648A a 2 A, including providing distance learning opportunities for Head Start staff, where needed to make higher education more accessible to Head Start staff; and

Act 642B a 4 B v enable the Head Start agencies to better conduct outreach to eligible families;

Act 642B a 4 C promote partnerships between Head Start agencies, State and local governments, and the private sector to help ensure that children from low-income families, who are in Head Start programs or are preschool age, are receiving comprehensive services to prepare the children for elementary school;

Act 642B a 4 D consult with the chief State school officer, local educational agencies, and providers of early childhood education and development, at both the State and local levels;

Act 642B a 4 E promote partnerships between Head Start agencies, schools, law enforcement, relevant community-based organizations, and substance abuse and mental health treatment agencies to strengthen family and community environments and to reduce the impact on child development of substance abuse, child abuse, domestic violence, and other high-risk behaviors that compromise healthy development;

Act 642B a 4 F promote partnerships between Head Start agencies and other organizations in order to enhance Head Start program quality, including partnerships to promote inclusion of more books in Head Start classrooms;

Act 642B a 4 G identify other resources and organizations (both public and private) for the provision of in-kind services to Head Start agencies in the State; and

Act 642B a 4 H serve on the State Advisory Council in order to assist the efforts of Head Start agencies to engage in effective coordination and collaboration.

Act 642B b STATE EARLY EDUCATION AND CARE.Act 642B b 1 A The Governor of the State shall--

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Act 642B b 1 A i designate or establish a council to serve as the State Advisory Council on Early Childhood Education and Care for children from birth to school entry (in this subchapter referred to as the ‘State Advisory Council’); and

Act 642B b 1 A ii designate an individual to coordinate activities of the State Advisory Council, as described in subparagraph D i.

Act 642B b 1 B The Governor may designate an existing entity in the State to serve as the State Advisory Council, and shall appoint representatives to the State Advisory Council at the Governor’s discretion.In designating an existing entity, the Governor shall take steps to ensure that its membership includes, to the extent possible, representatives consistent with subparagraph C.

Act 642B b 1 C Members of the State Advisory Council shall include, to the maximum extent possible--

Act 642B b 1 C i a representative of the State agency responsible for child care;Act 642B b 1 C ii a representative of the State educational agency;Act 642B b 1 C iii a representative of local educational agencies;Act 642B b 1 C iv a representative of institutions of higher education in the State;Act 642B b 1 C v a representative of local providers of early childhood education and

development services;Act 642B b 1 C vi a representative from Head Start agencies located in the State, including

migrant and seasonal Head Start programs and Indian Head Start programs;Act 642B b 1 C vii the State Director of Head Start Collaboration;Act 642B b1 C viii a representative of the State agency responsible for programs under section

619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.);

Act 642B b 1 C ix a representative of the State agency responsible for health or mental health care; and

Act 642B b 1 C x representatives of other entities determined to be relevant by the Governor of the State.

Act 642B b 1 D i The State Advisory Council shall, in addition to any responsibilities assigned to the Council by the Governor of the State--

Act 642B b 1 D i I conduct a periodic statewide needs assessment concerning the quality and availability of early childhood education and development programs and services for children from birth to school entry, including an assessment of the availability of high-quality pre-kindergarten services for low-income children in the State;

Act 642B b 1 D i II identify opportunities for, and barriers to, collaboration and coordination among Federally-funded and State-funded child development, child care, and early childhood education programs and services, including collaboration and coordination among State agencies responsible for administering such programs;

230






Act 642B b 1 D i III

develop recommendations for increasing the overall participation of children in existing Federal, State, and local child care and early childhood education programs, including outreach to underrepresented and special populations;

Act 642B b 1 D i IV

develop recommendations regarding the establishment of a unified data collection system for public early childhood education and development programs and services throughout the State;

Act 642B b 1 D i V develop recommendations regarding statewide professional development and career advancement plans for early childhood educators in the State;

Act 642B b 1 D i VI

assess the capacity and effectiveness of 2- and 4- year public and private institutions of higher education in the State toward supporting the development of early childhood educators, including the extent to which such institutions have in place articulation agreements, professional development and career advancement plans, and practice or internships for students to spend time in a Head Start or prekindergarten program; and

Act 642B b 1 D i VII

make recommendations for improvements in State early learning standards and undertake efforts to develop high-quality comprehensive early learning standards, as appropriate.

Act 642B b 1 D ii The State Advisory Council shall hold public hearings and provide an opportunity for public comment on the activities described in clause i. The State Advisory Council shall submit a statewide strategic report addressing the activities described in clause i to the State Director of Head Start Collaboration and the Governor of the State.

Act 642B b 1 D iii After submission of a statewide strategic report under clause ii, the State Advisory Council shall meet periodically to review any implementation of the recommendations in such report and any changes in State and local needs.

Act 642B b 2 A The Secretary shall use the portion reserved under section 640 a 4 A iii to award, on a competitive basis, one-time startup grants of not less than $500,000 to eligible States to enable such States to pay for the Federal share of developing and implementing a plan pursuant to the responsibilities included under paragraph 1 D i. A State that receives funds under this paragraph shall use such funds to facilitate the development or enhancement of high-quality systems of early childhood education and care designed to improve school preparedness through one or more of the following activities--

Act 642B b 2 A i promoting school preparedness of children from birth through school entry, including activities to encourage families and caregivers to engage in highly interactive, developmentally and age-appropriate activities to improve children’s early social, emotional, and cognitive development, support the transition of young children to school, and foster parental and family involvement in the early education of young children;

Act 642B b 2 A ii supporting professional development, recruitment, and retention initiatives for early childhood educators;

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Act 642B b 2 A iii enhancing existing early childhood education and development programs and services (in existence on the date on which the grant involved is awarded), including quality improvement activities authorized under the Child Care and Development Block Grant Act of 1990; and

Act 642B b 2 A iv carrying out other activities consistent with the State’s plan and application, pursuant to subparagraph B.

Act 642B b 2 B To be eligible to receive a grant under this paragraph, a State shall prepare and submit to the Secretary a plan and application, for a 3-year period, at such time, in such manner, and containing such information as the Secretary shall require, including--

Act 642B b 2 B i the statewide strategic report described in paragraph 1 D ii, including a description of the State Advisory Council’s responsibilities under paragraph 1 D i;

Act 642B b 2 B ii a description, for each fiscal year, of how the State will make effective use of funds available under this paragraph, with funds described in subparagraph C, to create an early childhood education and care system, by developing or enhancing programs and activities consistent with the statewide strategic report described in paragraph 1 D i;

Act 642B b 2 B iii a description of the State early learning standards and the State’s goals for increasing the number of children entering kindergarten ready to learn;

Act 642B b 2 B iv information identifying the agency or joint interagency office, and individual, designated to carry out the activities under this paragraph, which may be the individual designated under paragraph 1 A ii; and

Act 642B b 2 B v a description of how the State plans to sustain activities under this paragraph beyond the grant period.

Act 642B b 2 C The Federal share of the cost of activities proposed to be conducted under subparagraph A shall be 30%, and the State shall provide the non-Federal share.

Act 642B b 2 D Funds made available under this paragraph shall be used to supplement, and not supplant, other Federal, State, and local funds expended to carry out activities related to early childhood education and care in the State.

Act 642B b 2 E Not later than 18 months after the date a State receives a grant under this paragraph, the State shall submit an interim report to the Secretary. A State that receives a grant under this paragraph shall submit a final report to the Secretary at the end of the grant period. Each report shall include--

Act 642B b 2 E i a description of the activities and services carried out under the grant, including the outcomes of such activities and services in meeting the needs described in the periodic needs assessment and statewide strategic report;

Act 642B b 2 E ii information about how the State used such funds to meet the goals of this subsection through activities to develop or enhance high-quality systems of early childhood education and care, increase effectiveness of delivery systems and use of funds, and enhance existing programs and services;

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Act 642B b 2 E iii information regarding the remaining needs described in the periodic statewide needs assessment and statewide strategic report that have not yet been addressed by the State; and

Act 642B b 2 E iv any other information that the Secretary may require.Act 642B b 2 F Nothing in this subsection shall be construed to provide the State Advisory

Council with authority to modify, supersede, or negate the requirements of this subchapter.

Act 643[42 U.S.C. 9838]

SUBMISSION OF PLANS TO GOVERNORS.In carrying out the provisions of this subchapter, no contract, agreement, grant, or other assistance shall be made for the purpose of carrying out a Head Start program within a State unless a plan setting forth such proposed contract, agreement, grant, or other assistance has been submitted to the chief executive officer of the State, and such plan has not been disapproved by such officer within 45 days of such submission, or, if disapproved (for reasons other than failure of the program to comply with State health, safety, and child care laws, including regulations applicable to comparable child care programs in the State), has been reconsidered by the Secretary and found by the Secretary to be fully consistent with the provisions and in furtherance of the purposes of this subchapter, as evidenced by a written statement of the Secretary’s findings that is transmitted to such officer. Funds to cover the costs of the proposed contract, agreement, grant, or other assistance shall be obligated from the appropriation which is current at the time the plan is submitted to such officer. This section shall not, however, apply to contracts, agreements, grants, loans, or other assistance to any institution of higher education in existence on the date of the enactment of this Act.This section shall not apply to contracts, agreements, grants, loans, or other assistance for Indian Head Start programs or migrant or seasonal Head Start programs.

Act 644[42 U.S.C. 9839]

ADMINISTRATIVE REQUIREMENTS AND STANDARDS PDM6C

Act 644 a 1 Each Head Start agency shall observe standards of organization, management, and administration that will ensure, so far as reasonably possible, that all program activities are conducted in a manner consistent with the purposes of this subchapter and the objective of providing assistance effectively, efficiently, and free of any taint of partisan political bias or personal or family favoritism. Each such agency shall establish or adopt rules to carry out this section, which shall include rules to assure full staff accountability in matters governed by law, regulations, or agency policy. Each agency shall also provide for reasonable public access to information, including public hearings at the request of appropriate community groups and reasonable public access to books and records of the agency or other agencies engaged in program activities or operations involving the use of authority or funds for which it is responsible.

Act 644 a 2 Each Head Start agency shall make available to the public a report published PDM6C

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at least once in each fiscal year that discloses the following information from the most recently concluded fiscal year, except that reporting such information shall not reveal personally identifiable information about an individual child or parent:

Act 644 a 2 A The total amount of public and private funds received and the amount from each source.

PDM6C

Act 644 a 2 B An explanation of budgetary expenditures and proposed budget for the fiscal year.

PDM6C

Act 644 a 2 C The total number of children and families served, the average monthly enrollment (as a percentage of funded enrollment), and the percentage of eligible children served.

PDM6C

Act 644 a 2 D The results of the most recent review by the Secretary and the financial audit.

PDM6C

Act 644 a 2 E The percentage of enrolled children that received medical and dental exams. PDM6CAct 644 a 2 F Information about parent involvement activities. PDM6CAct 644 a 2 G The agency’s efforts to prepare children for kindergarten. PDM6CAct 644 a 2 H Any other information required by the Secretary. PDM6CAct 644 a 3 Each such agency shall adopt for itself and other agencies using funds or

exercising authority for which it is responsible, rules designed to--Act 644 a 3 A establish specific standards governing salaries, salary increases, travel and

per diem allowances, and other employee benefits;Act 644 a 3 B assure that only persons capable of discharging their duties with competence

and integrity are employed and that employees are promoted or advanced under impartial procedures calculated to improve agency performance and effectiveness;

Act 644 a 3 C guard against personal or financial conflicts of interest; andAct 644 a 3 D define employee duties in an appropriate manner that will in any case

preclude employees from participating, in connection with the performance of their duties, in any form of picketing, protest, or other direct action that is in violation of law.

Act 644 b Except as provided in subsection f of this section, no financial assistance shall be extended under this subchapter in any case in which the Secretary determines that the costs of developing and administering a program assisted under this subchapter exceed 15% of the total costs, including the required non-Federal contributions to such costs, of such program. The Secretary shall establish by regulation, criteria for determining:

Act 644 b 1 the costs of developing and administering such program; andAct 644 b 2 the total costs of such program.

In any case in which the Secretary determines that the cost of administering such program does not exceed 15% of such total costs but is, in the judgment of the Secretary, excessive, the Secretary shall forthwith require

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the recipient of such financial assistance to take such steps prescribed by the Secretary as will eliminate such excessive administrative cost, including the sharing by one or more Head Start agencies of a common director and other administrative personnel. The Secretary may waive the limitation prescribed by this subsection for specific periods of time not to exceed 12 months whenever the Secretary determines that such a waiver is necessary in order to carry out the purposes of this subchapter.

Act 644 c The Secretary shall prescribe rules or regulations to supplement subsections a and f of this section, which shall be binding on all agencies carrying on Head Start program activities with financial assistance under this subchapter. The Secretary may, where appropriate, establish special or simplified requirements for smaller agencies or agencies operating in rural areas. Policies and procedures shall be established to ensure that indirect costs attributable to the common or joint use of facilities and services by programs assisted under this subchapter and other programs shall be fairly allocated among the various programs which utilize such facilities and services.

Act 644 d At least 30 days prior to their effective date, all rules, regulations and application forms shall be published in the Federal Register and shall be sent to each grantee with the notification that each such grantee has the right to submit comments pertaining thereto to the Secretary prior to the final adoption thereof.

Act 644 e Funds appropriated to carry out this subchapter shall not be used to assist, promote, or deter union organizing.

Act 644 f 1 The Secretary shall establish uniform procedures for Head Start agencies to request approval to purchase facilities, or to request approval of the purchase (after December 31, 1986) of facilities, to be used to carry out Head Start programs. The Secretary shall suspend any proceedings pending against any Head Start agency to claim costs incurred in purchasing such facilities until the agency has been afforded an opportunity to apply for approval of the purchase and the Secretary has determined whether the purchase will be approved. The Secretary shall not be required to repay claims previously satisfied by Head Start agencies for costs incurred in the purchase of such facilities.

Act 644 f 2 Financial assistance provided under this subchapter may not be used by a Head Start agency to purchase a facility (including paying the cost of amortizing the principal, and paying interest on, loans) to be used to carry out a Head Start program unless the Secretary approves a request that is submitted by such agency and contains--

Act 644 f 2 A a description of the efforts by the agency to coordinate or collaborate with other providers in the community to seek assistance, including financial assistance, prior to the use of funds under this section;

Act 644 f 2 B a description of the site of the facility proposed to be purchased or that was previously purchased;

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Act 644 f 2 C the plans and specifications of such facility;Act 644 f 2 D information demonstrating that--Act 644 f 2 D i the proposed purchase will result, or the previous purchase has resulted, in

savings when compared to the costs that would be incurred to acquire the use of an alternative facility to carry out such program; or

Act 644 f 2 D ii the lack of alternative facilities will prevent, or would have prevented, the operation of such program;

Act 644 f 2 E in the case of a request regarding a previously purchased facility, information demonstrating that the facility will be used principally as a Head Start center, or a direct support facility for a Head Start program; and

Act 644 f 2 F such other information and assurances as the Secretary may require.Act 644 f 3 Upon a determination by the Secretary that suitable facilities are not

otherwise available to Indian tribes to carry out Head Start programs, and that the lack of suitable facilities will inhibit the operation of such programs, the Secretary, in the discretion of the Secretary, may authorize the use of financial assistance, to make payments for the purchase of facilities owned by such tribes. The amount of such a payment for such a facility shall not exceed the fair market value of the facility.

Act 644 g 1 Upon a determination by the Secretary that suitable facilities (including public school facilities) are not otherwise available to Indian tribes, rural communities, and other low-income communities to carry out Head Start programs, that the lack of suitable facilities will inhibit the operation of such programs, and that construction of such facilities is more cost effective than purchase of available facilities or renovation, the Secretary, in the discretion of the Secretary, may authorize the use of financial assistance under this subchapter to make payments for capital expenditures related to facilities that will be used to carry out such programs. The Secretary shall establish uniform procedures for Head Start agencies to request approval for such payments, and shall promote, the extent practicable, the collocation of Head Start programs with other programs serving low-income children and families.

Act 644 g 2 Such payments may be used for capital expenditures (including paying the cost of amortizing the principal, and paying interest on, loans) such as expenditures for--

Act 644 g 2 A construction of facilities that are not in existence on the date of the determination;

Act 644 g 2 B major renovation of facilities in existence on such date; andAct 644 g 2 C purchase of vehicles used for programs conducted at the Head Start

facilities.Act 644 g 3 All laborers and mechanics employed by contractors or subcontractors in the

construction or renovation of facilities to be used to carry out Head Start programs shall be paid wages at not less than those prevailing on similar

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construction in the locality, as determined by the Secretary of Labor in accordance with the Act of March 3, 1931, as amended (40 U.S.C. 276a et seq., commonly known as the “Davis-Bacon Act“).

Act 644 h In all personnel actions of the American Indian Programs Branch of the Head Start Bureau of the Administration for Children and Families, the Secretary shall give the same preference to individuals who are members of an Indian tribe as the Secretary gives to a disabled veteran, as defined in section 2108(3)(C) of title 5, United States Code. The Secretary shall take such additional actions as may be necessary to promote recruitment of such individuals for employment in the Administration.

Act 645[42 U.S.C. 9840]

PARTICIPATION IN HEAD START PROGRAMS ER1CER1D

Act 645 a 1 A The Secretary shall by regulation prescribe eligibility for the participation of persons in Head Start programs assisted under this subchapter.

Act 645 a 1 B Except as provided in paragraph 2, such regulation shall provide-- ER1CER1D

Act 645 a 1 B i that children from low-income families shall be eligible for participation in programs assisted under this subchapter if their families’ incomes are below the poverty line, or if their families are eligible or, in the absence of child care, would potentially be eligible for public assistance;

Act 645 a 1 B ii that homeless children shall be deemed to be eligible for such participation;Act 645 a 1 B iii that programs assisted under this subchapter may include-- ER1C

ER1DAct 645 a 1 B iii I to a reasonable extent (but not to exceed 10% of participants), participation

of children in the area served who would benefit from such programs but who are not eligible under clause i or ii; and

Act 645 a 1 B iii II from the area served, an additional 35% of participants who are not eligible under clause i or ii and whose families have incomes below 130% of the poverty line, if--

ER1CER1D

Act 645 a 1 B iii II aa

the Head Start agency involved establishes and implements outreach and enrollment policies and procedures that ensure such agency is meeting the needs of children eligible under clause i or ii (or subclause I) if the child involved has a disability) prior to meeting the needs of children eligible under this subclause; and

ER1CER1D

Act 645 a 1 B iii II bb

in prioritizing the selection of children to be served, the Head Start agency establishes criteria that provide that the agency will serve children eligible under clause i or ii prior to serving the children eligible under this subclause;

ER1CER1D

Act 645 a 1 B iv that any Head Start agency serving children eligible under clause iii II shall report annually to the Secretary information on--

Act 645 a 1 B iv I how such agency is meeting the needs of children eligible under clause i or ii, in the area served, including local demographic data on families of children eligible under clause i or ii;

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Act 645 a 1 B iv II the outreach and enrollment policies and procedures established by the agency that ensure the agency is meeting the needs of children eligible under clause i or ii (or clause iii I if the child involved has a disability) prior to meeting the needs of children eligible under clause iii II;

Act 645 a 1 B iv III the efforts, including outreach efforts (that are appropriate to the community involved), of such agency to be fully enrolled with children eligible under clause i or ii;

Act 645 a 1 B iv IV

the policies, procedures, and selection criteria such agency is implementing to serve eligible children, consistent with clause iii II;

Act 645 a 1 B iv V the agency’s enrollment level, and enrollment level over the fiscal year prior to the fiscal year in which the report is submitted;

Act 645 a 1 B iv VI

the number of children served by the agency, disaggregated by whether such children are eligible under clause i, clause ii, clause iii I, or clause iii II; and

Act 645 a 1 B iv VII

the eligibility criteria category of the children on the agency’s waiting list;

Act 645 a 1 B v that a child who has been determined to meet the eligibility criteria described in this subparagraph and who is participating in a Head Start program in a program year shall be considered to continue to meet the eligibility criteria through the end of the succeeding program year.

Act 645 a 1 C In determining, for purposes of this paragraph, whether a child who has applied for enrollment in a Head Start program meets the eligibility criteria, an entity may consider evidence of family income during the 12 months preceding the month in which the application is submitted, or during the calendar year preceding the calendar year in which the application is submitted, whichever more accurately reflects the needs of the family at the time of application.

Act 645 a 2 Whenever a Head Start program is operated in a community with a population of 1,000 or less individuals and--

Act 645 a 2 A there is no other preschool program in the community;Act 645 a 2 B the community is located in a medically underserved area, as designated by

the Secretary pursuant to section 330(b)(3) of the Public Health Service Act [42 U.S.C. §254c(b)(3)] and is located in a health professional shortage area, as designated by the Secretary pursuant to section 332(a)(1) of such Act [42 U.S.C. §254e(a)(1)];

Act 645 a 2 C the community is in a location which, by reason of remoteness, does not permit reasonable access to the types of services described in clauses A and B; and

Act 645 a 2 D not less than 50% of the families to be served in the community are eligible under the eligibility criteria established by the Secretary under paragraph 1; the Head Start program in such locality shall establish the criteria for eligibility, except that no child residing in such community whose family is eligible under such eligibility criteria shall, by virtue of such project’s

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eligibility criteria, be denied an opportunity to participate in such program. During the period beginning on the date of the enactment of the Human Services Reauthorization Act and ending on October 1, 1994, and unless specifically authorized in any statute of the United States enacted after such date of enactment, the Secretary may not make any change in the method, as in effect on April 25, 1984, of calculating income used to prescribe eligibility for the participation of persons in the Head Start programs assisted under this subchapter if such change would result in any reduction in, or exclusion from, participation of persons in any of such programs.

Act 645 a 3 A In this paragraph:Act 645 a 3 A i The term “dependent” has the meaning given the term in paragraphs (2)(A)

and (4)(A)(i) of section 401(a) of title 37, United States Code.Act 645 a 3 A ii The terms ‘member’ and ‘uniformed services’ have the meanings given the

terms in paragraphs (23) and (3), respectively, of section 101 of title 37, United States Code.

Act 645 a 3 B The following amounts of pay and allowance of a member of the uniformed services shall not be considered to be income for purposes of determining the eligibility of a dependent of such member for programs funded under this subchapter:

Act 645 a 3 B i The amount of any special pay payable under section 310 of title 37, United States Code, relating to duty subject to hostile fire or imminent danger.

Act 645 a 3 B ii The amount of basic allowance payable under section 403 of such title, including any such amount that is provided on behalf of the member for housing that is acquired or constructed under the alternative authority for the acquisition and improvement of military housing under subchapter IV of chapter 169 of title 10, United States Code, or any other related provision of law.

Act 645 a 4 After demonstrating a need through a communitywide strategic planning and needs assessment, a Head Start agency may apply to the Secretary to convert part-day sessions, particularly consecutive part-day sessions, into full-working-day sessions.

Act 645 a 5 A Upon written request and pursuant to the requirements of this paragraph, a Head Start agency may use funds that were awarded under this subchapter to serve children age 3 to compulsory school age, in order to serve infants and toddlers if the agency submits an application to the Secretary containing, as specified in rules issued by the Secretary, all of the following information:

Act 645 a 5 A i The amount of such funds that are proposed to be used in accordance with section 645A b.

Act 645 a 5 A ii A communitywide strategic planning and needs assessment demonstrating how the use of such funds would best meet the needs of the community.

Act 645 a 5 A iii A description of how the needs of pregnant women, and of infants and toddlers, will be addressed in accordance with section 645A b, and with

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regulations prescribed by the Secretary pursuant to section 641A in areas including the agency’s approach to child development and provision of health services, approach to family and community partnerships, and approach to program design and management.

Act 645 a 5 A iv A description of how the needs of eligible children will be met in the community.

Act 645 a 5 A v Assurances that the agency will participate in technical assistance activities (including planning, start-up site visits, and national training activities) in the same manner as recipients of grants under section 645A.

Act 645 a 5 A vi Evidence that the agency meets the same eligibility criteria as recipients of grants under section 645A.

Act 645 a 5 B An application that satisfies the requirements specified in subparagraph A shall be approved by the Secretary unless the Secretary finds that--

Act 645 a 5 B i the agency lacks adequate capacity and capability to carry out an effective Early Head Start program; or

Act 645 a 5 B ii the information provided under subparagraph A is inadequate.Act 645 a 5 C In approving such applications, the Secretary shall take into account the

costs of serving persons under section 645A.Act 645 a 5 D Any Head Start agency with an application approved under subparagraph B

shall be considered to be an Early Head Start agency and shall be subject to the same rules, regulations, and conditions as apply to recipients of grants under section 645A, with respect to activities carried out under this paragraph.

Act 645 b The Secretary shall not prescribe any fee schedule or otherwise provide for the charging of any fees for participation in Head Start programs, unless such fees are authorized by legislation hereafter enacted. Nothing in this subsection shall be construed to prevent the families of children who participate in Head Start programs and who are willing and able to pay the full cost of such participation from doing so. A Head Start agency that provides a Head Start program with full-working-day services in collaboration with other agencies or entities may collect a family copayment to support extended day services if a copayment is required in conjunction with the collaborative. The copayment charged to families receiving services through the Head Start program shall not exceed the copayment charged to families with similar incomes and circumstances who are receiving the services through participation in a program carried out by another agency or entity.

Act 645 c Each Head Start program operated in a community shall be permitted to provide more than 1 year of Head Start services to eligible children in the State. Each Head Start program operated in a community shall be permitted to recruit and accept applications for enrollment of children throughout the year.

Act 645 d 1 An Indian tribe that--

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Act 645 d 1 A operates a Head Start program;Act 645 d 1 B enrolls as participants in the program all children in the community served

by the tribe (including a community that is an off-reservation area, designated by an appropriate tribal government, in consultation with the Secretary) from families that meet the low-income criteria prescribed under subsection a 1 A; and

Act 645 d 1 C has the resources to enroll additional children in the community who do not meet the low-income criteria; may enroll such additional children in a Head Start program, in accordance with this subsection, if the program predominantly serves children who meet the low-income criteria.

Act 645 d 2 The Indian tribe shall enroll the children in the Head Start program in accordance with such requirements as the Secretary may specify by regulation promulgated after consultation with Indian tribes.

Act 645 d 3 Notwithstanding any other provision of this Act, an Indian tribe or tribes that operates both an Early Head Start program under section 645A and a Head Start program may, at its discretion, at any time during the grant period involved, reallocate funds between the Early Head Start program and the Head Start program in order to address fluctuations in client populations, including pregnant women and children from birth to compulsory school age. The reallocation of such funds between programs by an Indian tribe or tribes during a year shall not serve as the basis for the Secretary to reduce a base grant (as defined in section 640 a 7 A) for either program in succeeding years.

Act 645A EARLY HEAD START PROGRAMSAct 645A a IN GENERAL - The Secretary shall make grants to entities (referred to in

this subchapter as ‘Early Head Start agencies’) in accordance with this section for programs (referred to in this subchapter as ‘Early Head Start programs’) providing family-centered services for low-income families with very young children designed to promote the development of the children, and to enable their parents to fulfill their roles as parents and to move toward self-sufficiency.

Act 645A b SCOPE AND DESIGN OF PROGRAMS - In carrying out a program described in subsection a, an entity receiving assistance under this section shall--

Act 645A b 1 provide, either directly or through referral, early, continuous, intensive, and comprehensive child development and family support services that will enhance the physical, social, emotional, and intellectual development of participating children;

Act 645A b 2 ensure that the level of services provided to families responds to their needs and circumstances;

Act 645A b 3 promote positive parent-child interactions;Act 645A b 4 provide services to parents to support their role as parents (including

parenting skills training and training in basic child development) and

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services to help the families move toward self-sufficiency (including educational and employment services, as appropriate);

Act 645A b 5 coordinate services with services provided by programs in the State (including home-based services) and programs in the community (including programs for infants and toddlers with disabilities and programs for homeless infants and toddlers) to ensure a comprehensive array of services (such as health and mental health services and family support services);

Act 645A b 6 ensure that children with documented behavioral problems, including problems involving behavior related to prior or existing trauma, receive appropriate screening and referral;

Act 645A b 7 ensure formal linkages with local Head Start programs in order to provide for continuity of services for children and families;

Act 645A b 8 develop and implement a systematic procedure for transitioning children and parents from an Early Head Start program to a Head Start program or other local early childhood education and development program;

Act 645A b 9 establish channels of communication between staff of the Early Head Start program, and staff of a Head Start program or other local providers of early childhood education and development programs, to facilitate the coordination of programs;

Act 645A b 10 in the case of a Head Start agency that operates a program and that also provides Head Start services through the age of mandatory school attendance, ensure that children and families participating in the program receive such services through such age;

Act 645A b 11 ensure formal linkages with providers of early intervention services for infants and toddlers with disabilities under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.), with the State interagency coordinating council, as established in part C of the Individuals with Disabilities Education Act (20 U.S.C. 1431 et seq.), and with the agency responsible for administering section 106 of the Child Abuse Prevention and Treatment Act (42 U.S.C. 5106a); and

Act 645A b 12 meet such other requirements concerning design and operation of the program described in subsection a as the Secretary may establish.

Act 645A c PERSONS ELIGIBLE TO PARTICIPATE - Persons who may participate in programs described in subsection a include--

Act 645A c 1 pregnant women; andAct 645A c 2 families with children under age 3;

who meet the eligibility criteria specified in section 645 a 1, including the criteria specified in section 645 a 1 B ii.

Act 645A d ELIGIBLE SERVICE PROVIDERS - To be eligible to receive assistance under this section, an entity shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require. Entities that may apply to carry out activities under this section

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include--Act 645A d 1 entities operating Head Start programs under this subchapter;Act 645A d 2 entities operating Indian Head Start programs or migrant or seasonal Head

Start programs; andAct 645A d 3 other public entities, and nonprofit or for-profit private entities, including

community-based and faith-based organizations, capable of providing child and family services that meet the standards for participation in programs under this subchapter and meet such other appropriate requirements relating to the activities under this section as the Secretary may establish.

Act 645A e SELECTION OF GRANT RECIPIENTS - The Secretary shall award grants under this section on a competitive basis to applicants meeting the criteria specified in subsection d (giving priority to entities with a record of providing early, continuous, and comprehensive childhood development and family services).

Act 645A f DISTRIBUTION - In awarding grants to eligible applicants under this section, the Secretary shall--

Act 645A f 1 ensure an equitable national geographic distribution of the grants; andAct 645A f 2 award grants to applicants proposing to serve communities in rural areas and

to applicants proposing to serve communities in urban areas.Act 645A g MONITORING, TRAINING, TECHNICAL ASSISTANCE, AND

EVALUATION.--Act 645A g 1 REQUIREMENT - In order to ensure the successful operation of programs

assisted under this section, the Secretary shall use funds made available under section 640 a 2 E to monitor the operation of such programs, and funds made available under section 640 a 2 C i I to provide training and technical assistance tailored to the particular needs of such programs, consistent with section 640 c.

Act 645A g 2 TRAINING AND TECHNICAL ASSISTANCE.--Act 645A g 2 A ACTIVITIES - Of the portion set aside under section 640 a 2 C i I--Act 645A g 2 A i not less than 50% shall be made available to Early Head Start agencies to

use directly, which may include, at their discretion, the establishment of local or regional agreements with community experts, institutions of higher education, or private consultants, for training and technical assistance activities in order to make program improvements identified by such agencies;

Act 645A g 2 A ii not less than 25% shall be available to the Secretary to support a State-based training and technical assistance system, or a national system, described in section 648 e, including infant and toddler specialists, to support Early Head Start agencies, consistent with subparagraph B; and

Act 645A g 2 A iii the remainder of such amount shall be made available to the Secretary to assist Early Head Start agencies in meeting and exceeding the standards described in section 641A a 1 (directly, or through grants, contracts, or other

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agreements or arrangements with an entity with demonstrated expertise relating to infants, toddlers, and families) by--

Act 645A g 2 A iii I

providing ongoing training and technical assistance to Early Head Start agencies, including developing training and technical assistance materials and resources to support program development and improvement and best practices in providing services to children and families served by Early Head Start programs;

Act 645A g 2 A iii II

supporting a national network of infant and toddler specialists designed to improve the quality of Early Head Start programs;

Act 645A g 2 A iii III

providing ongoing training and technical assistance on Early Head Start program development and improvement for regional staff charged with monitoring and overseeing the administration of the program carried out under this section; and

Act 645A g 2 A iii IV

if funds remain after the activities described in subclauses I, II, and III are carried out, carry out 1 or more of the following activities:

Act 645A g 2 A iii IV aa

Providing support and program planning and implementation assistance for new Early Head Start agencies, including for agencies who want to use funds as described in section 645 a 5 to serve infants and toddlers.

Act 645A g 2 A iii IV bb

Creating special training and technical assistance initiatives targeted to serving high-risk populations, such as children in the child welfare system and homeless children.

Act 645A g 2 A iii IV cc

Providing professional development designed to increase program participation for underserved populations of eligible children.

Act 645A g 2 B CONTRACTS - For the purposes of supporting a State-based system, as described in subparagraph A ii, that will meet the needs of Early Head Start agencies and provide high-quality, sustained, and intensive training and technical assistance on programming for infants and toddlers to Early Head Start agencies, and in order to help such agencies meet or exceed the standards described in section 641A a 1, the Secretary shall--

Act 645A g 2 B i use funds reserved under subparagraph A ii in combination with funds reserved under section 640 a 2 C i II bb to ensure the contracts described in section 648 e 1 provide for a minimum of 1 fulltime specialist with demonstrated expertise in the development of infants and toddlers; and

Act 645A g 2 B ii ensure that such contracts and the services provided in the contracts are integrated with and augment the contracts awarded and services provided under section 648 e;

Act 645A h CENTER-BASED STAFF - The Secretary shall--Act 645A h 1 ensure that, not later than September 30, 2010, all teachers providing direct

services to children and families participating in Early Head Start programs located in Early Head Start centers, have a minimum of a child development associate credential, and have been trained (or have equivalent coursework) in early childhood development; and

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Act 645A h 2 establish staff qualification goals to ensure that not later than September 30, 2012, all such teachers have been trained (or have equivalent coursework) in early childhood development with a focus on infant and toddler development.

Act 645A i STAFF QUALIFICATIONS AND DEVELOPMENT.--Act 645A i 1 HOME VISITOR STAFF STANDARDS - In order to further enhance the

quality of home visiting services provided to families of children participating in home-based, center-based, or combination program options under this subchapter, the Secretary shall establish standards for training, qualifications, and the conduct of home visits for home visitor staff in Early Head Start programs.

Act 645A i 2 CONTENTS OF STANDARDS - The standards for training, qualifications, and the conduct of home visits shall include content related to--

Act 645A i 2 A structured child-focused home visiting that promotes parents’ ability to support the child’s cognitive, social, emotional, and physical development;

Act 645A i 2 B effective strengths-based parent education, including methods to encourage parents as their child’s first teachers;

Act 645A i 2 C early childhood development with respect to children from birth through age 3;

Act 645A i 2 D methods to help parents promote emergent literacy in their children from birth through age 3, including use of research-based strategies to support the development of literacy and language skills for children who are limited English proficient;

Act 645A i 2 E ascertaining what health and developmental services the family receives and working with providers of these services to eliminate gaps in service by offering annual health, vision, hearing, and developmental screening for children from birth to entry into kindergarten, when needed;

Act 645A i 2 F strategies for helping families coping with crisis; andAct 645A i 2 G the relationship of health and well-being of pregnant women to prenatal and

early child development.Act 646a APPEALS, NOTICE, AND HEARINGAct 646a a The Secretary shall prescribe --Act 646a a 1 procedures to assure that special notice of and an opportunity for a timely

and expeditious appeal to the Secretary will be provided for an agency or organization which desires to serve as a delegate agency under this subchapter and whose application to the Head start agency has been wholly or substantially rejected or has not been acted upon within a period of time deemed reasonable by the Secretary, in accordance with regulations which the Secretary shall prescribe;

Act 646a a 2 procedures to assure that financial assistance under this subchapter shall not be suspended, except in emergency situations, unless the recipient agency has been given reasonable notice and opportunity to show cause why such

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action should not be taken;Act 646a a 3 procedures to assure that financial assistance under this subchapter may be

terminated or reduced, and an application for refunding may be denied, after the recipient has been afforded reasonable notice and opportunity for a full and fair hearing, including--

Act 646a a 3 A a right to file a notice of appeal of a decision not later than 30 days after notice of the decision from the Secretary; and

Act 646a a 3 B access to a full and fair hearing of the appeal, not later than 120 days after receipt by the Secretary of the notice of appeal;

Act 646a a 4 procedures (including mediation procedures) are developed and published, to be used in order to--

Act 646a a 4 A resolve in a timely manner conflicts potentially leading to an adverse action between--

Act 646a a 4 A i recipients of financial assistance under this subchapter; andAct 646a a 4 A ii delegate agencies, or policy councils of Head Start agencies;Act 646a a 4 B avoid the need for an administrative hearing on an adverse action; andAct 646a a 4 C prohibit a Head Start agency from expending financial assistance awarded

under this subchapter for the purpose of paying legal fees, or other costs incurred, pursuant to an appeal under paragraph 3;

Act 646a a 5 procedures to assure that the Secretary may suspend financial assistance to a recipient under this subchapter--

Act 646a a 5 A except as provided in subparagraph B, for not more than 30 days; orAct 646a a 5 B in the case of a recipient under this subchapter that has multiple and

recurring deficiencies for 180 days or more and has not made substantial and significant progress toward meeting the goals of the grantee’s quality improvement plan or eliminating all deficiencies identified by the Secretary, during the hearing of an appeal described in paragraph 3, for any amount of time; and

Act 646a a 6 procedures to assure that in cases where a Head Start agency prevails in a decision under paragraph 4, the Secretary may determine and provide a reimbursement to the Head Start agency for fees deemed reasonable and customary.

Act 646a b In prescribing procedures for the mediation described in subsection a 4, the Secretary shall specify--

Act 646a b 1 the date by which a Head Start agency engaged in a conflict described in subsection a 4 will notify the appropriate regional office of the Department of the conflict; and

Act 646a b 2 a reasonable period for the mediation.Act 646a c The Secretary shall also specify--Act 646a c 1 a timeline for an administrative hearing, if necessary, on an adverse action;

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andAct 646a c 2 a timeline by which the person conducting the administrative hearing shall

issue a decision based on the hearing.Act 646a d In any case in which a termination, reduction, or suspension of financial

assistance under this subchapter is upheld in an administrative hearing under this section, such termination, reduction, or suspension shall not be stayed pending any judicial appeal of such administrative decision.

Act 646a e 1 The Secretary shall by regulation specify a process by which an Indian tribe may identify and establish an alternative agency, and request that the alternative agency be designated under section 641 as the Head Start agency providing services to the tribe, if--

Act 646a e 1 A the Secretary terminates financial assistance under section 646 to the only agency that was receiving financial assistance to provide Head Start services to the Indian tribe; and

Act 646a e 1 B the tribe would otherwise be precluded from providing such services to the members of the tribe.

Act 646a e 2 The regulation required by this subsection shall prohibit such designation of an alternative agency that includes an employee who--

Act 646a e 2 A served on the administrative staff or program staff of the agency described in paragraph 1 A; and

Act 646a e 2 B was responsible for a deficiency that--Act 646a e 2 B i relates to the performance standards or financial management standards

described in section 641A a 1; andAct 646a e 2 B ii was the basis for the termination of financial assistance described in

paragraph 1 A; as determined by the Secretary after providing the notice and opportunity described in subsection a 3.

Act 647 RECORDS AND AUDITS FM5BAct 647 a Each recipient of financial assistance under this subchapter shall keep such

records as the Secretary shall prescribe, including records which fully disclose the amount and disposition by such recipient of the proceeds of such financial assistance, the total cost of the project or undertaking in connection with which such financial assistance is given or used, the amount of that portion of the cost of the project or undertaking supplied by other sources, and such other records as will facilitate an effective audit.

Act 647 b The Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipients that are pertinent to the financial assistance received under this subchapter.

Act 647 c Each recipient of financial assistance under this subchapter shall-- FM5BAct 647 c 1 maintain, and annually submit to the Secretary, a complete accounting of the

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recipient’s administrative expenses (including a detailed statement identifying the amount of financial assistance provided under this subchapter used to pay expenses for salaries and compensation and the amount (if any) of other funds used to pay such expenses);

Act 647 c 2 not later than 30 days after the date of completion of an audit conducted in the manner and to the extent provided in chapter 75 of title 31, United States Code (commonly known as the ‘Single Audit Act of 1984’), submit to the Secretary a copy of the audit management letter and of any audit findings as they relate to the Head Start program; and

FM5B

Act 647 c 3 provide such additional documentation as the Secretary may require.Act 648 TECHNICAL ASSISTANCE AND TRAININGAct 648_a SECRETARIAL TRAINING AND TECHNICAL ASSISTANCE.--Act 648 a 1 AUTHORITY - From the funds provided under section 640 a 2 C i, the

Secretary shall provide, directly or through grants, contracts, or other agreements or arrangements as the Secretary considers appropriate, technical assistance and training for Head Start programs for the purposes of improving program quality and helping prepare children to succeed in school.

Act 648 a 2 PROCESS - The process for determining the technical assistance and training activities to be carried out under this section shall--

Act 648 a 2 A ensure that the needs of local Head Start agencies and programs relating to improving program quality and to program expansion are addressed to the maximum extent practicable; and

Act 648 a 2 B incorporate mechanisms to ensure responsiveness to local needs, including an ongoing procedure for obtaining input from the individuals and agencies carrying out Head Start programs.

Act 648 a 3 ACTIVITIES - In providing training and technical assistance and for allocating resources for such assistance under this section, the Secretary shall--

Act 648 a 3 A give priority consideration to--Act 648 a 3 A i activities to correct program and management deficiencies identified

through reviews carried out pursuant to section 641A c (including the provision of assistance to local programs in the development of quality improvement plans under section 641A d 2);

Act 648 a 3 A ii assisting Head Start agencies in ensuring the school readiness of children; and

Act 648 a 3 A iii activities that supplement those funded with amounts provided under section 640 a 5 B to address the training and career development needs of classroom staff (including instruction for providing services to children with disabilities, and for activities described in section 1222(d) of the Elementary and Secondary Education Act of 1965), and non-classroom staff, including home visitors and other staff working directly with families, including

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training relating to increasing parent involvement and services designed to increase family literacy and improve parenting skills; and

Act 648 a 3 B to the maximum extent practicable--Act 648 a 3 B i assist Head Start agencies in the development of collaborative initiatives

with States and other entities within the States, to foster effective professional development systems for early childhood education and development services;

Act 648 a 3 B ii provide technical assistance and training, either directly or through a grant, contract, or cooperative agreement with an entity that has experience in the development and operation of successful family literacy services programs, for the purpose of--

Act 648 a 3 B ii I assisting Head Start agencies providing family literacy services, in order to improve the quality of such family literacy services; and

Act 648 a 3 B ii II enabling those Head Start agencies that demonstrate effective provision of family literacy services, based on improved outcomes for children and their parents, to provide technical assistance and training to other Head Start agencies and to service providers that work in collaboration with such agencies to provide family literacy services;

Act 648 a 3 B iii assist Head Start agencies and programs in conducting and participating in communitywide strategic planning and needs assessments, including the needs of homeless children and their families, and in conducting self-assessments;

Act 648 a 3 B iv assist Head Start agencies and programs in developing and implementing full-working-day and full calendar year programs where community need is clearly identified and making the transition to such programs, with particular attention to involving parents and programming for children throughout the day, and assist the agencies and programs in expediting the sharing of information about innovative models for providing full-working-day, full calendar year services for children;

Act 648 a 3 B v assist Head Start agencies in better serving the needs of families with very young children, including providing support and program planning and implementation assistance for Head Start agencies that apply to serve or are serving additional infants and toddlers, in accordance with section 645 a 5;

Act 648 a 3 B vi assist Head Start agencies and programs in the development of sound management practices, including financial management procedures;

Act 648 a 3 B vii assist in efforts to secure and maintain adequate facilities for Head Start programs;

Act 648 a 3 B viii assist Head Start agencies in developing innovative program models, including mobile and home-based programs;

Act 648 a 3 B ix provide support for Head Start agencies (including policy councils and policy committees) that meet the standards described in section 641A a but that have, as documented by the Secretary through reviews conducted

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pursuant to section 641A c, programmatic, quality, and fiscal issues to address;

Act 648 a 3 B x assist Head Start agencies and programs in improving outreach to, increasing program participation of, and improving the quality of services available to meet the unique needs of--

Act 648 a 3 B x I homeless children;Act 648 a 3 B x II limited English proficient children and their families, particularly in

communities that have experienced a large percentage increase in the population of limited English proficient individuals, as measured by the Bureau of the Census; and

Act 648 a 3 B x III children with disabilities, particularly if such program’s enrollment opportunities or funded enrollment for children with disabilities is less than 10%;

Act 648 a 3 B xi assist Head Start agencies and programs to increase the capacity of classroom staff to meet the needs of eligible children in Head Start classrooms that are serving both children with disabilities and children without disabilities;

Act 648 a 3 B xii assist Head Start agencies and programs to address the unique needs of programs located in rural communities, including--

Act 648 a 3 B xii I removing barriers related to the recruitment and retention of Head Start teachers in rural communities;

Act 648 a 3 B xii II developing innovative and effective models of professional development for improving staff qualifications and skills for staff living in rural communities;

Act 648 a 3 B xii III

removing barriers related to outreach efforts to eligible families in rural communities;

Act 648 a 3 B xii IV

removing barriers to parent involvement in Head Start programs in rural communities;

Act 648 a 3 B xii V removing barriers to providing home visiting services in rural communities; and

Act 648 a 3 B xii VI

removing barriers to obtaining health screenings for Head Start participants in rural communities;

Act 648 a 3 B xiii provide training and technical assistance to members of governing bodies, policy councils, and, as appropriate, policy committees, to ensure that the members can fulfill their functions;

Act 648 a 3 B xiv provide activities that help ensure that Head Start programs have qualified staff who can promote prevention of childhood obesity by integrating developmentally appropriate research-based initiatives that stress the importance of physical activity and healthy, nutritional choices in daily classroom and family routines;

Act 648 a 3 B xv assist Indian Head Start agencies to provide on-site and off-site training to

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staff, using approaches that identify and enhance the positive resources and strengths of Indian children and families, to improve parent and family engagement and staff development, particularly with regard to child and family development; and

Act 648 a 3 B xvi assisting Head Start agencies in selecting and using the measures described in section 641A b.

Act 648_b ADDITIONAL SUPPORT - The Secretary shall provide, either directly or through grants, contracts or other arrangements, funds from section 640 a 2 C i II cc to--

Act 648 b 1 support an organization to administer a centralized child development and national assessment program leading to recognized credentials for personnel working in early childhood education and development programs; and

Act 648 b 2 support training for personnel--Act 648 b 2 A providing services to limited English proficient children and their families

(including services to promote the acquisition of the English language);Act 648 b 2 B providing services to children determined to be abused or neglected or

children referred by or receiving child welfare services;Act 648 b 2 C in helping children cope with community violence;Act 648 b 2 D to recognize common health, including mental health, problems in children

for appropriate referral;Act 648 b 2 E to address the needs of children with disabilities and their families;Act 648 b 2 F to address the needs of migrant and seasonal farmworker families; andAct 648 b 2 G to address the needs of homeless families.Act 648_c OUTREACH - The Secretary shall develop and implement a program of

outreach to recruit and train professionals from diverse backgrounds to become Head Start teachers in order to reflect the communities in which Head Start children live and to increase the provision of quality services and instruction to children with diverse backgrounds.

Act 648_d FUNDS TO AGENCIES - Funds made available under section 640 a 2 C i II aa shall be used by a Head Start agency to provide high-quality, sustained, and intensive training and technical assistance as follows:

Act 648 d 1 For 1 or more of the following:Act 648 d 1 A Activities that ensure that Head Start programs meet or exceed the standards

described in section 641A a 1.Act 648 d 1 B Activities that ensure that Head Start programs have adequate numbers of

trained, qualified staff who have skills in working with children and families, including children and families who are limited English proficient and children with disabilities and their families.

Act 648 d 1 C Activities to improve the management and implementation of Head Start services and systems, including direct training for expert consultants

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working with staff.Act 648 d 1 D Activities that help ensure that Head Start programs have qualified staff who

can promote language skills and literacy growth of children and who can provide children with a variety of skills that have been identified as predictive of later reading achievement, school success, and the skills, knowledge, abilities, development, and progress described in section 641A a 1 B ii.

Act 648 d 1 E Activities to improve staff qualifications and to assist with the implementation of career development programs and to encourage the staff to continually improve their skills and expertise, including developing partnerships with programs that recruit, train, place, and support college students in Head Start centers to deliver an innovative early learning program to preschool children.

Act 648 d 1 F Activities that help local programs ensure that the arrangement, condition, and implementation of the learning environments in Head Start programs are conducive to providing effective program services to children and families.

Act 648 d 1 G Activities to provide training necessary to improve the qualifications of Head Start staff and to support staff training, child counseling, health services, and other services necessary to address the needs of children enrolled in Head Start programs, including children from families in crises, children who experience chronic violence or homelessness, children who experience substance abuse in their families, and children under 3 years of age, where applicable.

Act 648 d 1 H Activities to provide classes or in-service-type programs to improve or enhance parenting skills, job skills, and adult and family literacy, including financial literacy, or training to become a classroom aide or bus driver in a Head Start program.

Act 648 d 1 I Additional activities deemed appropriate to the improvement of Head Start programs, as determined by the technical assistance and training plans of the Head Start agencies.

Act 648 d 2 To support enhanced early language and literacy development of children in Head Start programs, and to provide the children with high-quality oral language skills and with environments that are rich in literature in which to acquire language and early literacy skills. Each Head Start agency, in consultation with the State-based training and technical assistance system, as appropriate, shall ensure that--

Act 648 d 2 A all of the agency’s Head Start teachers receive ongoing training in language and emergent literacy (referred to in this subsection as ‘literacy training’), including appropriate curricula and assessment to improve instruction and learning;

Act 648 d 2 B such literacy training shall include training in methods to promote vocabulary development and phonological awareness (including phonemic awareness) in a developmentally, culturally, and linguistically appropriate

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manner and support children’s development in their native language;Act 648 d 2 C the literacy training shall include training in how to work with parents to

enhance positive language and early literacy development at home;Act 648 d 2 D the literacy training shall include specific methods to best address the needs

of children who are limited English proficient;Act 648 d 2 E the literacy training shall include training on how to best address the

language and literacy needs of children with disabilities, including training on how to work with specialists in language development; and

Act 648 d 2 F the literacy training shall be tailored to the early childhood literacy background and experience of the teachers involved; except that funds made available under section 640 a 2 C i shall not be used for long-distance travel expenses for training activities available locally or regionally or for training activities substantially similar to locally or regionally available training activities.

Act 648_e STATE-BASED TRAINING AND TECHNICAL ASSISTANCE SYSTEM - For the purposes of delivering a State-based training and technical assistance system (which may include a consortium of 2 or more States within a region) or a national system in the case of migrant or seasonal Head Start and Indian Head Start programs, as described in section 640 a 2 C i II bb, that will meet the needs of local grantees, as determined by such grantees, and provide high-quality, sustained, and intensive training and technical assistance to Head Start agencies and programs in order to improve their capacity to deliver services that meet or exceed the standards described in section 641A a 1, the Secretary shall--

Act 648 e 1 enter into contracts in each State with 1 or more entities that have a demonstrated expertise in supporting the delivery of high-quality early childhood education and development programs, except that contracts for a consortium of 2 or more States within a geographic region may be entered into if such a system is more appropriate to better meet the needs of local grantees within a region, as determined by such grantees;

Act 648 e 2 ensure that the entities described in subparagraph 1 determine the types of services to be provided through consultation with--

Act 648 e 2 A local Head Start agencies (including Indian Head Start agencies and migrant or seasonal Head Start agencies, as appropriate);

Act 648 e 2 B the State Head Start collaboration office; andAct 648 e 2 C the State Head Start Association;Act 648 e 3 encourage States to supplement the funds authorized in section 640 a 2 C i II

bb with Federal, State, or local funds other than funds made available under this subchapter, to expand training and technical assistance activities beyond Head Start agencies to include other providers of other early childhood education and development programs within a State;

Act 648 e 4 provide a report to the Committee on Education and Labor of the House of

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Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, not later than 90 days after the end of the fiscal year, summarizing the funding for such contracts and the activities carried out thereunder;

Act 648 e 5 periodically evaluate the effectiveness of the delivery of services in each State in promoting program quality; and

Act 648 e 6 ensure that in entering into such contracts as described in paragraph 1, such entities will address the needs of grantees in both urban and rural communities.

Act 648 f INDOOR AIR QUALITY - The Secretary shall consult with appropriate Federal agencies and other experts, as appropriate, on issues of air quality related to children’s health and inform Head Start agencies of existing programs or combination of programs that provide methods for improving indoor air quality.

Act 648 g CAREER ADVANCEMENT PARTNERSHIP PROGRAM.--Act 648 g 1 AUTHORITY - From amounts allocated under section 640 a 2 C the

Secretary is authorized to award demonstration grants, for a period of not less than 5 years, to historically Black colleges and universities, Hispanic-serving institutions, and Tribal Colleges and Universities--

Act 648 g 1 A to implement education programs that increase the number of associate, baccalaureate, and graduate degrees in early childhood education and related fields that are earned by Head Start agency staff members, parents of children served by such agencies, and members of the communities involved;

Act 648 g 1 B to provide assistance for stipends and costs related to tuition, fees, and books for enrolling Head Start agency staff members, parents of children served by such an agency, and members of the communities involved in courses required to complete the degree and certification requirement to become teachers in early childhood education and related fields;

Act 648 g 1 C to develop program curricula to promote high-quality services and instruction to children with diverse backgrounds, including--

Act 648 g 1 C i in the case of historically Black colleges and universities, to help Head Start Agency staff members develop skills and expertise needed to teach in programs serving large numbers of African American children;

Act 648 g 1 C ii in the case of Hispanic-serving institutions, programs to help Head Start Agency staff members develop skills and expertise needed to teach in programs serving large numbers of Hispanic children, including programs to develop the linguistic skills and expertise needed to teach in programs serving a large number of children with limited English proficiency; and

Act 648 g 1 C iii in the case of Tribal Colleges and Universities, to help Head Start Agency staff members develop skills and expertise needed to teach in programs serving large numbers of Indian children, including programs concerning tribal culture and language;

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Act 648 g 1 D to provide other activities to upgrade the skills and qualifications of educational personnel to meet the professional standards in subsection a to better promote high-quality services and instruction to children and parents from populations served by historically Black colleges and universities, Hispanic-serving institutions, or Tribal Colleges and Universities;

Act 648 g 1 E to provide technology literacy programs for Indian Head Start agency staff members and families of children served by such agency; and

Act 648 g 1 F to develop and implement the programs described under subparagraph A in technology-mediated formats, including through such means as distance learning and use of advanced technology, as appropriate.

Act 648 g 2 OTHER ASSISTANCE - The Secretary shall, using resources within the Department of Health and Human Services--

Act 648 g 2 A provide appropriate technical assistance to historically Black colleges and universities, Hispanic-serving institutions, and Tribal Colleges and Universities receiving grants under this section, including coordinating with the White House Initiative on historically Black colleges and universities; and

Act 648 g 2 B ensure that the American Indian Programs Branch of the Office of Head Start of the Administration for Children and Families of the Department of Health and Human Services can effectively administer the programs under this section and provide appropriate technical assistance to Tribal Colleges and Universities under this section.

Act 648 g 3 APPLICATION - Each historically Black college or university, Hispanic-serving institution, or Tribal College or University desiring a grant under this section shall submit an application, in partnership with at least 1 Head Start agency enrolling large numbers of students from the populations served by historically Black colleges and universities, Hispanic-serving institutions, or Tribal Colleges and Universities, to the Secretary, at such time, in such manner, and containing such information as the Secretary may require, including a certification that the institution of higher education has established a formal partnership with 1 or more Head Start agencies for the purposes of conducting the activities described in paragraph 1.

Act 648 g 4 DEFINITIONS - In this subsection:Act 648 g 4 A The term ‘Hispanic-serving institution’ has the meaning given such term in

section 502 of the Higher Education Act of 1965 (20 U.S.C. 1101a).Act 648 g 4 B The term ‘historically Black college or university’ has the meaning given

the term ‘part B institution’ in section 322(2) of the Higher Education Act of 1965 (20 U.S.C. 1061(2)).

Act 648 g 4 C The term ‘Tribal College or University’ has the meaning given such term in section 316(b) of the Higher Education Act of 1965 (20 U.S.C. 1059c(b)).

Act 648 g 5 TEACHING REQUIREMENT - A student at an institution receiving a grant under this subsection who receives assistance under a program funded under this subsection shall teach in a center-based Head Start program for a period

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of time equivalent to the period for which they received assistance or shall repay such assistance.

Act 648A STAFF QUALIFICATIONS AND DEVELOPMENT PDM7BPDM7DPDM7EPDM7I

Act 648A a CLASSROOM TEACHERS.-- PDM7BPDM7I

Act 648A a 1 PROFESSIONAL REQUIREMENTS - The Secretary shall ensure that each Head Start classroom in a center-based program is assigned 1 teacher who has demonstrated competency to perform functions that include--

PDM7B

Act 648A a 1 A planning and implementing learning experiences that advance the intellectual and physical development of children, including improving the readiness of children for school by developing their literacy, phonemic, and print awareness, their understanding and use of language, their understanding and use of increasingly complex and varied vocabulary, their appreciation of books, their understanding of early math and early science, their problem-solving abilities, and their approaches to learning;

PDM7B

Act 648A a 1 B establishing and maintaining a safe, healthy learning environment; PDM7BAct 648A a 1 C supporting the social and emotional development of children; and PDM7BAct 648A a 1 D encouraging the involvement of the families of the children in a Head Start

program and supporting the development of relationships between children and their families.

PDM7B

Act 648A a 2 DEGREE REQUIREMENTS.-- PDM7BAct 648A a 2 A HEAD START TEACHERS - The Secretary shall ensure that not later than

September 30, 2013, at least 50% of Head Start teachers nationwide in center-based programs have--

PDM7B

Act 648A a 2 A i a baccalaureate or advanced degree in early childhood education; or PDM7BAct 648A a 2 A ii a baccalaureate or advanced degree and coursework equivalent to a major

relating to early childhood education, with experience teaching preschool-age children.

PDM7B

Act 648A a 2 B ADDITIONAL STAFF - The Secretary shall ensure that, not later than September 30, 2013, all--

PDM7B

Act 648A a 2 B i Head Start education coordinators, including those that serve as curriculum specialists, nationwide in center-based programs--

PDM7B

Act 648A a 2 B i I have the capacity to offer assistance to other teachers in the implementation and adaptation of curricula to the group and individual needs of children in a Head Start classroom; and

PDM7B

Act 648A a 2 B i II have-- PDM7BAct 648A a 2 B i II aa

a baccalaureate or advanced degree in early childhood education; or PDM7B

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Act 648A a 2 B i II bb

a baccalaureate or advanced degree and coursework equivalent to a major relating to early childhood education, with experience teaching preschool-age children; and

PDM7B

Act 648A a 2 B ii Head Start teaching assistants nationwide in center-based programs have-- PDM7BAct 648A a 2 B ii I at least a child development associate credential; PDM7BAct 648A a 2 B ii II

enrolled in a program leading to an associate or baccalaureate degree; or PDM7B

Act 648A a 2 B ii III

enrolled in a child development associate credential program to be completed within 2 years.

PDM7B

Act 648A a 2 C PROGRESS.-- PDM7BAct 648A a 2 C i IMPLEMENTATION - The Secretary shall-- PDM7BAct 648A a 2 C i I require Head Start agencies to-- PDM7BAct 648A a 2 C i I aa

describe continuing progress each year toward achieving the goals described in sub paragraph s A and B; and

PDM7B

Act 648A a 2 C i I bb

annually submit to the Secretary a report indicating the number and percentage of classroom personnel described in sub paragraph s A and B in center-based programs with child development associate credentials or associate, baccalaureate, or advanced degrees;

PDM7B

Act 648A a 2 C i II compile and submit a summary of all program reports described in subclause I bb to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate; and

PDM7B

Act 648A a 2 C i III

not impose any penalties or sanctions on any individual Head Start agency, program, or staff in the monitoring of local agencies and programs under this subchapter not meeting the requirements of sub paragraph A or B.

PDM7B

Act 648A a 2 D CONSTRUCTION - In this paragraph a reference to a Head Start agency, or its program, services, facility, or personnel, shall not be considered to be a reference to an Early Head Start agency, or its program, services, facility, or personnel.

PDM7B

Act 648A a 3 ALTERNATIVE CREDENTIALING AND DEGREE REQUIREMENTS - The Secretary shall ensure that, for center-based programs, each Head Start classroom that does not have a teacher who meets the qualifications described in clause i or ii of paragraph 2 A is assigned one teacher who has the following during the period specified:

EC1AEC1B

PDM7B

Act 648A a 3 A Through September 30, 2011-- EC1AEC1B

PDM7BAct 648A a 3 A i a child development associate credential that is appropriate to the age of

children being served in center-based programs;EC1AEC1B

PDM7BAct 648A a 3 A ii a State-awarded certificate for preschool teachers that meets or exceeds the EC1A

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requirements for a child development associate credential; EC1BPDM7B

Act 648A a 3 A iii an associate degree in early childhood education; EC1AEC1B

PDM7BAct 648A a 3 A iv an associate degree in a related field and coursework equivalent to a major

relating to early childhood education, with experience teaching preschool-age children; or

EC1AEC1B

PDM7BAct 648A a 3 A v a baccalaureate degree and has been admitted into the Teach For America

program, passed a rigorous early childhood content exam, such as the Praxis II, participated in a Teach For America summer training institute that includes teaching preschool children, and is receiving ongoing professional development and support from Teach For America’s professional staff.

EC1AEC1B

PDM7B

Act 648A a 3 B As of October 1, 2011-- PDM7BAct 648A a 3 B i an associate degree in early childhood education; PDM7BAct 648A a 3 B ii an associate degree in a related field and coursework equivalent to a major

relating to early childhood education, with experience teaching preschool-age children; or

PDM7B

Act 648A a 3 B iii a baccalaureate degree and has been admitted into the Teach For America program, passed a rigorous early childhood content exam, such as the Praxis II, participated in a Teach For America summer training institute that includes teaching preschool children, and is receiving ongoing professional development and support from Teach For America’s professional staff.

PDM7B

Act 648A a 4 WAIVER - On request, the Secretary shall grant-- PDM7BAct 648A a 4 A through September 30, 2011, a 180-day waiver ending on or before

September 30, 2011, of the requirements of paragraph 3 A for a Head Start agency that can demonstrate that the agency has attempted unsuccessfully to recruit an individual who has the qualifications described in any of clauses i through iv of paragraph 3 A with respect to an individual who--

PDM7B

Act 648A a 4 A i is enrolled in a program that grants a credential, certificate, or degree described in clauses i through iv of paragraph 3 A; and

PDM7B

Act 648A a 4 A ii will receive such credential, certificate, or degree under the terms of such program not later than 180 days after beginning employment as a teacher with such agency; and

PDM7B

Act 648A a 4 B as of October 1, 2011, a 3-year waiver of the requirements of paragraph 3 B for a Head Start agency that can demonstrate that--

PDM7B

Act 648A a 4 B i the agency has attempted unsuccessfully to recruit an individual who has the qualifications described in clause i or ii of such paragraph, with respect to an individual who is enrolled in a program that grants a degree described in clause i or ii of such paragraph and will receive such degree in a reasonable time; and

PDM7B

Act 648A a 4 B ii each Head Start classroom has a teacher who has, at a minimum-- PDM7B

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Act 648A a 4 B ii I a child development associate credential that is appropriate to the age of children being served in center-based programs; or

PDM7B

Act 648A a 4 B ii II

a State-awarded certificate for preschool teachers that meets or exceeds the requirements for a child development associate credential.

PDM7B

Act 648A a 5 TEACHER IN-SERVICE REQUIREMENT - Each Head Start teacher shall attend not less than 15 clock hours of professional development per year. Such professional development shall be high-quality, sustained, intensive, and classroom-focused in order to have a positive and lasting impact on classroom instruction and the teacher’s performance in the classroom, and regularly evaluated by the program for effectiveness.

PDM7BPDM7I

Act 648A a 6 SERVICE REQUIREMENTS - The Secretary shall establish requirements to ensure that, in order to enable Head Start agencies to comply with the requirements of paragraph 2 A, individuals who receive financial assistance under this subchapter to pursue a degree described in paragraph 2 A shall--

PDM7B

Act 648A a 6 A teach or work in a Head Start program for a minimum of 3 years after receiving the degree; or

PDM7B

Act 648A a 6 B repay the total or a prorated amount of the financial assistance received based on the length of service completed after receiving the degree.

PDM7B

Act 648A a 7 USE OF FUNDS - The Secretary shall require that any Federal funds provided directly or indirectly to comply with paragraph 2 A shall be used toward degrees awarded by an institution of higher education, as defined by section 101 or 102 of the Higher Education Act of 1965 (20 U.S.C. 1001, 1002).

PDM7B

Act 648A b MENTOR TEACHERS.-- PDM7BAct 648A b 1 DEFINITION; FUNCTION - For purposes of this subsection, the term

“mentor teacher” means an individual responsible for observing and assessing the classroom activities of a Head Start program and providing on-the-job guidance and training to the Head Start program staff and volunteers, in order to improve the qualifications and training of classroom staff, to maintain high quality education services, and to promote career development, in Head Start programs.

PDM7B

Act 648A b 2 REQUIREMENT - In order to assist Head Start agencies in establishing positions for mentor teachers, the Secretary shall--

PDM7B

Act 648A b 2 A provide technical assistance and training to enable Head Start agencies to establish such positions;

PDM7B

Act 648A b 2 B give priority consideration, in providing assistance pursuant to subparagraph A, to Head Start programs that have substantial numbers of new classroom staff or that are experiencing difficulty in meeting applicable education standards;

PDM7B

Act 648A b 2 C encourage Head Start programs to give priority consideration for such positions to Head Start teachers at the appropriate level of career advancement in such programs; and

PDM7B

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Act 648A b 2 D promote the development of model curricula, designed to ensure the attainment of appropriate competencies of mentor teachers in Head Start programs.

PDM7B

Act 648A c FAMILY SERVICE WORKERS - To improve the quality and effectiveness of staff providing in-home and other services (including needs assessment, development of service plans, family advocacy, and coordination of service delivery) to families of children participating in Head Start programs, the Secretary, in coordination with concerned public and private agencies and organizations examining the issues of standards and training for family service workers, shall--

PDM7B

Act 648A c 1 review and, as necessary, revise or develop new qualification standards for Head Start staff providing such services;

PDM7B

Act 648A c 2 review, and as necessary, revise or develop maximum caseload requirements, as suggested by best practices;

PDM7B

Act 648A c 3 promote the development of model curricula (on subjects including parenting training and family literacy) designed to ensure the attainment of appropriate competencies by individuals working or planning to work in the field of early childhood and family services;

PDM7B

Act 648A c 4 promote the establishment of a credential that indicates attainment of the competencies and that is accepted nationwide; and

PDM7B

Act 648A c 5 promote the use of appropriate strategies to meet the needs of special populations (including populations of limited English proficient children).

PDM7B

Act 648A d HEAD START FELLOWSHIPS.-- PDM7BAct 648A d 1 AUTHORITY - The Secretary may establish a program of fellowships, to be

known as ‘Head Start Fellowships’, in accordance with this subsection. The Secretary may award the fellowships to individuals, to be known as ‘Head Start Fellows’, who are staff in local Head Start programs or other individuals working in the field of child development and family services.

PDM7B

Act 648A d 2 PURPOSE - The fellowship program established under this subsection shall be designed to enhance the ability of Head Start Fellows to make significant contributions to programs authorized under this subchapter, by providing opportunities to expand their knowledge and experience through exposure to activities, issues, resources, and new approaches, in the field of child development and family services.

PDM7B

Act 648A d 3 ASSIGNMENTS OF FELLOWS.-- PDM7BAct 648A d 3 A PLACEMENT SITES - Fellowship positions under the fellowship program

may be located (subject to sub paragraph s B and C)--PDM7B

Act 648A d 3 A i in agencies of the Department of Health and Human Services administering programs authorized under this subchapter (in national or regional offices of such agencies);

PDM7B

Act 648A d 3 A ii in local Head Start agencies and programs; PDM7BAct 648A d 3 A iii in institutions of higher education; PDM7B

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Act 648A d 3 A iv in public or private entities and organizations concerned with services to children and families; and

PDM7B

Act 648A d 3 A v in other appropriate settings PDM7BAct 648A d 3 B LIMITATION FOR FELLOWS OTHER THAN HEAD START

EMPLOYEES - A Head Start Fellow who is not an employee of a local Head Start agency or program may be placed only in a fellowship position located in an agency or program specified in clause i or ii of subparagraph A.

PDM7B

Act 648A d 3 C NO PLACEMENT IN LOBBYING ORGANIZATIONS - Head Start Fellowship positions may not be located in any agency (including a center) whose primary purpose, or one of whose major purposes, is to influence Federal, State, or local legislation.

PDM7B

Act 648A d 4 SELECTION OF FELLOWS - Head Start Fellowships shall be awarded on a competitive basis to individuals (other than Federal employees) selected from among applicants who are working, on the date of application, in local Head Start programs or otherwise working in the field of child development and children and family services.

PDM7B

Act 648A d 5 DURATION - Head Start Fellowships shall be for terms of 1 year, and may be renewed for a term of 1 additional year.

PDM7B

Act 648A d 6 AUTHORIZED EXPENDITURES - From amounts made available under section 640 a 2 E, the Secretary is authorized to make expenditures of not to exceed $1,000,000 for any fiscal year, for stipends and other reasonable expenses of the fellowship program.

PDM7B

Act 648A d 7 STATUS OF FELLOWS - Except as otherwise provided in this paragraph, Head Start Fellows shall not be considered to be employees or otherwise in the service or employment of the Federal Government. Head Start Fellows shall be considered to be employees for purposes of compensation for injuries under chapter 81 of title 5, United States Code. Head Start Fellows assigned to positions located in agencies specified in paragraph 3 A i shall be considered employees in the executive branch of the Federal Government for the purposes of chapter 11 of title 18, United States Code, and for purposes of any administrative standards of conduct applicable to the employees of the agency to which they are assigned.

PDM7B

Act 648A d 8 REGULATIONS - The Secretary shall promulgate regulations to carry out this subsection.

PDM7B

Act 648A e MODEL STAFFING PLANS - Not later than 1 year after the date of enactment of this subsection, the Secretary, in consultation with appropriate public agencies, private agencies, and organizations and with individuals with expertise in the field of children and family services, shall develop model staffing plans to provide guidance to local Head Start agencies and programs on the numbers, types, responsibilities, and qualifications of staff required to operate a Head Start program.

PDM7B

Act 648A f PROFESSIONAL DEVELOPMENT PLANS - Each Head Start agency and PDM7B

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program shall create, in consultation with an employee, a professional development plan for all full-time Head Start employees who provide direct services to children and shall ensure that such plans are regularly evaluated for their impact on teacher and staff effectiveness. The agency and the employee shall implement the plan to the extent feasible and practicable.

PDM7D

Act 648A g STAFF RECRUITMENT AND SELECTION PROCEDURES - Before a Head Start agency employs an individual, such agency shall--

PDM7BPDM7E

Act 648A g 1 conduct an interview of such individual; PDM7BAct 648A g 2 verify the personal and employment references provided by such individual;

andPDM7B

Act 648A g 3 obtain-- PDM7BPDM7E

Act 648A g 3 A a State, tribal, or Federal criminal record check covering all jurisdictions where the grantee provides Head Start services to children;

PDM7BPDM7E

Act 648A g 3 B a State, tribal, or Federal criminal record check as required by the law of the jurisdiction where the grantee provides Head Start services; or

PDM7BPDM7E

Act 648A g 3 C a criminal record check as otherwise required by Federal law. PDM7BPDM7E

Act 649 RESEARCH, DEMONSTRATIONS, AND EVALUATIONAct 649 a IN GENERAL.--Act 649 a 1 REQUIREMENT; GENERAL PURPOSES - The Secretary shall carry out a

continuing program of research, demonstration, and evaluation activities, in order to--

Act 649 a 1 A foster continuous improvement in the quality of the Head Start programs under this subchapter and in their effectiveness in enabling participating children and their families to succeed in school and otherwise; and

Act 649 a 1 B use the Head Start programs to develop, test, and disseminate new ideas based on existing scientifically valid research, for addressing the needs of low-income preschool children (including children with disabilities, homeless children, children who have been abused or neglected, and children in foster care) and their families and communities (including demonstrations of innovative non-center-based program models such as home-based and mobile programs), and otherwise to further the purposes of this subchapter.

Act 649 a 2 PLAN - The Secretary shall develop, and periodically update, a plan governing the research, demonstration, and evaluation activities under this section.

Act 649 b CONDUCT OF RESEARCH, DEMONSTRATION, AND EVALUATION ACTIVITIES - The Secretary, in order to conduct research, demonstration, and evaluation activities under this section--

Act 649 b 1 may carry out such activities directly, or through grants to, or contracts or

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cooperative agreements with, public or private entities;Act 649 b 2 shall, to the extent appropriate, undertake such activities in collaboration

with other Federal agencies, and with non-Federal agencies, conducting similar activities;

Act 649 b 3 shall ensure that evaluation of activities in a specific program or project is conducted by persons not directly involved in the operation of such program or project;

Act 649 b 4 may require Head Start agencies to provide for independent evaluations;Act 649 b 5 may approve, in appropriate cases, community-based cooperative research

and evaluation efforts to enable Head Start programs to collaborate with qualified researchers not directly involved in program administration or operation; and

Act 649 b 6 may collaborate with organizations with expertise in inclusive educational strategies for preschoolers with disabilities.

Act 649 c CONSULTATION AND COLLABORATION - In carrying out activities under this section, the Secretary shall--

Act 649 c 1 consult with--Act 649 c 1 A individuals from relevant academic disciplines;Act 649 c 1 B individuals who are involved in the operation of Head Start programs and

individuals who are involved in the operation of other child and family service programs; and

Act 649 c 1 C individuals from other Federal agencies, and individuals from organizations, involved with children and families, ensuring that the individuals described in this subparagraph reflect the multicultural nature of the children and families served by the Head Start programs and the multidisciplinary nature of the Head Start programs;

Act 649 c 2 whenever feasible and appropriate, obtain the views of persons participating in and served by programs and projects assisted under this subchapter with respect to activities under this section; and

Act 649 c 3 establish, to the extent appropriate, working relationships with the faculties of institutions of higher education, as defined in section 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)), located in the area in which any evaluation under this section is being conducted, unless there is no such institution of higher education willing and able to participate in such evaluation.

Act 649 d SPECIFIC OBJECTIVES - The research, demonstration, and evaluation activities under this subchapter shall include components designed to--

Act 649 d 1 permit ongoing assessment of the quality and effectiveness of the programs under this subchapter;

Act 649 d 2 establish evaluation methods that measure the effectiveness and impact of family literacy services program models, including models for the

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integration of family literacy services with Head Start services;Act 649 d 3 contribute to developing knowledge concerning factors associated with the

quality and effectiveness of Head Start programs and in identifying ways in which services provided under this subchapter may be improved;

Act 649 d 4 assist in developing knowledge concerning the factors that promote or inhibit healthy development and effective functioning of children and their families both during and following participation in a Head Start program;

Act 649 d 5 A identify successful strategies that promote good oral health and provide effective linkages to quality dental services through pediatric dental referral networks, for infants and toddlers participating in Early Head Start programs and children participating in other Head Start programs; and

Act 649 d 5 B identify successful strategies that promote good vision health through vision screenings for such infants, toddlers, and children, and referrals for appropriate follow-up care for those identified as having a vision problem;

Act 649 d 6 permit comparisons of children and families participating in Head Start programs with children and families receiving other child care, early childhood education and development or services programs and with other appropriate control groups;

Act 649 d 7 contribute to understanding the characteristics and needs of population groups eligible for services provided under this subchapter and the impact of such services on the individuals served and the communities in which such services are provided;

Act 649 d 8 provide for disseminating and promoting the use of the findings from such research, demonstration, and evaluation activities;

Act 649 d 9 promote exploration of areas in which knowledge is insufficient, and that will otherwise contribute to fulfilling the purposes of this subchapter; and

Act 649 d 10 A contribute to understanding the impact of Head Start services delivered in classrooms which include both children with disabilities and children without disabilities, on all of the children; and

Act 649 d 10 B disseminate promising practices for increasing the availability and quality of such services and such classrooms.

Act 649 e LONGITUDINAL STUDIES - In developing priorities for research, demonstration, and evaluation activities under this section, the Secretary shall give special consideration to longitudinal studies that--

Act 649 e 1 examine the developmental progress of children and their families both during and following participation in a Head Start program, including the examination of factors that contribute to or detract from such progress;

Act 649 e 2 examine factors related to improving the quality of the Head Start programs and the preparation the programs provide for children and their families to function effectively in schools and other settings in the years following participation in such a program; and

Act 649 e 3 as appropriate, permit comparison of children and families participating in

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Head Start programs with children and families receiving other early childhood education and development services or programs, and with other appropriate control groups.

Act 649 f OWNERSHIP OF RESULTS - The Secretary shall take necessary steps to ensure that all studies, reports, proposals, and data produced or developed with Federal funds under this subchapter shall become the property of the United States.

Act 649 g NATIONAL HEAD START IMPACT RESEARCH.--Act 649 g 1 EXPERT PANEL.--Act 649 g 1 A IN GENERAL - The Secretary shall appoint an independent panel

consisting of experts in program evaluation and research, education, and early childhood programs--

Act 649 g 1 A i to review, and make recommendations on, the design and plan for the research (whether conducted as a single assessment or as a series of assessments) described in paragraph 2, within 1 year after the date of enactment of the Coats Human Services Reauthorization Act of 1998;

Act 649 g 1 A ii to maintain and advise the Secretary regarding the progress of the research; and

Act 649 g 1 A iii to comment, if the panel so desires, on the interim and final research reports submitted under paragraph 7.

Act 649 g 1 B TRAVEL EXPENSES - The members of the panel shall not receive compensation for the performance of services for the panel, but shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the panel. Notwithstanding section 1342 of title 31, United States Code, the Secretary may accept the voluntary and uncompensated services of members of the panel.

Act 649 g 2 GENERAL AUTHORITY - After reviewing the recommendations of the expert panel, the Secretary shall make a grant to, or enter into a contract or cooperative agreement with an organization to conduct independent research that provides a national analysis of the impact of Head Start programs. The Secretary shall ensure that the organization shall have expertise in program evaluation, and research, education, and early childhood programs.

Act 649 g 3 DESIGNS AND TECHNIQUES - The Secretary shall ensure that the research uses rigorous methodological designs and techniques (based on the recommendations of the expert panel), including longitudinal designs, control groups, nationally recognized standardized measures, and random selection and assignment, as appropriate. The Secretary may provide that the research shall be conducted as a single comprehensive assessment or as a group of coordinated assessments designed to provide, when taken together, a national analysis of the impact of Head Start programs.

Act 649 g 4 PROGRAMS - The Secretary shall ensure that the research focuses

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primarily on Head Start programs that operate in the 50 States, the Commonwealth of Puerto Rico, or the District of Columbia and that do not specifically target special populations.

Act 649 g 5 ANALYSIS - The Secretary shall ensure that the organization conducting the research--

Act 649 g 5 A i determines if, overall, the Head Start programs have impacts consistent with their primary goal of increasing the social competence of children, by increasing the everyday effectiveness of the children in dealing with their present environments and future responsibilities, and increasing their school readiness;

Act 649 g 5 A ii considers whether the Head Start programs--Act 649 g 5 A ii I enhance the growth and development of children in cognitive, emotional,

and physical health areas;Act 649 g 5 A ii II strengthen families as the primary nurturers of their children; andAct 649 g 5 A ii III ensure that children attain school readiness; andAct 649 g 5 A iii examines--Act 649 g 5 A iii I the impact of the Head Start programs on increasing access of children to

such services as educational, health, and nutritional services, and linking children and families to needed community services; and

Act 649 g 5 A iii II how receipt of services described in subclause I enriches the lives of children and families participating in Head Start programs;

Act 649 g 5 B examines the impact of Head Start programs on participants on the date the participants leave Head Start programs, at the end of kindergarten and at the end of first grade (whether in public or private school), by examining a variety of factors, including educational achievement, referrals for special education or remedial course work, and absenteeism;

Act 649 g 5 C makes use of random selection from the population of all Head Start programs described in paragraph 4 in selecting programs for inclusion in the research; and

Act 649 g 5 D includes comparisons of individuals who participate in Head Start programs with control groups (including comparison groups) composed of--

Act 649 g 5 D i individuals who participate in other early childhood programs (such as public or private preschool programs and day care); and

Act 649 g 5 D ii individuals who do not participate in any other early childhood program.Act 649 g 6 CONSIDERATION OF SOURCES OF VARIATION - In designing the

research, the Secretary shall, to the extent practicable, consider addressing possible sources of variation in impact of Head Start programs, including variations in impact related to such factors as--

Act 649 g 6 A Head Start program operations;Act 649 g 6 B Head Start program quality;

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Act 649 g 6 C the length of time a child attends a Head Start program;Act 649 g 6 D the age of the child on entering the Head Start program;Act 649 g 6 E the type of organization (such as a local educational agency or a community

action agency) providing services for the Head Start program;Act 649 g 6 F the number of hours and days of program operation of the Head Start

program (such as whether the program is a full-working-day, full calendar year program, a part-day program, or a part-year program); and

Act 649 g 6 G other characteristics and features of the Head Start program (such as geographic location, location in an urban or a rural service area, or participant characteristics), as appropriate.

Act 649 g 7 REPORTSAct 649 g 7 A SUBMISSION OF INTERIM REPORTS - The organization shall prepare

and submit to the Secretary two interim reports on the research. The first interim report shall describe the design of the research, and the rationale for the design, including a description of how potential sources of variation in impact of Head Start programs have been considered in designing the research. The second interim report shall describe the status of the research and preliminary findings of the research, as appropriate.

Act 649 g 7 B SUBMISSION OF FINAL REPORT - The organization shall prepare and submit to the Secretary a final report containing the findings of the research.

Act 649 g 7 C TRANSMITTAL OF REPORT TO CONGRESS - Not later than September 30, 2009, the Secretary shall transmit the final report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate.

Act 649 g 8 DEFINITION - In this subsection, the term ‘impact’, used with respect to a Head Start program, means a difference in an outcome for a participant in the program that would not have occurred without the participation in the program.

Act 649 h LIMITED ENGLISH PROFICIENT CHILDREN.--Act 649 h 1 STUDY - Not later than 1 year after the date of enactment of the Improving

Head Start for School Readiness Act of 2007, the Secretary shall conduct a study on the status of limited English proficient children and their families participating in Head Start programs (including Early Head Start programs).

Act 649 h 2 REPORT - The Secretary shall prepare and submit to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, not later than September 30, 2010, a report containing the results of the study, including information on--

Act 649 h 2 A the demographics of limited English proficient children from birth through age 5, including the number of such children receiving Head Start services and Early Head Start services, and the geographic distribution of children described in this subparagraph;

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Act 649 h 2 B the nature of the Head Start services and of the Early Head Start services provided to limited English proficient children and their families, including the types, content, duration, intensity, and costs of family services, language assistance, and educational services;

Act 649 h 2 C procedures in Head Start programs and Early Head Start programs for the assessment of language needs and the transition of limited English proficient children to kindergarten, including the extent to which such programs meet the requirements of section 642A for limited English proficient children;

Act 649 h 2 D the qualifications and training provided to Head Start teachers and Early Head Start teachers who serve limited English proficient children and their families;

Act 649 h 2 E the languages in which Head Start teachers and Early Head Start teachers are fluent, in relation to the population, and instructional needs, of the children served;

Act 649 h 2 F the rate of progress made by limited English proficient children and their families in Head Start programs and in Early Head Start programs, including--

Act 649 h 2 F i the rate of progress made by limited English proficient children toward meeting the additional educational standards described in section 641A a 1 B ii while enrolled in such programs;

Act 649 h 2 F ii a description of the type of assessment or assessments used to determine the rate of progress made by limited English proficient children;

Act 649 h 2 F iii the correlation between such progress and the type and quality of instruction and educational programs provided to limited English proficient children; and

Act 649 h 2 F iv the correlation between such progress and the health and family services provided by such programs to limited English proficient children and their families; and

Act 649 h 2 G the extent to which Head Start programs and Early Head Start programs make use of funds under section 640 a 2 D to improve the quality of such services provided to limited English proficient children and their families.

Act 649 i RESEARCH AND EVALUATION ACTIVITIES RELEVANT TO DIVERSE COMMUNITIES - For purposes of conducting the study described in subsection h, activities described in section 640 l 5 A [sic], and other research and evaluation activities relevant to limited English proficient children and their families, migrant and seasonal farmworker families, and other families from diverse populations served by Head Start programs, the Secretary shall award, on a competitive basis, funds from amounts made available under section 640 a 2 D to 1 or more organizations with a demonstrated capacity for serving and studying the populations involved.

Act 649 j REVIEW OF ASSESSMENTS.--Act 649 j 1 APPLICATION OF STUDY - When the study on Developmental Outcomes

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and Assessments for Young Children by the National Academy of Sciences is made available to the Secretary, the Secretary shall--

Act 649 j 1 A integrate the results of the study, as appropriate and in accordance with paragraph 2 and 3, into each assessment used in Head Start programs; and

Act 649 j 1 B use the results of the study to develop, inform, and revise as appropriate the standards and measures described in section 641A, consistent with section 641A a 2 C ii.

Act 649 j 2 INFORM AND REVISE - In informing and revising any assessment used in the Head Start programs, the Secretary shall--

Act 649 j 2 A receive recommendations from the Panel on Developmental Outcomes and Assessments for Young Children of the National Academy of Sciences; and

Act 649 j 2 B with respect to the development or refinement of such assessment, ensure--Act 649 j 2 B i consistency with relevant, nationally recognized professional and technical

standards;Act 649 j 2 B ii validity and reliability for all purposes for which assessments under this

subchapter are designed and used;Act 649 j 2 B iii developmental and linguistic appropriateness of such assessments for

children assessed, including children who are limited English proficient; andAct 649 j 2 B iv that the results can be used to improve the quality of, accountability of, and

training and technical assistance in Head Start programs.Act 649 j 3 ADDITIONAL REQUIREMENTS - The Secretary, in carrying out the

process described in paragraph 2, shall ensure that--Act 649 j 3 A staff administering any assessments under this subchapter have received

appropriate training to administer such assessments;Act 649 j 3 B appropriate accommodations for children with disabilities and children who

are limited English proficient are made;Act 649 j 3 C the English and Spanish (and any other language, as appropriate) forms of

such assessments are valid and reliable in the languages in which they are administered; and

Act 649 j 3 D such assessments are not used to exclude children from Head Start programs.

Act 649 j 4 SUSPENDED IMPLEMENTATION OF NATIONAL REPORTING SYSTEM - The Secretary shall suspend implementation and terminate further development and use of the National Reporting System.

Act 649 k INDIAN HEAD START STUDY - The Secretary shall--Act 649 k 1 work in collaboration with the Head Start agencies that carry out Indian

Head Start programs, the Indian Head Start collaboration director, and other appropriate entities, including tribal governments and the National Indian Head Start Directors Association--

Act 649 k 1 A to undertake a study or set of studies designed to focus on the American

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Indian and Alaska Native Head Start-eligible population, with a focus on issues such as curriculum development, availability and need for services, appropriate research methodologies and measures for these populations, and best practices for teaching and educating American Indian and Alaska Native Head Start Children;

Act 649 k 1 B to accurately determine the number of children nationwide who are eligible to participate in Indian Head Start programs each year;

Act 649 k 1 C to document how many of these children are receiving Head Start services each year;

Act 649 k 1 D to the extent practicable, to ensure that access to Indian Head Start programs for eligible children is comparable to access to other Head Start programs for other eligible children; and

Act 649 k 1 E to make the funding decisions required in section 640 a 4 D ii, after completion of the studies required in that section, taking into account--

Act 649 k 1 E i the Federal government’s unique trust responsibility to American Indians and Alaska Natives;

Act 649 k 1 E ii limitations faced by tribal communities in accessing non-Federal sources of funding to supplement Federal funding for early childhood programs; and

Act 649 k 1 E iii other factors that uniquely and adversely impact children in American Indian and Alaska Native communities such as highly elevated poverty, unemployment and violent crime rates, as well as depressed levels of educational achievement and limited access to non-Federal health, social and educational resources;

Act 649 k 2 in carrying out paragraph 1, consult with the Secretary of Education about the Department of Education’s systems for collecting and reporting data about, and maintaining records on, American Indian and Alaska Native students;

Act 649 k 3 not later than 9 months after the effective date of this subsection, publish in the Federal Register a notice of how the Secretary plans to carry out paragraph 1 and shall provide a period for public comment. To the extent practicable, the Secretary shall consider comments received before submitting a report to the Congress;

Act 649 k 4 not later than 1 year after the effective date of this subsection, submit a report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, detailing how the Department of Health and Human Services plans to carry out paragraph 1;

Act 649 k 5 through regulation, ensure the confidentiality of any personally identifiable data, information, and records collected or maintained by the Secretary, by Head Start agencies that carry out Indian Head Start programs, and by State Directors of Head Start Collaboration, by the Indian Head Start Collaboration Project Director and by other appropriate entities pursuant to this subsection (such regulations shall provide the policies, protections, and

270



rights equivalent to those provided a parent, student, or educational agency or institution under section 444 of the General Education Provisions Act); and

Act 649 k 6 ensure that nothing in this subsection shall be construed to authorize the development of a nationwide database of personally identifiable information on individuals involved in studies or other collections of data under this subsection.

Act 649 l MIGRANT AND SEASONAL HEAD START PROGRAM STUDY.--Act 649 l 1 DATA - In order to increase access to Head Start services for children of

migrant and seasonal farmworkers, the Secretary shall work in collaboration with providers of migrant and seasonal Head Start programs, the Secretary of Agriculture, the Secretary of Labor, the Bureau of Migrant Health, and the Secretary of Education to--

Act 649 l 1 A collect, report, and share data, within a coordinated system, on children of migrant and seasonal farmworkers and their families, including health records and educational documents of such children, in order to adequately account for the number of children of migrant and seasonal farmworkers who are eligible for Head Start services and determine how many of such children receive the services; and

Act 649 l 1 B identify barriers that prevent children of migrant and seasonal farmworkers who are eligible for Head Start services from accessing Head Start services, and develop a plan for eliminating such barriers, including certain requirements relating to tracking, health records, and educational documents, and increasing enrollment.

Act 649 l 2 PUBLICATION OF PLAN - Not later than 1 year after the date of enactment of the Improving Head Start for School Readiness Act of 2007, the Secretary shall publish in the Federal Register a notice about how the Secretary plans to implement the activities identified in paragraph 1 and shall provide a period for public comment. To the extent practicable, the Secretary shall consider comments received before implementing any of the activities identified in paragraph 1.

Act 649 l 3 REPORT - Not later than 18 months after the date of enactment of the Improving Head Start for School Readiness Act of 2007, and annually thereafter, the Secretary shall submit a report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate detailing how the Secretary plans to implement the activities identified in paragraph 1, including the progress made in reaching out to and serving eligible children of migrant and seasonal farmworkers, and information on States where such children are still underserved.

Act 649 l 4 PROTECTION OF CONFIDENTIALITY - The Secretary shall, through regulation, ensure the protection of the confidentiality of any personally identifiable data, information, and records collected or maintained by the Secretary, by Head Start agencies that carry out migrant or seasonal Head

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Start programs, by the State director of Head Start Collaboration, and by the Migrant and Seasonal Farmworker Collaboration project Director (such regulations shall provide the policies, protections, and rights equivalent to those provided a parent, student, or educational agency or institution under section 444 of the General Education Provisions Act (20 U.S.C. 1232g)).

Act 649 l 5 RULE OF CONSTRUCTION - Nothing in this subsection shall be construed to authorize the development of a nationwide database of personally identifiable data, information, or records on individuals involved in studies or other collections of data under this subsection.

Act 649 m PROGRAM EMERGENCY PREPAREDNESS.--Act 649 m 1 PURPOSE - The purpose of this subsection is to evaluate the emergency

preparedness of the Head Start programs, including Early Head Start programs, and make recommendations for how Head Start shall enhance its readiness to respond to an emergency.

Act 649 m 2 STUDY - The Secretary shall evaluate the Federal, State, and local preparedness of Head Start programs, including Early Head Start programs, to respond appropriately in the event of a large-scale emergency, such as the hurricanes Katrina, Rita, and Wilma, the terrorist attacks of September 11, 2001, or other incidents where assistance may be warranted under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

Act 649 m 3 REPORT TO CONGRESS - Not later than 18 months after the date of the enactment of the Improving Head Start for School Readiness Act of 2007, the Secretary shall prepare and submit to Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate a report containing the results of the evaluation required under paragraph 2, including--

Act 649 m 3 A recommendations for improvements to Federal, State, and local preparedness and response capabilities to large-scale emergencies, including those that were developed in response to hurricanes Katrina, Rita, and Wilma, as they relate to Head Start programs, including Early Head Start programs, and the Secretary’s plan to implement such recommendations;

Act 649 m 3 B an evaluation of the procedures for informing families of children in Head Start programs about the program protocols for response to a large-scale emergency, including procedures for communicating with such families in the event of a large-scale emergency;

Act 649 m 3 C an evaluation of such procedures for staff training on State and local evacuation and emergency protocols; and

Act 649 m 3 D an evaluation of procedures for Head Start agencies and the Secretary to coordinate with appropriate Federal, State, and local emergency management agencies in the event of a large scale emergency and recommendations to improve such procedures.

Act 650 REPORTS

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Act 650 a STATUS OF CHILDREN - At least once during every 2-year period, the Secretary shall prepare and submit, to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, a report concerning the status of children (including children with disabilities, limited English proficient children, homeless children, children in foster care, and children participating in Indian Head Start programs and migrant or seasonal Head Start programs) in Head Start programs, including the number of children and the services being provided to such children. Such report shall include--

Act 650 a 1 a statement for the then most recently concluded fiscal year specifying--Act 650 a 1 A the amount of funds received by Head Start agencies designated under

section 641 to provide Head Start services in a period before such fiscal year; and

Act 650 a 1 B the amount of funds received by Head Start agencies newly designated under section 641 to provide such services in such fiscal year, and information on the number of children served under this subsection, disaggregated by type of eligibility criterion;

Act 650 a 2 a description of the distribution of Head Start services relative to the distribution of children who are eligible to participate in Head Start programs, including geographic distribution within States;

Act 650 a 3 a statement identifying how funds made available under section 640 a were distributed and used at national, regional, and local levels;

Act 650 a 4 a statement specifying the amount of funds provided by the State, and by local sources, to carry out Head Start programs;

Act 650 a 5 cost per child and how such cost varies by region;Act 650 a 6 a description of the level and nature of participation of parents in Head Start

programs as volunteers and in other capacities;Act 650 a 7 information concerning Head Start staff, including salaries, education,

training, experience, and staff turnover;Act 650 a 8 information concerning children participating in programs that receive Head

Start funding, including information on family income, racial and ethnic background, homelessness, whether the child is in foster care or was referred by a child welfare agency, disability, and receipt of benefits under part A of title IV of the Social Security Act;

Act 650 a 9 the use and source of funds to extend Head Start services to operate full-day and year round;

Act 650 a 10 using data from the monitoring conducted under section 641A c--Act 650 a 10 A a description of the extent to which programs funded under this subchapter

comply with performance standards and regulations in effect under this subchapter;

Act 650 a 10 B a description of the types and conditions of facilities in which such programs are located;

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Act 650 a 10 C the types of organizations that receive Head Start funds under such programs; and

Act 650 a 10 D the number of children served under each program option;Act 650 a 11 the information contained in the documents entitled “Program information

Report” and “Head Start Cost Analyses System” (or any document similar to either), prepared with respect to Head Start programs;

Act 650 a 12 a description of the types of services provided to children and their families, both on-site and through referrals, including health, mental health, dental care, vision care, parenting education, physical fitness, and literacy training;

Act 650 a 13 a summary of information concerning the research, demonstration, and evaluation activities conducted under section 649, including--

Act 650 a 13 A a status report on ongoing activities; andAct 650 a 13 B results, conclusions, and recommendations, not included in any previous

report, based on completed activities; andAct 650 a 14 a study of the delivery of Head Start programs to Indian children living on

and near Indian reservations, to children of Alaska Natives, and to children of migrant and seasonal farmworker families.Promptly after submitting such report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, the Secretary shall publish in the Federal Register a notice indicating that such report is available to the public and specifying how such report may be obtained.

Act 650 b FACILITIES - At least once during every 5-year period, the Secretary shall prepare and submit, to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, a report concerning the condition, location, and ownership of facilities used, or available to be used, by Indian Head Start agencies (including Alaska Native Head Start agencies) and Native Hawaiian Head Start agencies.

Act 650 c FISCAL PROTOCOL.--Act 650 c 1 IN GENERAL - The Secretary shall conduct an annual review to assess

whether the design and implementation of the triennial reviews described in section 641A c include compliance procedures that provide reasonable assurances that Head Start agencies are complying with applicable fiscal laws and regulations.

Act 650 c 2 REPORT - Not later than 30 days after the date the Secretary completes the annual review under paragraph 1, the Secretary shall report the findings and conclusions of the annual review to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate.

Act 650 d DISABILITY-RELATED SERVICES.--Act 650 d 1 IN GENERAL - The Secretary shall track the provision of disability-related

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services for children, in order to--Act 650 d 1 A determine whether Head Start agencies are making timely referrals to the

State or local agency responsible for providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.);

Act 650 d 1 B identify barriers to timely evaluations and eligibility determinations by the State or local agency responsible for providing services under section 619 or part C of the Individuals with Disabilities Education Act [=300.800]; and

Act 650 d 1 C determine under what circumstances and for what length of time Head Start agencies are providing disability-related services for children who have not been determined under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) to be children with disabilities.

Act 650 d 2 REPORT - Not later than 1 year after the date of enactment of the Improving Head Start for School Readiness Act of 2007, the Secretary shall provide a report to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate on the activities described in paragraph 1.

Act 650 e EVALUATION AND RECOMMENDATIONS REGARDING OBESITY PREVENTION - Not later than 1 year after the date of enactment of the Improving Head Start for School Readiness Act of 2007 the Secretary shall submit to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate a report on the Secretary’s progress in assisting program efforts to prevent and reduce obesity in children who participate in Head Start programs, including progress on implementing initiatives within the Head Start program to prevent and reduce obesity in such children.

Act 653 COMPARABILITY OF WAGES FM4BFM4C

Act 653 a COMPARABILITY OF WAGES - The Secretary shall take such action as may be necessary to assure that persons employed in carrying out programs financed under this subchapter shall not receive compensation at a rate which is--

Act 653 a 1 in excess of the average rate of compensation paid in the area where the program is carried out to a substantial number of persons providing substantially comparable services, or in excess of the average rate of compensation paid to a substantial number of the persons providing substantially comparable services in the area of the person’s immediately preceding employment, whichever is higher; or

Act 653 a 2 less than the minimum wage rate prescribed in section 6(a)(1) of the Fair Labor Standards Act of 1938. The Secretary shall encourage Head Start agencies to provide compensation according to salary scales that are based on training and experience.

Act 653 b LIMITATION.-- FM4B

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FM4CAct 653 b 1 IN GENERAL - Notwithstanding any other provision of law, no Federal

funds may be used to pay any part of the compensation of an individual employed by a Head Start agency, if such compensation, including non-Federal funds, exceeds an amount equal to the rate payable for level II of the Executive Schedule under section 5313 of title 5, United States Code.

FM4BFM4C

Act 653 b 2 COMPENSATION - In this subsection, the term ‘compensation’-- FM4BFM4C

Act 653 b 2 A includes salary, bonuses, periodic payments, severance pay, the value of any vacation time, the value of a compensatory or paid leave benefit not excluded by subparagraph B, and the fair market value of any employee perquisite or benefit not excluded by subparagraph B; and

FM4BFM4C

Act 653 b 2 B excludes any Head Start agency expenditure for a health, medical, life insurance, disability, retirement, or any other employee welfare or pension benefit.

FM4BFM4C

Act 654 NONDISCRIMINATION PROVISIONS.Act 654 a The Secretary shall not provide financial assistance for any program,

project, or activity under this subchapter unless the grant or contract with respect thereto specifically provides that no person with responsibilities in the operation thereof will discriminate with respect to any such program, project, or activity because of race, creed, color, national origin, sex, political affiliation, or beliefs.

Act 654 b No person in the United States shall on the ground of sex be excluded from participation in, be denied the benefits of, be subjected to discrimination under, or be denied employment in connection with any program or activity receiving assistance under this subchapter. The Secretary shall enforce the provisions of the preceding sentence in accordance with section 602 of the Civil Rights Act of 1964. Section 603 of such Act shall apply with respect to any action taken by the Secretary to enforce such sentence. This section shall not be construed as affecting any other legal remedy that a person may have if such person is excluded from participation in, denied the benefit of, subjected to discrimination under, or denied employment in connection with, any program, project, or activity receiving assistance under this subchapter.

Act 654 c The Secretary shall not provide financial assistance for any program, project, or activity under this subchapter unless the grant or contract relating to the financial assistance specifically provides that no person with responsibilities in the operation of the program, project, or activity will discriminate against any individual because of a handicapping condition in violation of section 504 of the Rehabilitation Act of 1973.

Act 655 LIMITATION WITH RESPECT TO CERTAIN UNLAWFUL ACTIVITIES.No individual employed or assigned by or in any Head Start agency or other agency assisted under this subchapter shall, pursuant to or during the

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performance of services rendered in connection with any program or activity conducted or assisted under this subchapter by such Head Start agency or such other agency, plan, initiate, participate in, or otherwise aid or assist in the conduct of any unlawful demonstration, rioting, or civil disturbance.

Act 656 POLITICAL ACTIVITIESAct 656 a STATE OR LOCAL AGENCY - For purposes of title 5, United States

Code, any agency which assumes responsibility for planning, developing, and coordinating Head Start programs and receives assistance under this subchapter shall be deemed to be a State or local agency. For purposes of clauses (1) and (2) of section 150(a) of such title, any agency receiving assistance under this subchapter shall be deemed to be a State or local agency.

Act 656 b RESTRICTIONS.--Act 656 b 1 IN GENERAL - A program assisted under this subchapter, and any

individual employed by, or assigned to or in, a program assisted under this subchapter (during the hours in which such individual is working on behalf of such program), shall not engage in--

Act 656 b 1 A any partisan or nonpartisan political activity or any other political activity associated with a candidate, or contending faction or group, in an election for public or party office; or

Act 656 b 1 B any activity to provide voters or prospective voters with transportation to the polls or similar assistance in connection with any such election.

Act 656 b 2 REGISTRATION - No funds appropriated under this subchapter may be used to conduct voter registration activities.Nothing in this subchapter prohibits the availability of Head Start facilities during hours of operation for the use of any nonpartisan organization to increase the number of eligible citizens who register to vote in elections for Federal office.

Act 656 b 3 RULES AND REGULATIONS - The Secretary, after consultation with the Director of the Office of Personnel Management, may issue rules and regulations to provide for the enforcement of this section, which may include provisions for summary suspension of assistance or other action necessary to permit enforcement on an emergency basis.

Act 657 ADVANCE FUNDINGFor the purpose of affording adequate notice of funding available under this subchapter, appropriations for carrying out this subchapter are authorized to be included in an appropriation Act for the fiscal year preceding the fiscal year for which they are available for obligation.

Act 657A PARENTAL CONSENT REQUIREMENT FOR NONEMERGENCY INTRUSIVE PHYSICAL EXAMINATIONS.

Act 657A a DEFINITION - The term “nonemergency intrusive physical examination” means, with respect to a child, a physical examination that--

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Act 657A a 1 is not immediately necessary to protect the health or safety of the child involved or the health or safety of another individual; and

Act 657A a 2 requires incision or is otherwise invasive, or involves exposure of private body parts.

Act 657A b REQUIREMENT - A Head Start agency shall obtain written parental consent before administration of any nonemergency intrusive physical examination of a child in connection with participation in a program under this subchapter.

Act 657A c RULE OF CONSTRUCTION - Nothing in this section shall be construed to prohibit agencies from using established methods, for handling cases of suspected or known child abuse and neglect, that are in compliance with applicable Federal, State, or tribal law.

Act 657B CENTERS OF EXCELLENCE IN EARLY CHILDHOOD.Act 657B a DEFINITION - In this section, the term “center of excellence” means a

Center of Excellence in Early Childhood designated under subsection b.Act 657B b DESIGNATION AND BONUS GRANTS - The Secretary shall, subject to

the availability of funds under this section, establish a program under which the Secretary shall--

Act 657B b 1 designate not more than 200 exemplary Head Start agencies (including Early Head Start agencies, Indian Head Start agencies, and migrant and seasonal Head Start agencies) as Centers of Excellence in Early Childhood; and

Act 657B b 2 make bonus grants to the centers of excellence to carry out the activities described in subsection d.

Act 657B c APPLICATION AND DESIGNATION.--Act 657B c 1 APPLICATION.--Act 657B c 1 A NOMINATION AND SUBMISSION.--Act 657B c 1 A i IN GENERAL - To be eligible to receive a designation as a center of

excellence under subsection b, except as provided in clause ii, a Head Start agency in a State shall be nominated by the Governor of the State, after selection for nomination by such Governor through a competitive process, and shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require.

Act 657B c 1 A ii INDIAN AND MIGRANT AND SEASONAL HEAD START PROGRAMS - In the case of an Indian Head Start agency or a migrant or seasonal Head Start agency, to be eligible to receive a designation as a center of excellence under subsection b, such an agency shall be nominated by the head of the appropriate regional office of the Department of Health and Human Services and shall submit an application to the Secretary in accordance with clause i.

Act 657B c 1 B CONTENTS - At a minimum, the application shall include--

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Act 657B c 1 B i evidence that the Head Start program carried out by the agency involved has significantly improved the school readiness of children who have participated in the program;

Act 657B c 1 B ii evidence that the program meets or exceeds standards described in section 641A a 1, as evidenced by the results of monitoring reviews described in section 641A c, and has no findings of deficiencies in the preceding 3 years;

Act 657B c 1 B iii evidence that the program is making progress toward meeting the requirements described in section 648A;

Act 657B c 1 B iv an assurance that the Head Start agency will develop a collaborative partnership with the State (or a State agency) and other providers of early childhood education and development programs and services in the local community involved to conduct activities under subsection d;

Act 657B c 1 B v a nomination letter from the Governor, or appropriate regional office, demonstrating the agency’s ability to provide the coordination, transition, and training services of the program to be carried out under the bonus grant involved, including coordination of activities with State and local agencies that provide early childhood education and development to children and families in the community served by the agency, and carry out the activities described under subsection d 1; and

Act 657B c 1 B vi a description of how the center involved, in order to expand accessibility and continuity of quality early childhood education and development services and programs, will coordinate activities, as appropriate, assisted under this section with--

Act 657B c 1 B vi I programs carried out under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.);

Act 657B c 1 B vi II

the Early Head Start programs carried out under section 645A;

Act 657B c 1 B vi III

Early Reading First and Even Start programs carried out under subparts 2 and 3 of part B of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6371 et seq., 6381 et seq.);

Act 657B c 1 B vi IV

other preschool programs carried out under title I of that Act (20 U.S.C. 6301 et seq.);

Act 657B c 1 B vi V

programs carried out under section 619 and part C of the Individuals with Disabilities Education Act [=300.800] (20 U.S.C. 1419, 1431 et seq.);

Act 657B c 1 B vi VI

State prekindergarten programs; and

Act 657 B c 1 B vi VII

other programs of early childhood education and development.

Act 657B c 2 SELECTION - In selecting agencies to designate as centers of excellence under subsection b, the Secretary shall designate not less than 1 from each of the 50 States, the District of Columbia, an Indian Head Start program, a migrant or seasonal Head Start program, and the Commonwealth of Puerto

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Rico.Act 657B c 3 PRIORITY - In making bonus grant determinations under this section, the

Secretary shall give priority to agencies that, through their applications, demonstrate that their programs are of exceptional quality and would serve as exemplary models for programs in the same geographic region. The Secretary may also consider the populations served by the applicants, such as agencies that serve large proportions of families of limited English proficient children or other underserved populations, and may make bonus grants to agencies that do an exceptional job meeting the needs of children in such populations.

Act 657B c 4 TERM OF DESIGNATION.--Act 657B c 4 A IN GENERAL - Subject to subparagraph B, the Secretary shall designate a

Head Start agency as a center of excellence for a 5-year term. During the period of that designation, subject to the availability of appropriations, the agency shall be eligible to receive a bonus grant under subsection b.

Act 657B c 4 B REVOCATION - The Secretary may revoke an agency’s designation under subsection b if the Secretary determines that the agency is not demonstrating adequate performance or has had findings of deficiencies described in paragraph 1 B ii.

Act 657B c 5 AMOUNT OF BONUS GRANT - The Secretary shall base the amount of funding provided through a bonus grant made under subsection b to a center of excellence on the number of children eligible for Head Start services in the community involved. The Secretary shall, subject to the availability of funding, make such a bonus grant in an amount of not less than $200,000 per year.

Act 657B d USE OF FUNDS - A center of excellence that receives a bonus grant under subsection b--

Act 657B d 1 shall use not less than 15% of the funds made available through the bonus grant to disseminate to other Head Start agencies in the State involved, best practices for achieving early academic success, including--

Act 657B d 1 A best practices for achieving school readiness, including developing early literacy and mathematics skills, for children at risk for school difficulties;

Act 657B d 1 B best practices for achieving the acquisition of the English language for limited English proficient children, if appropriate to the population served; and

Act 657B d 1 C best practices for providing high-quality comprehensive services for eligible children and their families;

Act 657B d 2 may use the funds made available through the bonus grant--Act 657B d 2 A to provide Head Start services to additional eligible children;Act 657B d 2 B to better meet the needs of working families in the community served by the

center by serving more children in existing Early Head Start programs (existing as of the date the center is designated under this section) or in full-

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working-day, full calendar year Head Start programs;Act 657B d 2 C to further coordinate early childhood education and development programs

and services and social services available in the community served by the center for at-risk children (birth through age 8), their families, and pregnant women;

Act 657B d 2 D to provide professional development for Head Start teachers and staff, including joint training for Head Start teachers and staff, child care providers, public and private preschool and elementary school teachers, and other providers of early childhood education and development programs;

Act 657B d 2 E to provide effective transitions between Head Start programs and elementary schools and to facilitate ongoing communication between Head Start and elementary school teachers concerning children receiving Head Start services to improve the teachers’ ability to work effectively with low-income, at-risk children and their families;

Act 657B d 2 F to develop or maintain partnerships with institutions of higher education and nonprofit organizations, including community-based organizations, that recruit, train, place, and support college students to serve as mentors and reading partners to preschool children in Head Start programs; and

Act 657B d 2 G to carry out other activities determined by the center to improve the overall quality of the Head Start program carried out by the agency and the program carried out under the bonus grant involved.

Act 657B e RESEARCH AND REPORTS.--Act 657B e 1 RESEARCH - The Secretary shall, subject to the availability of funds to

carry out this subsection, award a grant or contract to an independent organization to conduct research on the ability of the centers of excellence to use the funds received under this section to improve the school readiness of children receiving Head Start services, and to positively impact school results in the earliest grades. The organization shall also conduct research to measure the success of the centers of excellence at encouraging the center’s delegate agencies, additional Head Start agencies, and other providers of early childhood education and development programs in the communities involved to meet measurable improvement goals, particularly in the area of school readiness.

Act 657B e 2 RESEARCH REPORT - Not later than 48 months after the date of enactment of the Improving Head Start for School Readiness Act of 2007, the organization shall prepare and submit to the Secretary and Congress a report containing the results of the research described in paragraph 1.

Act 657B e 3 REPORTS TO THE SECRETARY - Each center of excellence shall submit an annual report to the Secretary, at such time and in such manner as the Secretary may require, that contains a description of the activities the center carried out with funds received under this section, including a description of how such funds improved services for children and families.

Act 657B f AUTHORIZATION OF APPROPRIATIONS - There are authorized to be

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appropriated such sums as may be necessary for each of fiscal years 2008 through 2012 to make bonus grants to centers of excellence under subsection b to carry out activities described in subsection d and research and report activities described in subsection e.

Act 657C GENERAL PROVISIONS.Act 657C a LIMITATION - Nothing in this subchapter shall be construed to authorize

or permit the Secretary or any employee or contractor of the Department of Health and Human Services to mandate, direct, or control, the selection of a curriculum, a program of instruction, or instructional materials, for a Head Start program.

Act 657C b SPECIAL RULE - Nothing in this subchapter shall be construed to authorize a Head Start program or a local educational agency to require the other to select or implement a specific curriculum or program of instruction.

Act 657C c DEFINITION - In this subchapter, the term “health”, when used to refer to services or care provided to enrolled children, their parents, or their siblings, shall be interpreted to refer to both physical and mental health.

* * *

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OMB Circular A-102 Grants and Cooperative Agreements with State and Local Governments



A102 1 Pre-Award Policies.A102 1 a Use of grants and cooperative agreements. Sections 6301-08, title 31,

United States Code govern the use of grants, contracts and cooperative agreements. A grant or cooperative agreement shall be used only when the principal purpose of a transaction is to accomplish a public purpose of support or stimulation authorized by Federal statute. Contracts shall be used when the principal purpose is acquisition of property or services for the direct benefit or use of the Federal Government. The statutory criterion for choosing between grants and cooperative agreements is that for the latter, “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.”

A102 1 b Advance Public Notice and Priority Setting.A102 1 b 1 Federal agencies shall provide the public with an advance notice in the

Federal Register, or by other appropriate means, of intended funding priorities for discretionary assistance programs, unless funding priorities are established by Federal statute. These priorities shall be approved by a policy level official.

A102 1 b 2 Whenever time permits, agencies shall provide the public an opportunity to comment on intended funding priorities.

A102 1 b 3 All discretionary grant awards in excess of $25,000 shall be reviewed for consistency with agency priorities by a policy level official.

A102 1 c Standard Forms for Applying for Grants and Cooperative Agreements.A102 1 c 1 Agencies shall use the following standard application forms unless they

obtain Office of Management and Budget (OMB) approval under the Paperwork Reduction Act of 1980 (44 U.S.C. 35) and the 5 CFR Part 1320, “Controlling Paperwork Burdens on the Public”: SF-424 Facesheet SF-424a Budget Information (Non-Construction) SF-424b Standard Assurances (Non-Construction) SF-424c Budget Information (Construction) SF-424d Standard Assurances (Construction) When different or additional information is needed to comply with legislative requirements or to meet specific program needs, agencies shall also obtain prior OMB approval.

A102 1 c 2 A preapplication shall be used for all construction, land acquisition and land development projects or programs when the need for Federal funding exceeds $100,000, unless the Federal agency determines that a preapplication is not needed. A preapplication is used to:

A102 1 c 2 a Establish communication between the agency and the applicant,

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A102 1 c 2 b Determine the applicant's eligibility,A102 1 c 2 c Determine how well the project can compete with similar projects from

others, andA102 1 c 2 d Discourage any proposals that have little or no chance for Federal funding

before applicants incur significant costs in preparing detailed applications.A102 1 c 3 Agencies shall use the Budget Information (Construction) and Standard

Assurances (Construction) when the major purpose of the project or program is construction, land acquisition or land development.

A102 1 c 4 Agencies may specify how and whether budgets shall be shown by functions or activities within the program or project.

A102 1 c 5 Agencies should generally include a request for a program narrative statement which is based on the following instructions:

A102 1 c 5 a Objectives and need for assistance. Pinpoint any relevant physical, economic, social, financial, institutional, or other problems requiring a solution. Demonstrate the need for the assistance and state the principal and subordinate objectives of the project. Supporting documentation or other testimonies from concerned interests other than the applicant may be used. Any relevant data based on planning studies should be included or footnoted.

A102 1 c 5 b Results or Benefits Expected. Identify costs and benefits to be derived. For example, show how the facility will be used. For land acquisition or development projects, explain how the project will benefit the public.

A102 1 c 5 c Approach. Outline a plan of action pertaining to the scope and detail how the proposed work will be accomplished for each assistance program. Cite factors which might accelerate or decelerate the work and reasons for taking this approach as opposed to others. Describe any unusual features of the project, such as design or technological innovations, reductions in cost or time, or extraordinary social and community involvements. Provide for each assistance program quantitative projections of the accomplishments to be achieved, if possible. When accomplishments cannot be quantified, list the activities in chronological order to show the schedule of accomplishments and target expected completion dates. Identify the kinds of data to be collected and maintained, and discuss the criteria to be used to evaluate the results and success of the project. Explain the methodology that will be used to determine if the needs identified and discussed are being met and if the results and benefits identified are being achieved. List each organization, cooperator, consultant, or other key individuals who will work on the project along with a short description of the nature of their effort or contribution.

A102 1 c 5 d Geographic location. Give a precise location of the project and area to be served by the proposed project. Maps or other graphic aids may be attached.

A102 1 c 5 e If applicable, provide the following information: for research and demonstration assistance requests, present a biographical sketch of the

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program director with the following information: name, address, telephone number, background, and other qualifying experience for the project. Also, list the name, training and background for other key personnel engaged in the project. Describe the relationship between this project and other work planned, anticipated, or underway under Federal assistance. Explain the reason for all requests for supplemental assistance and justify the need for additional funding. Discuss accomplishments to date and list in chronological order a schedule of accomplishments, progress or milestones anticipated with the new funding request. If there have been significant changes in the project objectives, location, approach or time delays, explain and justify. For other requests for changes, or amendments, explain the reason for the change(s). If the scope or objectives have changed or an extension of time is necessary, explain the circumstances and justify. If the total budget has been exceeded or if the individual budget items have changes more than the prescribed limits, explain and justify the change and its effect on the project.

A102 1 c 6 Additional assurances shall not be added to those contained on the standard forms, unless specifically required by statute.

A102 1 d Debarment and Suspension. Federal agencies shall not award assistance to applicants that are debarred or suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549. Agencies shall establish procedures for the effective use of the List of Parties Excluded from Federal Procurement or Nonprocurement programs to assure that they do not award assistance to listed parties in violation of the Executive Order. Agencies shall also establish procedures to provide for effective use and/or dissemination of the list to assure that their grantees and subgrantees (including contractors) at any tier do not make awards in violation of the nonprocurement debarment and suspension common rule.

A102 1 e Awards and Adjustments.A102 1 e 1 Ordinarily awards shall be made at least ten days prior to the beginning of

the grant period.A102 1 e 2 Agencies shall notify grantees immediately of any anticipated adjustments

in the amount of an award. This notice shall be provided as early as possible in the funding period. Reductions in funding shall apply only to periods after notice is provided. Whenever an agency adjusts the amount of an award, it shall also make an appropriate adjustment to the amount of any required matching or cost sharing.

A102 1 f Carryover Balances. Agencies shall be prepared to identify to OMB the amounts of carryover balances (e.g., the amounts of estimated grantee unobligated balances available for carryover into subsequent grant periods). This presentation shall detail the fiscal and programmatic (level of effort) impact in the following period.

A102 1 g Special Conditions or Restrictions. Agencies may impose special

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conditions or restrictions on awards to “high risk” applicants/grantees in accordance with section .12 of the grants management common rule. Agencies shall document use of the “Exception” provisions of section .6 and “High-risk” provisions of section .12 of the grants management common rule.

A102 1 h Waiver of Single State Agency Requirements.A102 1 h 1 Requests to agencies from the Governors, or other duly constituted State

authorities, for waiver of “single” State agency requirements in accordance with section 31 U.S.C. 6504, “Use of existing State or multi-member agency to administer grant programs,” shall be given expeditious handling and, whenever possible, an affirmative response.

A102 1 h 2 When it is necessary to refuse a request for waiver of “single” State agency requirements under section 204 of the Intergovernmental Corporation Act, the Federal grantor agency shall advise OMB prior to informing the State that the request cannot be granted. The agency shall indicate to OMB the reasons for the denial of the request.

A102 1 h 3 Legislative proposals embracing grant-in-aid programs shall avoid inclusion of proposals for “single” State agencies in the absence of compelling reasons to do otherwise. In addition, existing requirements in present grant-in-aid programs shall be reviewed and legislative proposals developed for the removal of these restrictive provisions.

A102 1 i Patent Rights. Agencies shall use the standard patent rights clause specified in “Rights to Inventions made by Non-profit Organizations and Small Business Firms” (37 CFR Part 401), when providing support for research and development.

A102 1 j Metric System of Measurement. The Metric Conversion Act of 1975, as amended, declares that the metric system is the preferred measurement system for U.S. trade and commerce. The Act requires each Federal agency to establish a date(s), in consultation with the Secretary of Commerce, when the metric system of measurement will be used in the agency's procurement, grants, and other business-related activities. Metric implementation may take longer where the use of the system is initially impractical or likely to cause significant inefficiencies in the accomplishment of federally-funded activities. Heads of departments and agencies shall establish a process for a policy level and program level review of proposed exceptions to metric usage in grants programs. Executive Order 12770 (“Metric Usage in Federal Government Programs”) elaborates on implementation of the Act.

A102 2 Post-award Policies.A102 2 a Cash Management. Agency methods and procedures for transferring funds

shall minimize the time elapsing between the transfer to recipients of grants and cooperative agreements and the recipient's need for the funds.

A102 2 a 1 Such transfers shall be made consistent with program purposes, applicable law and Treasury regulations contained in 31 CFR Part 205, Federal Funds Transfer Procedures.

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A102 2 a 2 Where letters-of-credit are used to provide funds, they shall be in the same amount as the award.

A102 2 b Grantee Financial Management Systems. In assessing the adequacy of an applicant's financial management system, the awarding agency shall rely on readily available sources of information, such as audit reports, to the maximum extent possible. If additional information is necessary to assure prudent management of agency funds, it shall be obtained from the applicant or from an on-site review.

A102 2 c Financial Status Reports.A102 2 c 1 Federal agencies shall require grantees to use the SF-269, Financial Status

Report-Long Form, or SF-269a, Financial Status Report-Short Form, to report the status of funds for all non-construction projects or programs. Federal agencies need not require the Financial Status Report when the SF-270, Request for Advance or Reimbursement, or SF-272, Report of Federal Cash Transactions, is determined to provide adequate information.

A102 2 c 2 Federal agencies shall not require grantees to report on the status of funds by object class category of expenditure (e.g., personnel, travel, equipment).

A102 2 c 3 If reporting on the status of funds by programs, functions or activities within the project or program is required by statute or regulation, Federal agencies shall instruct grantees to use block 12, Remarks, on the SF-269, or a supplementary form approved by the OMB under the Paperwork Reduction Act of 1980.

A102 2 c 4 Federal agencies shall prescribe whether the reporting shall be on a cash or an accrual basis. If the Federal agency requires accrual information and the grantees's accounting records are not normally kept on an accrual basis, the grantee shall not be required to convert its accounting system but shall develop such accrual information through an analysis of the documentation on hand.

A102 2 d Contracting With Small and Minority Firms, Women's Business Enterprises and Labor Surplus Area Firms. It is national policy to award a fair share of contracts to small and minority business firms. Grantees shall take similar appropriate affirmative action to support of women's enterprises and are encouraged to procure goods and services from labor surplus areas.

A102 2 e Program Income.A102 2 e 1 Agencies shall encourage grantees to generate program income to help

defray program costs. However, Federal agencies shall not permit grantees to use grant-acquired assets to compete unfairly with the private sector.

A102 2 e 2 Federal agencies shall instruct grantees to deduct program income from total program costs as specified in the grants management common rule at paragraph .25 g 1, unless agency regulations or the terms of the grant award state otherwise. Authorization for recipients to follow the other alternatives in paragraph .25 g 2 and 3 shall be granted sparingly.

A102 2 f Site Visits and Technical Assistance. Agencies shall conduct site visits

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only as warranted by program or project needs. Technical assistance site visits shall be provided only

A102 2 f 1 in response to requests from grantees,A102 2 f 2 based on demonstrated program need, orA102 2 f 3 when recipients are designated “high risk” under section .12 of the grants

management common rule.A102 2 g Infrastructure Investment. Agencies shall encourage grantees to consider

the provisions of the common rule at Section .31 and Executive Order 12803 (“Infrastructure Privatization”). This includes reviewing and modifying procedures affecting the management and disposition of federally-financed infrastructure owned by State and local governments, with their requests to sell or lease infrastructure assets, consistent with the criteria in Section 4 of the Order. Related guidance contained in Executive Order 12893 (“Principles for Federal Infrastructure Investments”) requiring economic analysis and the development of investment options, including public-private partnership, shall also be applied. On March 7, 1994, OMB issued guidance on Executive Order 12893 in OMB Bulletin No. 94-16.

A102 2 h Resource Conservation and Recovery Act. Agencies shall implement the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. 6962). Any State agency or agency of a political subdivision of a State which is using appropriated Federal funds must comply with Section 6002 of RCRA. Section 6002 requires that preference be given in procurement programs to the purchase of specific products containing recycled materials identified in guidelines developed by the Environmental Protection Agency (EPA). Current guidelines are contained in 40 CFR Parts 247-253. State and local recipients of grants, loans, cooperative agreements or other instruments funded by appropriated Federal funds shall give preference in procurement programs to the purchase of recycled products pursuant to the EPA guidelines.

A102 2 i Procurement of Goods and Services. Agencies should be aware of and comply with the requirement enacted in Section 623 of the Treasury, Postal Service and General Government Appropriations Act, 1993, and reenacted in Section 621 of the fiscal year 1994 Appropriations Act. This Section requires grantees to specify in any announcement of the awarding of contracts with an aggregate value of $500,000 or more, the amount of Federal funds that will be used to finance the acquisitions.

A102 2 j Conditional exemptions.A102 2 j 1 OMB authorizes conditional exemption from OMB administrative

requirements and cost principles circulars for certain Federal programs with statutorily-authorized consolidated planning and consolidated administrative funding, that are identified by a Federal agency and approved by the head of the Executive department or establishment. A Federal agency shall consult with OMB during its consideration of whether to grant such an exemption.

A102 2 j 2 To promote efficiency in State and local program administration, when

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Federal non-entitlement programs with common purposes have specific statutorily-authorized consolidated planning and consolidated administrative funding and where most of the State agency's resources come from non-Federal sources, Federal agencies may exempt these covered State-administered, non-entitlement grant programs from certain OMB grants management requirements. The exemptions would be from all but the allocability of costs provisions of OMB Circulars A-87 (Attachment A, subsection C.3) [sic; now at 2CFR 225 Appendix A C 3], “Cost Principles for State, Local, and Indian Tribal Governments,” A-21 (Section C, subpart 4) [sic; now at 2CFR 220 Appendix A C 4], “Cost Principles for Educational Institutions,” and A-122 (Attachment A, subsection A.4) [sic; now at 2CFR 230 Appendix A A 4], “Cost Principles for Non-Profit Organizations,” and from all of the administrative requirements provisions of OMB Circular A-110 [sic; now at 2CFR 215], “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,” and the agencies' grants management common rule.

A102 2 j 3 When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this option, a State must adopt its own written fiscal and administrative requirements for expending and accounting for all funds, which are consistent with the provisions of OMB Circular A-87, and extend such policies to all subrecipients. These fiscal and administrative requirements must be sufficiently specific to ensure that: funds are used in compliance with all applicable Federal statutory and regulatory provisions, costs are reasonable and necessary for operating these programs, and funds are not be used for general expenses required to carry out other responsibilities of a State or its subrecipients.

A102 3 After-the-grant Policies.A102 3 a Closeout. Federal agencies shall notify grantees in writing before the end of

the grant period of final reports that shall be due, the dates by which they must be received, and where they must be submitted. Copies of any required forms and instructions for their completion shall be included with this notification. The Federal actions that must precede closeout are:

A102 3 a 1 Receipt of all required reports,A102 3 a 2 Disposition or recovery of federally-owned assets (as distinct from property

acquired under the grant), andA102 3 a 3 Adjustment of the award amount and the amount of Federal cash paid the

recipient.A102 3 b Annual Reconciliation of Continuing Assistance Awards. Federal

agencies shall reconcile continuing awards at least annually and evaluate program performance and financial reports. Items to be reviewed include:

A102 3 b 1 A comparison of the recipient's work plan to its progress reports and project outputs,

A102 3 b 2 the Financial Status Report (SF-269),

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A102 3 b 3 Request(s) for payment,A102 3 b 4 Compliance with any matching, level of effort or maintenance of effort

requirement, andA102 3 b 5 A review of federally-owned property (as distinct from property acquired

under the grant).

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OMB Circular A-133: Audits

OMB Circular A-133—Audits


A133 OMB Circular No. A-133, Audits of States, Local Governments, and Non-Profit Organizations.

FM1G

A Subpart A--General 100 Purpose. This part sets forth standards for obtaining consistency and uniformity

among Federal agencies for the audit of non-Federal entities expending Federal awards.

105 Definitions. Auditee means any non-Federal entity that expends Federal awards which must be audited under this part. Auditor means an auditor, that is a public accountant or a Federal, State or local government audit organization, which meets the general standards specified in generally accepted government auditing standards (GAGAS). The term auditor does not include internal auditors of non-profit organizations. Audit finding means deficiencies which the auditor is required by 510 a to report in the schedule of findings and questioned costs. CFDA number means the number assigned to a Federal program in the Catalog of Federal Domestic Assistance (CFDA). Cluster of programs means a grouping of closely related programs that share common compliance requirements. The types of clusters of programs are research and development (R&D), student financial aid (SFA), and other clusters. “Other clusters” are as defined by the Office of Management and Budget (OMB) in the compliance supplement or as designated by a State for Federal awards the State provides to its subrecipients that meet the definition of a cluster of programs. When designating an “other cluster,” a State shall identify the Federal awards included in the cluster and advise the subrecipients of compliance requirements applicable to the cluster, consistent with 400 d 1 and 400 d 2, respectively. A cluster of programs shall be considered as one program for determining major programs, as described in 520, and, with the exception of R&D as described in 200 c, whether a program-specific audit may be elected. Cognizant agency for audit means the Federal agency designated to carry out the responsibilities described in 400 a. Compliance supplement refers to the Circular A-133 Compliance Supplement, included as Appendix B to Circular A-133, or such documents as OMB or its designee may issue to replace it. This document is available from the Government Printing Office, Superintendent of Documents, Washington, DC 20402-9325. Corrective action means action taken by the auditee that: (1) Corrects identified deficiencies; (2) Produces recommended improvements; or (3) Demonstrates that audit findings are either invalid or do not warrant auditee action. Federal agency has the same meaning as the term agency in Section 551(1) of title 5, United States Code. Federal award means Federal financial assistance and Federal cost-reimbursement contracts that non-Federal entities receive directly from Federal awarding agencies or indirectly from pass-through entities. It does not include procurement contracts, under grants or contracts, used to buy goods or services from vendors. Any audits of such

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vendors shall be covered by the terms and conditions of the contract. Contracts to operate Federal Government owned, contractor operated facilities (GOCOs) are excluded from the requirements of this part. Federal awarding agency means the Federal agency that provides an award directly to the recipient. Federal financial assistance means assistance that non-Federal entities receive or administer in the form of grants, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance, but does not include amounts received as reimbursement for services rendered to individuals as described in 205 h and 205 i. Federal program means: (1) All Federal awards to a non-Federal entity assigned a single number in the CFDA. (2) When no CFDA number is assigned, all Federal awards from the same agency made for the same purpose should be combined and considered one program. (3) Notwithstanding paragraphs 1 and 2 of this definition, a cluster of programs. The types of clusters of programs are: (i) Research and development (R&D); (ii) Student financial aid (SFA); and (iii) “Other clusters,” as described in the definition of cluster of programs in this section. GAGAS means generally accepted government auditing standards issued by the Comptroller General of the United States, which are applicable to financial audits. Generally accepted accounting principles has the meaning specified in generally accepted auditing standards issued by the American Institute of Certified Public Accountants (AICPA). Indian tribe means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation (as defined in, or established under, the Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. Internal control means a process, effected by an entity’s management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (1) Effectiveness and efficiency of operations; (2) Reliability of financial reporting; and (3) Compliance with applicable laws and regulations. Internal control pertaining to the compliance requirements for Federal programs (Internal control over Federal programs) means a process--effected by an entity’s management and other personnel--designed to provide reasonable assurance regarding the achievement of the following objectives for Federal programs: (1) Transactions are properly recorded and accounted for to: (i) Permit the preparation of reliable financial statements and Federal reports; (ii) Maintain accountability over assets; and (iii) Demonstrate compliance with laws, regulations, and other compliance requirements; (2) Transactions are executed in compliance with:

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(i) Laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on a Federal program; and (ii) Any other laws and regulations that are identified in the compliance supplement; and (3) Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition. Loan means a Federal loan or loan guarantee received or administered by a non-Federal entity. Local government means any unit of local government within a State, including a county, borough, municipality, city, town, township, parish, local public authority, special district, school district, intrastate district, council of governments, and any other instrumentality of local government. Major program means a Federal program determined by the auditor to be a major program in accordance with 520 or a program identified as a major program by a Federal agency or pass-through entity in accordance with 215 c. Management decision means the evaluation by the Federal awarding agency or pass-through entity of the audit findings and corrective action plan and the issuance of a written decision as to what corrective action is necessary. Non-Federal entity means a State, local government, or non-profit organization. Non-profit organization means: (1) any corporation, trust, association, cooperative, or other organization that: (i) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest; (ii) Is not organized primarily for profit; and (iii) Uses its net proceeds to maintain, improve, or expand its operations; and (2) The term non-profit organization includes non-profit institutions of higher education and hospitals. OMB means the Executive Office of the President, Office of Management and Budget. Oversight agency for audit means the Federal awarding agency that provides the predominant amount of direct funding to a recipient not assigned a cognizant agency for audit. When there is no direct funding, the Federal agency with the predominant indirect funding shall assume the oversight responsibilities. The duties of the oversight agency for audit are described in 400 b. Effective July 28, 2003, the following is added to this definition:A Federal agency with oversight for an auditee may reassign oversight to another Federal agency which provides substantial funding and agrees to be the oversight agency for audit. Within 30 days after any reassignment, both the old and the new oversight agency for audit shall notify the auditee, and, if known, the auditor of the reassignment.Pass-through entity means a non-Federal entity that provides a Federal award to a subrecipient to carry out a Federal program. Program-specific audit means an audit of one Federal program as provided for in 200 c and 235. Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a provision of a law,

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regulation, contract, grant, cooperative agreement, or other agreement or document governing the use of Federal funds, including funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Recipient means a non-Federal entity that expends Federal awards received directly from a Federal awarding agency to carry out a Federal program. Research and development (R&D) means all research activities, both basic and applied, and all development activities that are performed by a non-Federal entity. Research is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function. Development is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. Single audit means an audit which includes both the entity’s financial statements and the Federal awards as described in 500. State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, any multi-State, regional, or interstate entity which has governmental functions, and any Indian tribe as defined in this section. Student Financial Aid (SFA) includes those programs of general student assistance, such as those authorized by Title IV of the Higher Education Act of 1965, as amended, (20 U.S.C. 1070 et seq.) which is administered by the U.S. Department of Education, and similar programs provided by other Federal agencies. It does not include programs which provide fellowships or similar Federal awards to students on a competitive basis, or for specified studies or research. Subrecipient means a non-Federal entity that expends Federal awards received from a pass-through entity to carry out a Federal program, but does not include an individual that is a beneficiary of such a program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency. Guidance on distinguishing between a subrecipient and a vendor is provided in 210. Types of compliance requirements refers to the types of compliance requirements listed in the compliance supplement. Examples include: activities allowed or unallowed; allowable costs/cost principles; cash management; eligibility; matching, level of effort, earmarking; and, reporting. Vendor means a dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a Federal program. These goods or services may be for an organization’s own use or for the use of beneficiaries of the Federal program. Additional guidance on distinguishing between a subrecipient and a vendor is provided in 210.

B Subpart B--Audits

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200 Audit requirements. FM1G200 a Audit required. Non-Federal entities that expend $300,000 ($500,000 for fiscal years

ending after December 31, 2003) or more in a year in Federal awards shall have a single or program-specific audit conducted for that year in accordance with the provisions of this part. Guidance on determining Federal awards expended is provided in 205.

FM1G

200 b Single audit. Non-Federal entities that expend $300,000 ($500,000 for fiscal years ending after December 31, 2003) or more in a year in Federal awards shall have a single audit conducted in accordance with 500 except when they elect to have a program-specific audit conducted in accordance with paragraph c of this section.

200 c Program-specific audit election. When an auditee expends Federal awards under only one Federal program (excluding R&D) and the Federal program’s laws, regulations, or grant agreements do not require a financial statement audit of the auditee, the auditee may elect to have a program-specific audit conducted in accordance with 235. A program-specific audit may not be elected for R&D unless all of the Federal awards expended were received from the same Federal agency, or the same Federal agency and the same pass-through entity, and that Federal agency, or pass-through entity in the case of a subrecipient, approves in advance a program-specific audit.

200 d Exemption when Federal awards expended are less than $300,000 ($500,000 for fiscal years ending after December 31, 2003). Non-Federal entities that expend less than $300,000 ($500,000 for fiscal years ending after December 31, 2003) a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in 215 a, but records must be available for review or audit by appropriate officials of the Federal agency, pass-through entity, and General Accounting Office (GAO).

200 e Federally Funded Research and Development Centers (FFRDC). Management of an auditee that owns or operates a FFRDC may elect to treat the FFRDC as a separate entity for purposes of this part.

205 Basis for determining Federal awards expended.205 a Determining Federal awards expended. The determination of when an award is

expended should be based on when the activity related to the award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with laws, regulations, and the provisions of contracts or grant agreements, such as: expenditure/expense transactions associated with grants, cost-reimbursement contracts, cooperative agreements, and direct appropriations; the disbursement of funds passed through to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or consumption of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and, the period when insurance is in force.

205 b Loan and loan guarantees (loans). Since the Federal Government is at risk for loans until the debt is repaid, the following guidelines shall be used to calculate the value of Federal awards expended under loan programs, except as noted in paragraphs c and d

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of this section:205 b 1 Value of new loans made or received during the fiscal year; plus205 b 2 Balance of loans from previous years for which the Federal Government imposes

continuing compliance requirements; plus205 b 3 Any interest subsidy, cash, or administrative cost allowance received.205 c Loan and loan guarantees (loans) at institutions of higher education. When loans

are made to students of an institution of higher education but the institution does not make the loans, then only the value of loans made during the year shall be considered Federal awards expended in that year. The balance of loans for previous years is not included as Federal awards expended because the lender accounts for the prior balances.

205 d Prior loan and loan guarantees (loans). Loans, the proceeds of which were received and expended in prior-years, are not considered Federal awards expended under this part when the laws, regulations, and the provisions of contracts or grant agreements pertaining to such loans impose no continuing compliance requirements other than to repay the loans.

205 e Endowment funds. The cumulative balance of Federal awards for endowment funds which are federally restricted are considered awards expended in each year in which the funds are still restricted.

205 f Free rent. Free rent received by itself is not considered a Federal award expended under this part. However, free rent received as part of an award to carry out a Federal program shall be included in determining Federal awards expended and subject to audit under this part.

205 g Valuing non-cash assistance. Federal non-cash assistance, such as free rent, food stamps, food commodities, donated property, or donated surplus property, shall be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency.

205 h Medicare. Medicare payments to a non-Federal entity for providing patient care services to Medicare eligible individuals are not considered Federal awards expended under this part.

205 i Medicaid. Medicaid payments to a subrecipient for providing patient care services to Medicaid eligible individuals are not considered Federal awards expended under this part unless a State requires the funds to be treated as Federal awards expended because reimbursement is on a cost-reimbursement basis.

205 j Certain loans provided by the National Credit Union Administration. For purposes of this part, loans made from the National Credit Union Share Insurance Fund and the Central Liquidity Facility that are funded by contributions from insured institutions are not considered Federal awards expended.

210 Subrecipient and vendor determinations.210 a General. An auditee may be a recipient, a subrecipient, and a vendor. Federal awards

expended as a recipient or a subrecipient would be subject to audit under this part. The payments received for goods or services provided as a vendor would not be considered

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Federal awards. The guidance in paragraphs b and c of this section should be considered in determining whether payments constitute a Federal award or a payment for goods and services.

210 b Federal award. Characteristics indicative of a Federal award received by a subrecipient are when the organization:

210 b 1 Determines who is eligible to receive what Federal financial assistance;210 b 2 Has its performance measured against whether the objectives of the Federal program

are met;210 b 3 Has responsibility for programmatic decision making;210 b 4 Has responsibility for adherence to applicable Federal program compliance

requirements; and210 b 5 Uses the Federal funds to carry out a program of the organization as compared to

providing goods or services for a program of the pass-through entity.210 c Payment for goods and services. Characteristics indicative of a payment for goods

and services received by a vendor are when the organization:210 c 1 Provides the goods and services within normal business operations;210 c 2 Provides similar goods or services to many different purchasers;210 c 3 Operates in a competitive environment;210 c 4 Provides goods or services that are ancillary to the operation of the Federal program;

and210 c 5 Is not subject to compliance requirements of the Federal program.210 d Use of judgment in making determination. There may be unusual circumstances or

exceptions to the listed characteristics. In making the determination of whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all of the characteristics will be present and judgment should be used in determining whether an entity is a subrecipient or vendor.

210 e For-profit subrecipient. Since this part does not apply to for-profit subrecipients, the pass-through entity is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients. The contract with the for-profit subrecipient should describe applicable compliance requirements and the for-profit subrecipient’s compliance responsibility. Methods to ensure compliance for Federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the contract, and post-award audits.

210 f Compliance responsibility for vendors. In most cases, the auditee’s compliance responsibility for vendors is only to ensure that the procurement, receipt, and payment for goods and services comply with laws, regulations, and the provisions of contracts or grant agreements. Program compliance requirements normally do not pass through to vendors. However, the auditee is responsible for ensuring compliance for vendor transactions which are structured such that the vendor is responsible for program compliance or the vendor’s records must be reviewed to determine program

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compliance. Also, when these vendor transactions relate to a major program, the scope of the audit shall include determining whether these transactions are in compliance with laws, regulations, and the provisions of contracts or grant agreements.

215 Relation to other audit requirements.215 a Audit under this part in lieu of other audits. An audit made in accordance with this

part shall be in lieu of any financial audit required under individual Federal awards. To the extent this audit meets a Federal agency’s needs, it shall rely upon and use such audits. The provisions of this part neither limit the authority of Federal agencies, including their Inspectors General, or GAO to conduct or arrange for additional audits (e.g., financial audits, performance audits, evaluations, inspections, or reviews) nor authorize any auditee to constrain Federal agencies from carrying out additional audits. Any additional audits shall be planned and performed in such a way as to build upon work performed by other auditors.

215 b Federal agency to pay for additional audits. A Federal agency that conducts or contracts for additional audits shall, consistent with other applicable laws and regulations, arrange for funding the full cost of such additional audits.

215 c Request for a program to be audited as a major program. A Federal agency may request an auditee to have a particular Federal program audited as a major program in lieu of the Federal agency conducting or arranging for the additional audits. To allow for planning, such requests should be made at least 180 days prior to the end of the fiscal year to be audited. The auditee, after consultation with its auditor, should promptly respond to such request by informing the Federal agency whether the program would otherwise be audited as a major program using the risk-based audit approach described in 520 and, if not, the estimated incremental cost. The Federal agency shall then promptly confirm to the auditee whether it wants the program audited as a major program. If the program is to be audited as a major program based upon this Federal agency request, and the Federal agency agrees to pay the full incremental costs, then the auditee shall have the program audited as a major program. A pass-through entity may use the provisions of this paragraph for a subrecipient.

220 Frequency of audits. Except for the provisions for biennial audits provided in paragraphs a and b of this section, audits required by this part shall be performed annually. Any biennial audit shall cover both years within the biennial period.

220 a A State or local government that is required by constitution or statute, in effect on January 1, 1987, to undergo its audits less frequently than annually, is permitted to undergo its audits pursuant to this part biennially. This requirement must still be in effect for the biennial period under audit.

220 b Any non-profit organization that had biennial audits for all biennial periods ending between July 1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this part biennially.

225 Sanctions. No audit costs may be charged to Federal awards when audits required by this part have not been made or have been made but not in accordance with this part. In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities shall take appropriate action using sanctions such as:

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225 a Withholding a percentage of Federal awards until the audit is completed satisfactorily;

225 b Withholding or disallowing overhead costs;225 c Suspending Federal awards until the audit is conducted; or225 d Terminating the Federal award.230 Audit costs.230 a Allowable costs. Unless prohibited by law, the cost of audits made in accordance with

the provisions of this part are allowable charges to Federal awards. The charges may be considered a direct cost or an allocated indirect cost, as determined in accordance with the provisions of applicable OMB cost principles circulars, the Federal Acquisition Regulation (FAR) (48 CFR parts 30 and 31), or other applicable cost principles or regulations.

230 b Unallowable costs. A non-Federal entity shall not charge the following to a Federal award:

230 b 1 The cost of any audit under the Single Audit Act Amendments of 1996 (31 U.S.C. 7501 et seq.) not conducted in accordance with this part.

230 b 2 The cost of auditing a non-Federal entity which has Federal awards expended of less than $300,000 ($500,000 for fiscal years ending after December 31, 2003) per year and is thereby exempted under 200 d from having an audit conducted under this part. However, this does not prohibit a pass-through entity from charging Federal awards for the cost of limited scope audits to monitor its subrecipients in accordance with 400 d 3, provided the subrecipient does not have a single audit. For purposes of this part, limited scope audits only include agreed-upon procedures engagements conducted in accordance with either the AICPA’s generally accepted auditing standards or attestation standards, that are paid for and arranged by a pass-through entity and address only one or more of the following types of compliance requirements: activities allowed or unallowed; allowable costs/cost principles; eligibility; matching, level of effort, earmarking; and, reporting.

235 Program-specific audits.235 a Program-specific audit guide available. In many cases, a program-specific audit

guide will be available to provide specific guidance to the auditor with respect to internal control, compliance requirements, suggested audit procedures, and audit reporting requirements. The auditor should contact the Office of Inspector General of the Federal agency to determine whether such a guide is available. When a current program-specific audit guide is available, the auditor shall follow GAGAS and the guide when performing a program-specific audit.

235 b Program-specific audit guide not available.235 b 1 When a program-specific audit guide is not available, the auditee and auditor shall

have basically the same responsibilities for the Federal program as they would have for an audit of a major program in a single audit.

235 b 2 The auditee shall prepare the financial statement(s) for the Federal program that includes, at a minimum, a schedule of expenditures of Federal awards for the program and notes that describe the significant accounting policies used in preparing the

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schedule, a summary schedule of prior audit findings consistent with the requirements of 315 b, and a corrective action plan consistent with the requirements of 315 c.

235 b 3 The auditor shall:235 b 3 i Perform an audit of the financial statement(s) for the Federal program in accordance

with GAGAS;235 b 3 ii Obtain an understanding of internal control and perform tests of internal control over

the Federal program consistent with the requirements of 500 c for a major program;235 b 3 iii Perform procedures to determine whether the auditee has complied with laws,

regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on the Federal program consistent with the requirements of 500 d for a major program; and

235 b 3 iv Follow up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee, and report, as a current year audit finding, when the auditor concludes that the summary schedule of prior audit findings materially misrepresents the status of any prior audit finding in accordance with the requirements of 500 e.

235 b 4 The auditor’s report(s) may be in the form of either combined or separate reports and may be organized differently from the manner presented in this section. The auditor’s report(s) shall state that the audit was conducted in accordance with this part and include the following:

235 b 4 i An opinion (or disclaimer of opinion) as to whether the financial statement(s) of the Federal program is presented fairly in all material respects in conformity with the stated accounting policies;

235 b 4 ii A report on internal control related to the Federal program, which shall describe the scope of testing of internal control and the results of the tests;

235 b 4 iii A report on compliance which includes an opinion (or disclaimer of opinion) as to whether the auditee complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on the Federal program; and

235 b 4 iv A schedule of findings and questioned costs for the Federal program that includes a summary of the auditor’s results relative to the Federal program in a format consistent with 505 d 1 and findings and questioned costs consistent with the requirements of 505 d 3.

235 c Report submission for program-specific audits. 235 c 1 The audit shall be completed and the reporting required by paragraph c 2 or c 3 of this

section submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the Federal agency that provided the funding or a different period is specified in a program-specific audit guide. (However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the required reporting shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or 13 months after the end of the audit period, unless a different period is specified in a

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program-specific audit guide.) Unless restricted by law or regulation, the auditee shall make report copies available for public inspection.

235 c 2 When a program-specific audit guide is available, the auditee shall submit to the Federal clearinghouse designated by OMB the data collection form prepared in accordance with 320 b, as applicable to a program-specific audit, and the reporting required by the program-specific audit guide to be retained as an archival copy. Also, the auditee shall submit to the Federal awarding agency or pass-through entity the reporting required by the program-specific audit guide.

235 c 3 When a program-specific audit guide is not available, the reporting package for a program-specific audit shall consist of the financial statement(s) of the Federal program, a summary schedule of prior audit findings, and a corrective action plan as described in paragraph b 2 of this section, and the auditor’s report(s) described in paragraph b 4 of this section. The data collection form prepared in accordance with 320 b, as applicable to a program-specific audit, and one copy of this reporting package shall be submitted to the Federal clearinghouse designated by OMB to be retained as an archival copy. Also, when the schedule of findings and questioned costs disclosed audit findings or the summary schedule of prior audit findings reported the status of any audit findings, the auditee shall submit one copy of the reporting package to the Federal clearinghouse on behalf of the Federal awarding agency, or directly to the pass-through entity in the case of a subrecipient. Instead of submitting the reporting package to the pass-through entity, when a subrecipient is not required to submit a reporting package to the pass-through entity, the subrecipient shall provide written notification to the pass-through entity, consistent with the requirements of 320 e 2. A subrecipient may submit a copy of the reporting package to the pass-through entity to comply with this notification requirement.

235 d Other sections of this part may apply. Program-specific audits are subject to 100 through 215 b, 220 through 230, 300 through 305, 315, 320 f through 320 j, 400 through 405, 510 through 515, and other referenced provisions of this part unless contrary to the provisions of this section, a program-specific audit guide, or program laws and regulations.

Subpart C--Auditees300 Auditee responsibilities. The auditee shall:

300 a Identify, in its accounts, all Federal awards received and expended and the Federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the Federal agency, and name of the pass-through entity.

300 b Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.

300 c Comply with laws, regulations, and the provisions of contracts or grant agreements related to each of its Federal programs.

300 d Prepare appropriate financial statements, including the schedule of expenditures of

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Federal awards in accordance with 310. 300 e Ensure that the audits required by this part are properly performed and submitted when

due. When extensions to the report submission due date required by 320 a are granted by the cognizant or oversight agency for audit, promptly notify the Federal clearinghouse designated by OMB and each pass-through entity providing Federal awards of the extension.

300 f Follow up and take corrective action on audit findings, including preparation of a summary schedule of prior audit findings and a corrective action plan in accordance with 315 b and 315 c, respectively.

305 Auditor selection.305 a Auditor procurement. In procuring audit services, auditees shall follow the

procurement standards prescribed by the Grants Management Common Rule (hereinafter referred to as the “A-102 Common Rule”) published March 11, 1988 and amended April 19, 1995 [insert appropriate CFR citation], Circular A-110, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations,” [sic; now at 2CFR 215] or the FAR (48 CFR part 42), as applicable (OMB Circulars are available from the Office of Administration, Publications Office, room 2200, New Executive Office Building, Washington, DC 20503). Whenever possible, auditees shall make positive efforts to utilize small businesses, minority-owned firms, and women’s business enterprises, in procuring audit services as stated in the A-102 Common Rule, OMB Circular A-110 [sic; now at 2CFR 215], or the FAR (48 CFR part 42), as applicable. In requesting proposals for audit services, the objectives and scope of the audit should be made clear. Factors to be considered in evaluating each proposal for audit services include the responsiveness to the request for proposal, relevant experience, availability of staff with professional qualifications and technical abilities, the results of external quality control reviews, and price.

305 b Restriction on auditor preparing indirect cost proposals. An auditor who prepares the indirect cost proposal or cost allocation plan may not also be selected to perform the audit required by this part when the indirect costs recovered by the auditee during the prior year exceeded $1 million. This restriction applies to the base year used in the preparation of the indirect cost proposal or cost allocation plan and any subsequent years in which the resulting indirect cost agreement or cost allocation plan is used to recover costs. To minimize any disruption in existing contracts for audit services, this paragraph applies to audits of fiscal years beginning after June 30, 1998.

305 c Use of Federal auditors. Federal auditors may perform all or part of the work required under this part if they comply fully with the requirements of this part.

310 Financial statements.310 a Financial statements. The auditee shall prepare financial statements that reflect its

financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The financial statements shall be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, organization-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in

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accordance with 500 a and prepare separate financial statements.310 b Schedule of expenditures of Federal awards. The auditee shall also prepare a

schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple award years, the auditee may list the amount of Federal awards expended for each award year separately. At a minimum, the schedule shall:

310 b 1 List individual Federal programs by Federal agency. For Federal programs included in a cluster of programs, list individual Federal programs within a cluster of programs. For R&D, total Federal awards expended shall be shown either by individual award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services.

310 b 2 For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity shall be included.

310 b 3 Provide total Federal awards expended for each individual Federal program and the CFDA number or other identifying number when the CFDA information is not available.

310 b 4 Include notes that describe the significant accounting policies used in preparing the schedule.

310 b 5 To the extent practical, pass-through entities should identify in the schedule the total amount provided to subrecipients from each Federal program.

310 b 6 Include, in either the schedule or a note to the schedule, the value of the Federal awards expended in the form of non-cash assistance, the amount of insurance in effect during the year, and loans or loan guarantees outstanding at year end. While not required, it is preferable to present this information in the schedule.

315 Audit findings follow-up.315 a General. The auditee is responsible for follow-up and corrective action on all audit

findings. As part of this responsibility, the auditee shall prepare a summary schedule of prior audit findings. The auditee shall also prepare a corrective action plan for current year audit findings. The summary schedule of prior audit findings and the corrective action plan shall include the reference numbers the auditor assigns to audit findings under 510 c. Since the summary schedule may include audit findings from multiple years, it shall include the fiscal year in which the finding initially occurred.

315 b Summary schedule of prior audit findings. The summary schedule of prior audit findings shall report the status of all audit findings included in the prior audit’s schedule of findings and questioned costs relative to Federal awards. The summary schedule shall also include audit findings reported in the prior audit’s summary schedule of prior audit findings except audit findings listed as corrected in accordance with paragraph b 1 of this section, or no longer valid or not warranting further action in accordance with paragraph b 4 of this section.

315 b 1 When audit findings were fully corrected, the summary schedule need only list the

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audit findings and state that corrective action was taken.315 b 2 When audit findings were not corrected or were only partially corrected, the summary

schedule shall describe the planned corrective action as well as any partial corrective action taken.

315 b 3 When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency’s or pass-through entity’s management decision, the summary schedule shall provide an explanation.

315 b 4 When the auditee believes the audit findings are no longer valid or do not warrant further action, the reasons for this position shall be described in the summary schedule. A valid reason for considering an audit finding as not warranting further action is that all of the following have occurred:

315 b 4 i Two years have passed since the audit report in which the finding occurred was submitted to the Federal clearinghouse;

315 b 4 ii The Federal agency or pass-through entity is not currently following up with the auditee on the audit finding; and

315 b 4 iii A management decision was not issued.315 c Corrective action plan. At the completion of the audit, the auditee shall prepare a

corrective action plan to address each audit finding included in the current year auditor’s reports. The corrective action plan shall provide the name(s) of the contact person(s) responsible for corrective action, the corrective action planned, and the anticipated completion date. If the auditee does not agree with the audit findings or believes corrective action is not required, then the corrective action plan shall include an explanation and specific reasons.

320 Report submission. FM1G320 a General. The audit shall be completed and the data collection form described in

paragraph b of this section and reporting package described in paragraph c of this section shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. (However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the data collection form and reporting package shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or 13 months after the end of the audit period.) Unless restricted by law or regulation, the auditee shall make copies available for public inspection.

FM1G

320 b Data Collection.320 b 1 The auditee shall submit a data collection form which states whether the audit was

completed in accordance with this part and provides information about the auditee, its Federal programs, and the results of the audit. The form shall be approved by OMB, available from the Federal clearinghouse designated by OMB, and include data elements similar to those presented in this paragraph. A senior level representative of the auditee (e.g., State controller, director of finance, chief executive officer, or chief financial officer) shall sign a statement to be included as part of the form certifying

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that: the auditee complied with the requirements of this part, the form was prepared in accordance with this part (and the instructions accompanying the form), and the information included in the form, in its entirety, are accurate and complete.

320 b 2 The data collection form shall include the following data elements:320 b 2 i The type of report the auditor issued on the financial statements of the auditee (i.e.,

unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion).320 b 2 ii Where applicable, a statement that reportable conditions in internal control were

disclosed by the audit of the financial statements and whether any such conditions were material weaknesses.

320 b 2 iii A statement as to whether the audit disclosed any noncompliance which is material to the financial statements of the auditee.

320 b 2 iv Where applicable, a statement that reportable conditions in internal control over major programs were disclosed by the audit and whether any such conditions were material weaknesses.

320 b 2 v The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion).

320 b 2 vi A list of the Federal awarding agencies which will receive a copy of the reporting package pursuant to 320 d 2 of OMB Circular A-133.

320 b 2 vii A yes or no statement as to whether the auditee qualified as a low-risk auditee under 530 of OMB Circular A-133.

320 b 2 viii

The dollar threshold used to distinguish between Type A and Type B programs as defined in 520 b of OMB Circular A-133.

320 b 2 ix The Catalog of Federal Domestic Assistance (CFDA) number for each Federal program, as applicable.

320 b 2 x The name of each Federal program and identification of each major program. Individual programs within a cluster of programs should be listed in the same level of detail as they are listed in the schedule of expenditures of Federal awards.

320 b 2 xi The amount of expenditures in the schedule of expenditures of Federal awards associated with each Federal program.

320 b 2 xii For each Federal program, a yes or no statement as to whether there are audit findings in each of the following types of compliance requirements and the total amount of any questioned costs:

320 b 2 xii A

Activities allowed or unallowed.

320 b 2 xii B

Allowable costs/cost principles.

320 b 2 xii C

Cash management.

320 b 2 xii D

Davis-Bacon Act.

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320 b 2 xii E

Eligibility.

320 b 2 xii F

Equipment and real property management.

320 b 2 xii G

Matching, level of effort, earmarking.

320 b 2 xii H

Period of availability of Federal funds.

320 b 2 xii I

Procurement and suspension and debarment.

320 b 2 xii J

Program income.

320 b 2 xii K

Real property acquisition and relocation assistance.

320 b 2 xii L

Reporting.

320 b 2 xii M

Subrecipient monitoring.

320 b 2 xii N

Special tests and provisions.

320 b 2 xiii

Auditee Name, Employer Identification Number(s), Name and Title of Certifying Official, Telephone Number, Signature, and Date.

320 b 2 xiv

Auditor Name, Name and Title of Contact Person, Auditor Address, Auditor Telephone Number, Signature, and Date.

320 b 2 xv Whether the auditee has either a cognizant or oversight agency for audit.320 b 2 xvi

The name of the cognizant or oversight agency for audit determined in accordance with 400 a and 400 b, respectively.

320 b 3 Using the information included in the reporting package described in paragraph c of this section, the auditor shall complete the applicable sections of the form. The auditor shall sign a statement to be included as part of the data collection form that indicates, at a minimum, the source of the information included in the form, the auditor’s responsibility for the information, that the form is not a substitute for the reporting package described in paragraph c of this section, and that the content of the form is limited to the data elements prescribed by OMB.

320 c Reporting package. The reporting package shall include the:320 c 1 Financial statements and schedule of expenditures of Federal awards discussed in 310

a and 310 b, respectively; 320 c 2 Summary schedule of prior audit findings discussed in 310 b;320 c 3 Auditor’s report(s) discussed in 505; and320 c 4 Corrective action plan discussed in 315 c.

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320 d Submission to clearinghouse. All auditees shall submit to the Federal clearinghouse designated by OMB the data collection form described in paragraph b of this section and one copy of the reporting package described in paragraph c of this section for:

320 d 1 The Federal clearinghouse to retain as an archival copy; and320 d 2 Each Federal awarding agency when the schedule of findings and questioned costs

disclosed audit findings relating to Federal awards that the Federal awarding agency provided directly or the summary schedule of prior audit findings reported the status of any audit findings relating to Federal awards that the Federal awarding agency provided directly.

320 e Additional submission by subrecipients.320 e 1 In addition to the requirements discussed in paragraph d of this section, auditees that

are also subrecipients shall submit to each pass-through entity one copy of the reporting package described in paragraph c of this section for each pass-through entity when the schedule of findings and questioned costs disclosed audit findings relating to Federal awards that the pass-through entity provided or the summary schedule of prior audit findings reported the status of any audit findings relating to Federal awards that the pass-through entity provided.

320 e 2 Instead of submitting the reporting package to a pass-through entity, when a subrecipient is not required to submit a reporting package to a pass-through entity pursuant to paragraph e 1 of this section, the subrecipient shall provide written notification to the pass-through entity that: an audit of the subrecipient was conducted in accordance with this part (including the period covered by the audit and the name, amount, and CFDA number of the Federal award(s) provided by the pass-through entity); the schedule of findings and questioned costs disclosed no audit findings relating to the Federal award(s) that the pass-through entity provided; and, the summary schedule of prior audit findings did not report on the status of any audit findings relating to the Federal award(s) that the pass-through entity provided. A subrecipient may submit a copy of the reporting package described in paragraph c of this section to a pass-through entity to comply with this notification requirement.

320 f Requests for report copies. In response to requests by a Federal agency or pass-through entity, auditees shall submit the appropriate copies of the reporting package described in paragraph c of this section and, if requested, a copy of any management letters issued by the auditor.

320 g Report retention requirements. Auditees shall keep one copy of the data collection form described in paragraph b of this section and one copy of the reporting package described in paragraph c of this section on file for three years from the date of submission to the Federal clearinghouse designated by OMB. Pass-through entities shall keep subrecipients’ submissions on file for three years from date of receipt.

320 h Clearinghouse responsibilities. The Federal clearinghouse designated by OMB shall distribute the reporting packages received in accordance with paragraph d 2 of this section and 235 c 3 to applicable Federal awarding agencies, maintain a data base of completed audits, provide appropriate information to Federal agencies, and follow up with known auditees which have not submitted the required data collection forms and reporting packages.

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320 i Clearinghouse address. The address of the Federal clearinghouse currently designated by OMB is Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th Street, Jeffersonville, IN 47132.

320 j Electronic filing. Nothing in this part shall preclude electronic submissions to the Federal clearinghouse in such manner as may be approved by OMB. With OMB approval, the Federal clearinghouse may pilot test methods of electronic submissions.

D Subpart D--Federal Agencies and Pass-Through Entities 400 Responsibilities. FM1G400 a Cognizant agency for audit responsibilities. Recipients expending more than $25

million ($50 million for fiscal years ending after December 31, 2003) a year in Federal awards shall have a cognizant agency for audit. The designated cognizant agency for audit shall be the Federal awarding agency that provides the predominant amount of direct funding to a recipient unless OMB makes a specific cognizant agency for audit assignment. Following is effective for fiscal years ending on or before December 31, 2003: To provide for continuity of cognizance, the determination of the predominant amount of direct funding shall be based upon direct Federal awards expended in the recipient’s fiscal years ending in 1995, 2000, 2005, and every fifth year thereafter. For example, audit cognizance for periods ending in 1997 through 2000 will be determined based on Federal awards expended in 1995. (However, for States and local governments that expend more than $25 million a year in Federal awards and have previously assigned cognizant agencies for audit, the requirements of this paragraph are not effective until fiscal years beginning after June 30, 2000.) Following is effective for fiscal years ending after December 31, 2003: The determination of the predominant amount of direct funding shall be based upon direct Federal awards expended in the recipient’s fiscal years ending in 2004, 2009, 2014, and every fifth year thereafter. For example, audit cognizance for periods ending in 2006 through 2010 will be determined based on Federal awards expended in 2004. (However, for 2001 through 2005, the cognizant agency for audit is determined based on the predominant amount of direct Federal awards expended in the recipent’s fiscal year ending in 2000).Notwithstanding the manner in which audit cognizance is determined, a Federal awarding agency with cognizance for an auditee may reassign cognizance to another Federal awarding agency which provides substantial direct funding and agrees to be the cognizant agency for audit. Within 30 days after any reassignment, both the old and the new cognizant agency for audit shall notify the auditee, and, if known, the auditor of the reassignment. The cognizant agency for audit shall:

400 a 1 Provide technical audit advice and liaison to auditees and auditors.400 a 2 Consider auditee requests for extensions to the report submission due date required by

320 a. The cognizant agency for audit may grant extensions for good cause. 400 a 3 Obtain or conduct quality control reviews of selected audits made by non-Federal

auditors, and provide the results, when appropriate, to other interested organizations.400 a 4 Promptly inform other affected Federal agencies and appropriate Federal law

enforcement officials of any direct reporting by the auditee or its auditor of

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irregularities or illegal acts, as required by GAGAS or laws and regulations.400 a 5 Advise the auditor and, where appropriate, the auditee of any deficiencies found in the

audits when the deficiencies require corrective action by the auditor. When advised of deficiencies, the auditee shall work with the auditor to take corrective action. If corrective action is not taken, the cognizant agency for audit shall notify the auditor, the auditee, and applicable Federal awarding agencies and pass-through entities of the facts and make recommendations for follow-up action. Major inadequacies or repetitive substandard performance by auditors shall be referred to appropriate State licensing agencies and professional bodies for disciplinary action.

400 a 6 Coordinate, to the extent practical, audits or reviews made by or for Federal agencies that are in addition to the audits made pursuant to this part, so that the additional audits or reviews build upon audits performed in accordance with this part.

400 a 7 Coordinate a management decision for audit findings that affect the Federal programs of more than one agency.

400 a 8 Coordinate the audit work and reporting responsibilities among auditors to achieve the most cost-effective audit.

400 a 9 For biennial audits permitted under 220, consider auditee requests to qualify as a low-risk auditee under 530 a.

400 b Oversight agency for audit responsibilities. An auditee which does not have a designated cognizant agency for audit will be under the general oversight of the Federal agency determined in accordance with 105. The oversight agency for audit:

400 b 1 Shall provide technical advice to auditees and auditors as requested.400 b 2 May assume all or some of the responsibilities normally performed by a cognizant

agency for audit.400 c Federal awarding agency responsibilities. The Federal awarding agency shall

perform the following for the Federal awards it makes:400 c 1 Identify Federal awards made by informing each recipient of the CFDA title and

number, award name and number, award year, and if the award is for R&D. When some of this information is not available, the Federal agency shall provide information necessary to clearly describe the Federal award.

400 c 2 Advise recipients of requirements imposed on them by Federal laws, regulations, and the provisions of contracts or grant agreements.

400 c 3 Ensure that audits are completed and reports are received in a timely manner and in accordance with the requirements of this part.

400 c 4 Provide technical advice and counsel to auditees and auditors as requested.400 c 5 Issue a management decision on audit findings within six months after receipt of the

audit report and ensure that the recipient takes appropriate and timely corrective action.

400 c 6 Assign a person responsible for providing annual updates of the compliance supplement to OMB.

400 d Pass-through entity responsibilities. A pass-through entity shall perform the FM1G

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following for the Federal awards it makes:400 d 1 Identify Federal awards made by informing each subrecipient of CFDA title and

number, award name and number, award year, if the award is R&D, and name of Federal agency. When some of this information is not available, the pass-through entity shall provide the best information available to describe the Federal award.

400 d 2 Advise subrecipients of requirements imposed on them by Federal laws, regulations, and the provisions of contracts or grant agreements as well as any supplemental requirements imposed by the pass-through entity.

400 d 3 Monitor the activities of subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved.

400 d 4 Ensure that subrecipients expending $300,000 ($500,000 for fiscal years ending after December 31, 2003) or more in Federal awards during the subrecipient’s fiscal year have met the audit requirements of this part for that fiscal year.

FM1G

400 d 5 Issue a management decision on audit findings within six months after receipt of the subrecipient’s audit report and ensure that the subrecipient takes appropriate and timely corrective action.

400 d 6 Consider whether subrecipient audits necessitate adjustment of the pass-through entity’s own records.

400 d 7 Require each subrecipient to permit the pass-through entity and auditors to have access to the records and financial statements as necessary for the pass-through entity to comply with this part.

405 Management decision.405 a General. The management decision shall clearly state whether or not the audit finding

is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. If the auditee has not completed corrective action, a timetable for follow-up should be given. Prior to issuing the management decision, the Federal agency or pass-through entity may request additional information or documentation from the auditee, including a request for auditor assurance related to the documentation, as a way of mitigating disallowed costs. The management decision should describe any appeal process available to the auditee.

405 b Federal agency. As provided in 400 a 7, the cognizant agency for audit shall be responsible for coordinating a management decision for audit findings that affect the programs of more than one Federal agency. As provided in 400 c 5, a Federal awarding agency is responsible for issuing a management decision for findings that relate to Federal awards it makes to recipients. Alternate arrangements may be made on a case-by-case basis by agreement among the Federal agencies concerned.

405 c Pass-through entity. As provided in 400 d 5, the pass-through entity shall be responsible for making the management decision for audit findings that relate to Federal awards it makes to subrecipients.

405 d Time requirements. The entity responsible for making the management decision shall

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do so within six months of receipt of the audit report. Corrective action should be initiated within six months after receipt of the audit report and proceed as rapidly as possible.

405 e Reference numbers. Management decisions shall include the reference numbers the auditor assigned to each audit finding in accordance with 510 c.

E Subpart E--Auditors 500 Scope of audit.500 a General. The audit shall be conducted in accordance with GAGAS. The audit shall

cover the entire operations of the auditee; or, at the option of the auditee, such audit shall include a series of audits that cover departments, agencies, and other organizational units which expended or otherwise administered Federal awards during such fiscal year, provided that each such audit shall encompass the financial statements and schedule of expenditures of Federal awards for each such department, agency, and other organizational unit, which shall be considered to be a non-Federal entity. The financial statements and schedule of expenditures of Federal awards shall be for the same fiscal year.

500 b Financial statements. The auditor shall determine whether the financial statements of the auditee are presented fairly in all material respects in conformity with generally accepted accounting principles. The auditor shall also determine whether the schedule of expenditures of Federal awards is presented fairly in all material respects in relation to the auditee’s financial statements taken as a whole.

500 c Internal control.500 c 1 In addition to the requirements of GAGAS, the auditor shall perform procedures to

obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk for major programs.

500 c 2 Except as provided in paragraph c 3 of this section, the auditor shall:500 c 2 i Plan the testing of internal control over major programs to support a low assessed level

of control risk for the assertions relevant to the compliance requirements for each major program; and

500 c 2 ii Perform testing of internal control as planned in paragraph c 2 i of this section.500 c 3 When internal control over some or all of the compliance requirements for a major

program are likely to be ineffective in preventing or detecting noncompliance, the planning and performing of testing described in paragraph c 2 of this section are not required for those compliance requirements. However, the auditor shall report a reportable condition (including whether any such condition is a material weakness) in accordance with 510, assess the related control risk at the maximum, and consider whether additional compliance tests are required because of ineffective internal control.

500 d Compliance.500 d 1 In addition to the requirements of GAGAS, the auditor shall determine whether the

auditee has complied with laws, regulations, and the provisions of contracts or grant agreements that may have a direct and material effect on each of its major programs.

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500 d 2 The principal compliance requirements applicable to most Federal programs and the compliance requirements of the largest Federal programs are included in the compliance supplement.

500 d 3 For the compliance requirements related to Federal programs contained in the compliance supplement, an audit of these compliance requirements will meet the requirements of this part. Where there have been changes to the compliance requirements and the changes are not reflected in the compliance supplement, the auditor shall determine the current compliance requirements and modify the audit procedures accordingly. For those Federal programs not covered in the compliance supplement, the auditor should use the types of compliance requirements contained in the compliance supplement as guidance for identifying the types of compliance requirements to test, and determine the requirements governing the Federal program by reviewing the provisions of contracts and grant agreements and the laws and regulations referred to in such contracts and grant agreements.

500 d 4 The compliance testing shall include tests of transactions and such other auditing procedures necessary to provide the auditor sufficient evidence to support an opinion on compliance.

500 e Audit follow-up. The auditor shall follow-up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee in accordance with 315 b, and report, as a current year audit finding, when the auditor concludes that the summary schedule of prior audit findings materially misrepresents the status of any prior audit finding. The auditor shall perform audit follow-up procedures regardless of whether a prior audit finding relates to a major program in the current year.

500 f Data Collection Form. As required in 320 b 3, the auditor shall complete and sign specified sections of the data collection form.

505 Audit reporting. The auditor’s report(s) may be in the form of either combined or separate reports and may be organized differently from the manner presented in this section. The auditor’s report(s) shall state that the audit was conducted in accordance with this part and include the following:

505 a An opinion (or disclaimer of opinion) as to whether the financial statements are presented fairly in all material respects in conformity with generally accepted accounting principles and an opinion (or disclaimer of opinion) as to whether the schedule of expenditures of Federal awards is presented fairly in all material respects in relation to the financial statements taken as a whole.

505 b A report on internal control related to the financial statements and major programs. This report shall describe the scope of testing of internal control and the results of the tests, and, where applicable, refer to the separate schedule of findings and questioned costs described in paragraph d of this section.

505 c A report on compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements. This report shall also include an opinion (or disclaimer of opinion) as to whether the auditee complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on each major

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program, and, where applicable, refer to the separate schedule of findings and questioned costs described in paragraph d of this section.

505 d A schedule of findings and questioned costs which shall include the following three components:

505 d 1 A summary of the auditor’s results which shall include:505 d 1 i The type of report the auditor issued on the financial statements of the auditee (i.e.,

unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion);505 d 1 ii Where applicable, a statement that reportable conditions in internal control were

disclosed by the audit of the financial statements and whether any such conditions were material weaknesses;

505 d 1 iii A statement as to whether the audit disclosed any noncompliance which is material to the financial statements of the auditee;

505 d 1 iv Where applicable, a statement that reportable conditions in internal control over major programs were disclosed by the audit and whether any such conditions were material weaknesses;

505 d 1 v The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion);

505 d 1 vi A statement as to whether the audit disclosed any audit findings which the auditor is required to report under 510 a;

505 d 1 vii An identification of major programs;505 d 1 viii

The dollar threshold used to distinguish between Type A and Type B programs, as described in 520 b; and

505 d 1 ix A statement as to whether the auditee qualified as a low-risk auditee under 530. 505 d 2 Findings relating to the financial statements which are required to be reported in

accordance with GAGAS.505 d 3 Findings and questioned costs for Federal awards which shall include audit findings as

defined in 510 a.505 d 3 i Audit findings (e.g., internal control findings, compliance findings, questioned costs,

or fraud) which relate to the same issue should be presented as a single audit finding. Where practical, audit findings should be organized by Federal agency or pass-through entity.

505 d 3 ii Audit findings which relate to both the financial statements and Federal awards, as reported under paragraphs d 2 and d 3 of this section, respectively, should be reported in both sections of the schedule. However, the reporting in one section of the schedule may be in summary form with a reference to a detailed reporting in the other section of the schedule.

510 Audit findings.510 a Audit findings reported. The auditor shall report the following as audit findings in a

schedule of findings and questioned costs:510 a 1 Reportable conditions in internal control over major programs. The auditor’s

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determination of whether a deficiency in internal control is a reportable condition for the purpose of reporting an audit finding is in relation to a type of compliance requirement for a major program or an audit objective identified in the compliance supplement. The auditor shall identify reportable conditions which are individually or cumulatively material weaknesses.

510 a 2 Material noncompliance with the provisions of laws, regulations, contracts, or grant agreements related to a major program. The auditor’s determination of whether a noncompliance with the provisions of laws, regulations, contracts, or grant agreements is material for the purpose of reporting an audit finding is in relation to a type of compliance requirement for a major program or an audit objective identified in the compliance supplement.

510 a 3 Known questioned costs which are greater than $10,000 for a type of compliance requirement for a major program. Known questioned costs are those specifically identified by the auditor. In evaluating the effect of questioned costs on the opinion on compliance, the auditor considers the best estimate of total costs questioned (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor shall also report known questioned costs when likely questioned costs are greater than $10,000 for a type of compliance requirement for a major program. In reporting questioned costs, the auditor shall include information to provide proper perspective for judging the prevalence and consequences of the questioned costs.

510 a 4 Known questioned costs which are greater than $10,000 for a Federal program which is not audited as a major program. Except for audit follow-up, the auditor is not required under this part to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program which is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program which is not audited as a major program (e.g., as part of audit follow-up or other audit procedures) and the known questioned costs are greater than $10,000, then the auditor shall report this as an audit finding.

510 a 5 The circumstances concerning why the auditor’s report on compliance for major programs is other than an unqualified opinion, unless such circumstances are otherwise reported as audit findings in the schedule of findings and questioned costs for Federal awards.

510 a 6 Known fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to make an additional reporting when the auditor confirms that the fraud was reported outside of the auditor’s reports under the direct reporting requirements of GAGAS.

510 a 7 Instances where the results of audit follow-up procedures disclosed that the summary schedule of prior audit findings prepared by the auditee in accordance with 315 b materially misrepresents the status of any prior audit finding.

510 b Audit finding detail. Audit findings shall be presented in sufficient detail for the auditee to prepare a corrective action plan and take corrective action and for Federal agencies and pass-through entities to arrive at a management decision. The following

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specific information shall be included, as applicable, in audit findings:510 b 1 Federal program and specific Federal award identification including the CFDA title

and number, Federal award number and year, name of Federal agency, and name of the applicable pass-through entity. When information, such as the CFDA title and number or Federal award number, is not available, the auditor shall provide the best information available to describe the Federal award.

510 b 2 The criteria or specific requirement upon which the audit finding is based, including statutory, regulatory, or other citation.

510 b 3 The condition found, including facts that support the deficiency identified in the audit finding.

510 b 4 Identification of questioned costs and how they were computed.510 b 5 Information to provide proper perspective for judging the prevalence and

consequences of the audit findings, such as whether the audit findings represent an isolated instance or a systemic problem. Where appropriate, instances identified shall be related to the universe and the number of cases examined and be quantified in terms of dollar value.

510 b 6 The possible asserted effect to provide sufficient information to the auditee and Federal agency, or pass-through entity in the case of a subrecipient, to permit them to determine the cause and effect to facilitate prompt and proper corrective action.

510 b 7 Recommendations to prevent future occurrences of the deficiency identified in the audit finding.

510 b 8 Views of responsible officials of the auditee when there is disagreement with the audit findings, to the extent practical.

510 c Reference numbers. Each audit finding in the schedule of findings and questioned costs shall include a reference number to allow for easy referencing of the audit findings during follow-up.

515 Audit working papers.515 a Retention of working papers. The auditor shall retain working papers and reports for

a minimum of three years after the date of issuance of the auditor’s report(s) to the auditee, unless the auditor is notified in writing by the cognizant agency for audit, oversight agency for audit, or pass-through entity to extend the retention period. When the auditor is aware that the Federal awarding agency, pass-through entity, or auditee is contesting an audit finding, the auditor shall contact the parties contesting the audit finding for guidance prior to destruction of the working papers and reports.

515 b Access to working papers. Audit working papers shall be made available upon request to the cognizant or oversight agency for audit or its designee, a Federal agency providing direct or indirect funding, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this part. Access to working papers includes the right of Federal agencies to obtain copies of working papers, as is reasonable and necessary.

520 Major program determination.520 a General. The auditor shall use a risk-based approach to determine which Federal

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programs are major programs. This risk-based approach shall include consideration of: Current and prior audit experience, oversight by Federal agencies and pass-through entities, and the inherent risk of the Federal program. The process in paragraphs b through i of this section shall be followed.

520 b Step 1.520 b 1 The auditor shall identify the larger Federal programs, which shall be labeled Type A

programs. Type A programs are defined as Federal programs with Federal awards expended during the audit period exceeding the larger of:

520 b 1 i $300,000 or three percent (.03) of total Federal awards expended in the case of an auditee for which total Federal awards expended equal or exceed $300,000 but are less than or equal to $100 million.

520 b 1 ii $3 million or three-tenths of one percent (.003) of total Federal awards expended in the case of an auditee for which total Federal awards expended exceed $100 million but are less than or equal to $10 billion.

520 b 1 iii $30 million or 15 hundredths of one percent (.0015) of total Federal awards expended in the case of an auditee for which total Federal awards expended exceed $10 billion.

520 b 2 Federal programs not labeled Type A under paragraph b 1 of this section shall be labeled Type B programs.

520 b 3 The inclusion of large loan and loan guarantees (loans) should not result in the exclusion of other programs as Type A programs. When a Federal program providing loans significantly affects the number or size of Type A programs, the auditor shall consider this Federal program as a Type A program and exclude its values in determining other Type A programs.

520 b 4 For biennial audits permitted under 220, the determination of Type A and Type B programs shall be based upon the Federal awards expended during the two-year period.

520 c Step 2. 520 c 1 The auditor shall identify Type A programs which are low-risk. For a Type A program

to be considered low-risk, it shall have been audited as a major program in at least one of the two most recent audit periods (in the most recent audit period in the case of a biennial audit), and, in the most recent audit period, it shall have had no audit findings under 510 a. However, the auditor may use judgment and consider that audit findings from questioned costs under 510 a 3 and 510 a 4, fraud under 510 a 6, and audit follow-up for the summary schedule of prior audit findings under 510 a 7 do not preclude the Type A program from being low-risk. The auditor shall consider: the criteria in 525 c, 525 d 1, 525 d 2, and 525 d 3; the results of audit follow-up; whether any changes in personnel or systems affecting a Type A program have significantly increased risk; and apply professional judgment in determining whether a Type A program is low-risk.

520 c 2 Notwithstanding paragraph c 1 of this section, OMB may approve a Federal awarding agency’s request that a Type A program at certain recipients may not be considered low-risk. For example, it may be necessary for a large Type A program to be audited as major each year at particular recipients to allow the Federal agency to comply with

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the Government Management Reform Act of 1994 (31 U.S.C. 3515). The Federal agency shall notify the recipient and, if known, the auditor at least 180 days prior to the end of the fiscal year to be audited of OMB’s approval.

520 d Step 3. 520 d 1 The auditor shall identify Type B programs which are high-risk using professional

judgment and the criteria in 525. However, should the auditor select Option 2 under Step 4 (paragraph e 2 i B of this section), the auditor is not required to identify more high-risk Type B programs than the number of low-risk Type A programs. Except for known reportable conditions in internal control or compliance problems as discussed in 525 b 1, 525 b 2, and 525 c 1, a single criteria in 525 would seldom cause a Type B program to be considered high-risk.

520 d 2 The auditor is not expected to perform risk assessments on relatively small Federal programs. Therefore, the auditor is only required to perform risk assessments on Type B programs that exceed the larger of:

520 d 2 i $100,000 or three-tenths of one percent (.003) of total Federal awards expended when the auditee has less than or equal to $100 million in total Federal awards expended.

520 d 2 ii $300,000 or three-hundredths of one percent (.0003) of total Federal awards expended when the auditee has more than $100 million in total Federal awards expended.

520 e Step 4. At a minimum, the auditor shall audit all of the following as major programs:520 e 1 All Type A programs, except the auditor may exclude any Type A programs identified

as low-risk under Step 2 (paragraph c 1 of this section).520 e 2 i High-risk Type B programs as identified under either of the following two options:520 e 2 i A Option 1. At least one half of the Type B programs identified as high-risk under Step

3 (paragraph d of this section), except this paragraph e 2 i A does not require the auditor to audit more high-risk Type B programs than the number of low-risk Type A programs identified as low-risk under Step 2.

520 e 2 i B Option 2. One high-risk Type B program for each Type A program identified as low-risk under Step 2.

520 e 2 ii When identifying which high-risk Type B programs to audit as major under either Option 1 or 2 in paragraph e 2 i A or B, the auditor is encouraged to use an approach which provides an opportunity for different high-risk Type B programs to be audited as major over a period of time.

520 e 3 Such additional programs as may be necessary to comply with the percentage of coverage rule discussed in paragraph f of this section. This paragraph e 3 may require the auditor to audit more programs as major than the number of Type A programs.

520 f Percentage of coverage rule. The auditor shall audit as major programs Federal programs with Federal awards expended that, in the aggregate, encompass at least 50% of total Federal awards expended. If the auditee meets the criteria in 530 for a low-risk auditee, the auditor need only audit as major programs Federal programs with Federal awards expended that, in the aggregate, encompass at least 25% of total Federal awards expended.

520 g Documentation of risk. The auditor shall document in the working papers the risk

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analysis process used in determining major programs.520 h Auditor’s judgment. When the major program determination was performed and

documented in accordance with this part, the auditor’s judgment in applying the risk-based approach to determine major programs shall be presumed correct. Challenges by Federal agencies and pass-through entities shall only be for clearly improper use of the guidance in this part. However, Federal agencies and pass-through entities may provide auditors guidance about the risk of a particular Federal program and the auditor shall consider this guidance in determining major programs in audits not yet completed.

520 i Deviation from use of risk criteria. For first-year audits, the auditor may elect to determine major programs as all Type A programs plus any Type B programs as necessary to meet the percentage of coverage rule discussed in paragraph f of this section. Under this option, the auditor would not be required to perform the procedures discussed in paragraphs c, d, and e of this section.

520 i 1 A first-year audit is the first year the entity is audited under this part or the first year of a change of auditors.

520 i 2 To ensure that a frequent change of auditors would not preclude audit of high-risk Type B programs, this election for first-year audits may not be used by an auditee more than once in every three years.

525 Criteria for Federal program risk. 525 a General. The auditor’s determination should be based on an overall evaluation of the

risk of noncompliance occurring which could be material to the Federal program. The auditor shall use auditor judgment and consider criteria, such as described in paragraph b, c, and d of this section, to identify risk in Federal programs. Also, as part of the risk analysis, the auditor may wish to discuss a particular Federal program with auditee management and the Federal agency or pass-through entity.

525 b Current and prior audit experience.525 b 1 Weaknesses in internal control over Federal programs would indicate higher risk.

Consideration should be given to the control environment over Federal programs and such factors as the expectation of management’s adherence to applicable laws and regulations and the provisions of contracts and grant agreements and the competence and experience of personnel who administer the Federal programs.

525 b 1 i A Federal program administered under multiple internal control structures may have higher risk. When assessing risk in a large single audit, the auditor shall consider whether weaknesses are isolated in a single operating unit (e.g., one college campus) or pervasive throughout the entity.

525 b 1 ii When significant parts of a Federal program are passed through to subrecipients, a weak system for monitoring subrecipients would indicate higher risk.

525 b 1 iii The extent to which computer processing is used to administer Federal programs, as well as the complexity of that processing, should be considered by the auditor in assessing risk. New and recently modified computer systems may also indicate risk.

525 b 2 Prior audit findings would indicate higher risk, particularly when the situations

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identified in the audit findings could have a significant impact on a Federal program or have not been corrected.

525 b 3 Federal programs not recently audited as major programs may be of higher risk than Federal programs recently audited as major programs without audit findings.

525 c Oversight exercised by Federal agencies and pass-through entities.525 c 1 Oversight exercised by Federal agencies or pass-through entities could indicate risk.

For example, recent monitoring or other reviews performed by an oversight entity which disclosed no significant problems would indicate lower risk. However, monitoring which disclosed significant problems would indicate higher risk.

525 c 2 Federal agencies, with the concurrence of OMB, may identify Federal programs which are higher risk. OMB plans to provide this identification in the compliance supplement.

525 d Inherent risk of the Federal program.525 d 1 The nature of a Federal program may indicate risk. Consideration should be given to

the complexity of the program and the extent to which the Federal program contracts for goods and services. For example, Federal programs that disburse funds through third party contracts or have eligibility criteria may be of higher risk. Federal programs primarily involving staff payroll costs may have a high-risk for time and effort reporting, but otherwise be at low-risk.

525 d 2 The phase of a Federal program in its life cycle at the Federal agency may indicate risk. For example, a new Federal program with new or interim regulations may have higher risk than an established program with time-tested regulations. Also, significant changes in Federal programs, laws, regulations, or the provisions of contracts or grant agreements may increase risk.

525 d 3 The phase of a Federal program in its life cycle at the auditee may indicate risk. For example, during the first and last years that an auditee participates in a Federal program, the risk may be higher due to start-up or closeout of program activities and staff.

525 d 4 Type B programs with larger Federal awards expended would be of higher risk than programs with substantially smaller Federal awards expended.

530 Criteria for a low-risk auditee. An auditee which meets all of the following conditions for each of the preceding two years (or, in the case of biennial audits, preceding two audit periods) shall qualify as a low-risk auditee and be eligible for reduced audit coverage in accordance with 520:

530 a Single audits were performed on an annual basis in accordance with the provisions of this part. A non-Federal entity that has biennial audits does not qualify as a low-risk auditee, unless agreed to in advance by the cognizant or oversight agency for audit.

530 b The auditor’s opinions on the financial statements and the schedule of expenditures of Federal awards were unqualified. However, the cognizant or oversight agency for audit may judge that an opinion qualification does not affect the management of Federal awards and provide a waiver.

530 c There were no deficiencies in internal control which were identified as material

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weaknesses under the requirements of GAGAS. However, the cognizant or oversight agency for audit may judge that any identified material weaknesses do not affect the management of Federal awards and provide a waiver.

530 d None of the Federal programs had audit findings from any of the following in either of the preceding two years (or, in the case of biennial audits, preceding two audit periods) in which they were classified as Type A programs:

530 d 1 Internal control deficiencies which were identified as material weaknesses;530 d 2 Noncompliance with the provisions of laws, regulations, contracts, or grant

agreements which have a material effect on the Type A program; or 530 d 3 Known or likely questioned costs that exceed five percent of the total Federal awards

expended for a Type A program during the year.

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OMB Circular A-133 Compliance Supplement

(Appendix B)

Which Circular do I Follow? Cost PrinciplesA-21, Educational Institutions (05/10/2004) HTML or PDF (263k), Relocated to 2CFR part 220 (384k)A-87, State and Local Governments (05/10/2004) HTML or PDF (199k), Relocated to 2CFR part 225 (362k) A-122, Non-Profit Organizations (05/10/2004)HTML or PDF (220k) , Relocated to 2CFR part 230 (235k) o How are cognizant agencies determined for indirect costs? o Where is the updated OMB list? Administrative RequirementsRefer to awarding agency’s codification(s) of A-110 and A-102 for information on how to comply with these requirements under specific assistance agreements. A-102, State and Local Governments (10/07/1994, amended 08/29/1997) o Where is the A-102 Common Rule? o Where are the Attachments to A-102? o Where have Agencies Codified the A-102 Common Rule? A-110, Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations (11/19/1993, amended 09/30/1999, Relocated to 2CFR 215 (280k)) o Where are the Attachments to A-110? o Where have Agencies Codified A-110? Audit RequirementsA-133, States, Local Governments, and Non-Profit Organizations (06/24/1997, includes revisions published in Federal Register 06/27/2003) HTML or PDF (127k) o 2006 OMB Compliance Supplement o 2005 OMB Compliance Supplement Update o March 2004 Compliance Supplement List Of Selected Items of Cost Contained in OMB Cost Principles Circulars (Amended, effective 06/09/2004) (101k) Crosswalk of Changed References to OMB Cost Principles (effective 06/09/2004) HTML or PDF (28k) Access the Federal Audit Clearinghouse Click here for Suspension and Debarment Guidance (November 15, 2006) (73k)

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http://www.whitehouse.gov/omb/fedreg/2007/111506_grants.pdf

http://www.whitehouse.gov/goodbye/994d4168ead0937e11473dc94060d9b8d8da71a3.html

http://www.whitehouse.gov/omb/grants/2004_crosswalk.pdf

http://www.whitehouse.gov/omb/grants/2004_crosswalk.html

http://www.whitehouse.gov/omb/grants/2004_cost_principles_exhibit.pdf

http://www.whitehouse.gov/omb/circulars/a133_compliance/04/04toc.html

http://www.whitehouse.gov/omb/circulars/a133_compliance/05/cs5updates.html

http://www.whitehouse.gov/omb/circulars/a133_compliance/06/06toc.html

http://www.whitehouse.gov/omb/circulars/a133/a133.pdf

http://www.whitehouse.gov/omb/circulars/a133/a133.html

http://www.whitehouse.gov/omb/grants/chart.html

http://www.whitehouse.gov/omb/grants/attach.html#110


http://www.whitehouse.gov/omb/grants/chart.html

http://www.whitehouse.gov/omb/grants/attach.html

http://www.whitehouse.gov/omb/grants/attach.html


http://www.whitehouse.gov/omb/grants/attach.html#cost

http://www.whitehouse.gov/omb/grants/attach.html#cost

http://www.whitehouse.gov/omb/circulars/a122/a122_2004.pdf

http://www.whitehouse.gov/omb/circulars/a122/a122_2004.html





http://www.whitehouse.gov/omb/grants/attach.html#which

A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006)

A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006)

CFDA 93.600

Department of Health and Human Services: Head Start

I PROGRAM OBJECTIVES. The objectives of the Head Start and Early Head Start programs are to provide comprehensive health, educational, nutritional, social, and other developmental services primarily to economically disadvantaged preschool children (ages 3 to 5) and infants and toddlers (birth through age 3) so that the children will attain school readiness. Parents receive social services and participate in various decision-making processes related to the operation of the program.

II PROGRAM PROCEDURESHead Start ServicesThe Head Start program provides services in the following areas:Early Childhood Development and Health - Head Start’s educational program is designed to meet the needs of each child, the community served, and its ethnic and cultural characteristics. Every child receives a variety of learning experiences to foster intellectual, social, and emotional growth. Head Start also emphasizes the importance of the early identification of health problems. Every child is involved in a comprehensive health program, which includes immunizations, medical, dental, mental health, and nutritional services. Family and Community Partnerships - An essential part of the Head Start program is the involvement of parents in parent education, program planning, and operating activities. Many parents serve as members of policy councils and committees and have a voice in administrative and managerial decisions. Participation in classes and workshops on child development and staff visits assist parents in identifying the needs of their children and about educational activities that can take place at home. Specific services are geared to each family after its needs are determined. They include community outreach; referrals; family need assessments; recruitment and enrollment of children; and emergency assistance or crisis intervention.Early Head StartThe 1994 Head Start Reauthorization (Pub. L. 103-252) established a new program for low-income pregnant women and families with infants and toddlers.The purpose of this program is to enhance children’s physical, social, emotional and cognitive development; enable parents to be better caregivers to and teachers of their children; and help parents meet their own goals, including that of economic independence.Administration and ServicesHead Start programs operate in all 50 States, the District of Columbia, Puerto Rico, and the U.S. territories. Head Start grants are awarded for an indefinite project period, with an annual budget period that is specific to each grantee. Grants are awarded to public, non-profit, and for-profit organizations directly by the Administration for Children and Families (ACF) in the ten Department of Health and Human Service (HHS) Regional Offices and in Washington, DC.Early Head Start grantees include Head Start grantees, school systems, universities, colleges, and other public and private entities. In all other respects, Early Head Start grants are subject to the same program performance standards and compliance requirements as Head Start grants; therefore, references to Head Start apply to both. Initial Head Start grants were for a five-year period. Beginning in FY 2000, however, all new Head Start grants were for

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A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006)an indefinite project period. For Early Head Start grantees that are also Head Start grantees, the Early Head Start program will no longer be a separate grant; instead, Early Head Start will be shown as a separate program account in the single grant document. Grantees may also subgrant some or all of its operational responsibilities for a Head Start/Early Head Start grant to a “delegate agency.” Delegate agencies (subrecipients) may be public, non-profit, or for-profit organizations.Grantees may collaborate with other entities carrying out early childhood education and child-care programs in the community, including those funded by the Child Care and Development Fund (CCDF) (CFDA 93.575 and CFDA 93.596) and Temporary Assistance to Needy Families (CFDA 93.558). The coordination and collaboration between Head Start and the CCDF entity is mandated by sections 640 a 5 E [sic], 640 g 2 D [sic] and E [sic] and 642 c of the Head Start Act (42 USC 9837(c)) in the provision of full-working day, full calendar year comprehensive services (42 USC 9835(a)(5)(C)(v)). Source of Governing Requirements Head Start began in 1965 under the Office of Economic Opportunity and is now administered by ACF, HHS. These programs are currently authorized under the Head Start Act (Title VI, Subtitle A, Chapter 8, Subchapter B of Pub. L. 97-35), as amended, which is codified at 42 USC 9831-9843a. The implementing program regulations are parts 1301 through 1308.Availability of Other Program InformationThe Head Start Bureau’s web page (http://www.acf.dhhs.gov/programs/hsb) provides general information about this program.

III COMPLIANCE REQUIREMENTS. In developing the audit procedures to test compliance with the requirements for a Federal program, the auditor should first look to Part 2, Matrix of Compliance Requirements, to identify which of the 14 types of compliance requirements described in Part 3 are applicable and then look to Parts 3 and 4 for the details of the requirements.

III A Activities Allowed or UnallowedIII A 1 Allowable services include, but are not limited to, health (medical, dental, nutrition, and

mental health); education; social services; transportation; parent involvement; use of volunteers; career development for teachers, nonprofessional aides and other staff members; and special services for parents (e.g., literacy) (part 1304, subparts B, C, and D).

III A 2 Grant funds may, with specific ACF approval, be used for capital expenditures (including paying the cost of amortizing the principal, and paying interest on, loans) such as construction of new facilities, purchase of new or existing facilities, major renovations on existing facilities, and purchase of vehicles used for programs conducted at the Head Start facilities (42 USC 9839(f) and (g)).

III B Allowable Costs/Cost Principles. Indirect costs attributable to common or joint use of facilities or services must be fairly allocated among the various programs which utilize such services (42 USC 9839(c); section 1301.32), except as provided for in section 640 a 5 E ii [sic] of the Head Start Act. This provision exempts equipment and non-consumable supplies from this requirement if Head Start is the predominant funding source for the activity (42 USC 9835 (a)(5)(E)(ii)).

III G [sic] Matching, Level of Effort, EarmarkingIII G 1 Matching. Grantees are required to contribute at least 20% of the costs of the program

through cash or in-kind contributions, unless a lesser amount has been approved by ACF (42

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A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006)USC 9835 (b); sections 1301.20 and 1301.21).

III G 2 Level of Effort - Not ApplicableIII G 3 EarmarkingIII G 3 a The costs of developing and administering a Head Start program shall not exceed 15% of the

annual total program costs, including the required non-Federal contribution to such costs (i.e., matching), unless a waiver has been granted by ACF. Development and administrative costs include, but are not limited to, the cost of organization-wide planning, coordination and general purpose direction, accounting and auditing, purchasing and personnel functions, and the cost of operating and maintaining space for these purposes (42 USC 9839(b); section 1301.32).

III G 3 b Enrollment levels must adhere to the levels specified in the financial assistance award.III G 3 c Required percentage of income eligiblesIII G 3 c 1 For grantees other than Indian tribes/tribal organizations, at least 90% of the enrollees must

come from families whose income is below the official Federal poverty guidelines or who are receiving public assistance (income-eligible). Up to 10% of the children who are enrolled may be from families that are not income-eligible (section 1305.4).

III G 3 c 2 For tribal grantees, the income-eligible percentage may be as low as 51%, providing certain conditions are met (section 1305.4 b 3).

III G 3 c 3 The family income must be verified by the Head Start grantee before determining that a child is income-eligible (section 1305.4 c).

III G 3 c 4 Verification must include examination of any of the following: Individual Income Tax Form 1040, W-2 forms, pay stubs, pay envelopes, written statements from employers, or documentation showing current status as recipients of public assistance (section 1305.4 d).

III G 3 c 5 Although copies of income verification documents need not be retained by grantees, the child or family record must include a statement, signed by an employee of the grantee (Head Start program), identifying which income verification document was examined and stating that the child is income-eligible (section 1305.4 e). The poverty guidelines are issued each year in the Federal Register and HHS maintains a web page that provides the poverty guidelines (http://aspe.hhs.gov/poverty/)

III L [sic] ReportingIII L 1 Financial ReportingIII L 1 a SF-269, Financial Status Report - ApplicableIII L 1 b SF-270, Request for Advance or Reimbursement - Not ApplicableIII L 1 c SF-271, Outlay Report and Request for Reimbursement for Construction Programs - Not

ApplicableIII L 1 d SF-272, Federal Cash Transactions Report - Payments under this program are made by the

HHS Payment Management System (PMS). Reporting equivalent to the SF-272 is accomplished through the PMS and is evidenced by the PSC-272 series of reports.

III M Subrecipient Monitoring. Grantees must establish and implement procedures for the ongoing monitoring of their own Early Head Start and Head Start operations, as well as those of their delegate agencies, to ensure that these operations effectively implement Federal regulations. Grantees must inform delegate agency governing bodies of any

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A-133CS: Head Start Compliance Supplement to OMB Circular A-133 (March, 2006)deficiencies in delegate agency operations identified in the monitoring review and must help them develop plans, including timetables, for addressing identified problems (sections 1304.51 i 2 and 3).

IV OTHER INFORMATION. See Appendix VI for a Hurricane Katrina-related waiver.

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Davis-Bacon ActRelated Review questions: FM3B

Davis-Bacon Act [Public -- No. 403-74th Congress] [S.3303]AN ACTTo amend the Act approved March 3, 1931, relating to the rate of wages for laborers and mechanics employed by contractors and subcontractors on public buildings.Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Act entitled "An Act relating to the rate of wages for laborers and mechanics employed on public building of the United States and the District of Columbia by contractors or subcontractors, and for other purposes," approved March 3, 1931, is amended to read as follows:"That the advertised specifications for every contract in excess of $2,000, to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works of the United States or the District of Columbia within the geographical limits of the States of the Union or the District of Columbia, and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which the work is to be performed, or in the District of Columbia if the work is to be performed there; and every contract based upon these specifications shall contain a stipulation that the contractor or his subcontractor shall pay all mechanics and laborers employed directly upon the site of the work, unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account, the full amounts accrued at time of payment, computed at wage rates not less than those stated in the advertised specifications, regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics, and that the scale of wages to be paid shall be posted by the contractor in a prominent and easily accessible place at the site of the work; and the further stipulation that there may be withheld from the contractor so much of accrued payments as may be considered necessary by the contracting officer to pay to laborers and mechanics employed by the contractor or any subcontractor on the work the difference between the rates of wages required by the contract to be paid laborers and mechanics on the work and the rates of wages received by such laborers and mechanics and not refunded to the contractor, subcontractors, or their agents."Sec.2. Every contract within the scope of this Act shall contain the further provision that in the event it is found by the contracting officer that any laborer or mechanic employed by the contractor or any subcontractor directly on the site of the work covered by the contract has been or is being paid a rate of wages less than the rate of wages required by the contract to be paid as aforesaid, the Government may, by written notice to the contractor, terminate his right to proceed with the work or such part of the work as to which there has been a failure to pay said required wages and to prosecute the work to completion by contract or otherwise, and the contractor and his sureties shall be liable to the Government for any excess costs occasioned the Government thereby."Sec. 3. (a) The Comptroller General of the United States is authorized and directed to pay directly to laborers and mechanics from any accrued payments withheld under the terms of the contract any wages found to be due laborers and mechanics pursuant to this Act; and the Comptroller General of the United States is further authorized and is directed to distribute a list to all departments of the Government giving the names of persons or firms whom he has found to have disregarded their obligations to employees and subcontractors. No contract shall be awarded to the persons or firms appearing on this list or to any firm, corporation, partnership, or association in which such persons or firms have an interest until three years have elapsed from the date of publication of the list containing the names of such persons or firms."(b) If the accrued payments withheld under the terms of the contract, as aforesaid, are insufficient to

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Davis-Bacon Actreimburse all the laborers and mechanics with respect to whom there has been a failure to pay the wages required pursuant to this Act, such laborers and mechanics shall have the right of action and/or of intervention against the contractor and his sureties conferred by law upon persons furnishing labor or materials, and in such proceedings it shall be no defense that such laborers and mechanics accepted or agreed to accept less than the required rate of wages or voluntarily made refunds."Sec. 4. This Act shall not be construed to supersede or impair any authority otherwise granted by Federal law to provide for the establishment of specific wage rates."Sec. 5. This Act shall take effect thirty days after its passage, but shall not affect any contract then existing or any contract that may thereafter be entered into pursuant to invitations for bids that are outstanding at the time of the passage of this Act."Sec. 6. In the event of a national emergency the President is authorized to suspend the provisions of this Act."Sec. 7. The funds appropriated and made available by the Emergency Relief Appropriation Act of 1935 (Public Resolution Numbered 11, 74th Congress), are hereby made available for the fiscal year ending June 30, 1936, to the Department of Labor for expenses of the administration of this Act."Approved, August 30, 1935.AMENDMENT[Public-No. 633 -- 76th Congress][Chapter 373-3d Session][S.3650]AN ACTTo require the payment of prevailing rates of wages on Federal public works in Alaska and Hawaii.Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1 of the Act entitled "An Act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by contractors and subcontractors, and for other purposes," approved March 3, 1931 (46 Stat. 1494), as amended, is further amended by striking out the words "States of the Union or the District of Columbia" and inserting in lieu thereof :"States of the Union, the Territory of Alaska, the Territory of Hawaii, or the District of Columbia";and by striking out the words "or other civil subdivision of the State" and inserting in lieu thereof "or other civil subdivision of the State, or the Territory of Alaska or the Territory of Hawaii".Sec 2. The amendments made by this Act shall take effect on the thirtieth day after the date of enactment of this Act, but shall not affect any contract in existence on such effective date of made thereafter pursuant to invitations for bids outstanding on the date of enactment of this Act.Approved, June 15, 1940.[40 U.S. Code, sec. 276a-7]The fact that any contract authorized by any Act is entered into without regard to section 5 of Title 41, or upon a cost-plus-a-fixed-fee basis or otherwise without advertising for proposals, shall not be construed to render inapplicable the provisions of sections 276a to 276a-5 of this title, if such Act would otherwise be applicable to such contract. March 23, 1941, 12 noon, ch. 26, 55 Stat. 53; Aug. 21, 1941, ch. 395, 55 Stat. 658.AMENDMENT[Public -No. 88-349-88th Congress]July 2, 1964[H.R. 6041]AN ACTTo amend the prevailing wage section of the Davis-Bacon Act, as amended; and related sections of the Federal Airport Act, as amended; and the National Housing Act as amendedBe it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1 of the Act of March 3, 1931, as amended (46 Stat. 1494, as amended; 40 U.S.C.

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Davis-Bacon Act276a), is hereby amended by designating the language of the present section as subsection (a) and by adding at the end thereof the following new subsection (b);"(b) As used in this Act the term ‘wages’, ‘scale of wages’, ‘wage rates’, ‘minimum wages’, and ‘prevailing wages’ shall include -

1. the basic hourly rate of pay; and 2. the amount of -

the rate of contribution irrevocably made by a contractor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program; and

the rate of costs to the contractor or subcontractor which may be reasonably anticipated in providing benefits to laborers and mechanics pursuant to an enforceable commitment to carry out a financially responsible plan or program which was communicated in writing to the laborers and mechanics affected, for medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, for unemployment benefits, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying costs of apprenticeship or other similar programs, or for other bona fide fringe benefits, but only where the contractor or subcontractor is not required by other Federal, State, or local law to provide any of such benefits: provided that the obligation of a contractor or subcontractor to make payment in accordance with the prevailing wage determination of the Secretary of Labor, insofar as this Act and other Acts incorporating this Act by reference are concerned may be discharged by the making of payments in cash, by the making of contributions of a type referred to in paragraph (2)(A), or by the assumption of an enforceable commitment to bear the costs of a plan or program of a type referred to in paragraph (2)(B), or any combination thereof, where the aggregate of any such payments, contributions, and costs is not less than the rate of pay described in paragraph (1) plus the amount referred to in paragraph (2). "In determining the overtime pay to which the laborer or mechanic is entitled under any Federal law, his regular or basic hourly rate of pay (or other alternative rate upon which premium rate of overtime compensation is computed) shall be deemed to be the rate computed under paragraph (1), except that where the amount of payments, contributions, or costs incurred with respect to him exceeds the prevailing wage applicable to him under this Act, such regular or basic hourly rate of pay (or such other alternative rate) shall be arrived at by deducting from the amount of payments, contributions, or costs actually incurred with respect to him, the amount of contributions or costs of the types described in paragraph (2) actually incurred with respect to him, or the amount determined under paragraph (2) but not actually paid, whichever amount is the greater."

Sec. 2. Section 15(b) of the Federal Airport Act, as amended (60 Stat. 178, as amended; 49 U.S.C. 1114(b)) is hereby amended by inserting the words "in accordance with the Davis- Bacon Act, as amended (40 U.S.C. 276a -- 276a-5)" after the words "Secretary of Labor,".Sec. 3. Section 212(a) of the National Housing Act, as amended (53 Stat. 208, as amended; 12 U.S.C. 1715 (c)), is hereby amended by inserting the words "in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a -- 276a-5)," after the words "Secretary of Labor,".Sec 4. The amendments made by this Act shall take effect on the ninetieth day after the date of enactment of this Act, but shall not affect any contract in existence on such effective date or made thereafter pursuant to invitations for bids outstanding on such effective date and the rate of payments specified by section 1(b)(2) of the Act of March 3, 1931, as amended by this Act, shall, during a period of two hundred and seventy days after such effective date, become effective only in those cases and reasonable classes of cases as the Secretary of Labor, acting as rapidly as practicable to make such rates of payments fully effective, shall by rule or regulation provide.

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)

McKinney-Vento Homeless Assistance Act (January 2002) (MV)

Subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 et seq.) is amended to read as follows:Subtitle B Education for Homeless Children and YouthsMV721 STATEMENT OF POLICY. The following is the policy of the Congress:MV721 1 Each State educational agency shall ensure that each child of a homeless individual and

each homeless youth has equal access to the same free, appropriate public education, including a public preschool education, as provided to other children and youths.

MV721 2 In any State that has a compulsory residency requirement as a component of the State’s compulsory school attendance laws or other laws, regulations, practices, or policies that may act as a barrier to the enrollment, attendance, or success in school of homeless children and youths, the State will review and undertake steps to revise such laws, regulations, practices, or policies to ensure that homeless children and youths are afforded the same free, appropriate public education as provided to other children and youths.

MV721 3 Homelessness alone is not sufficient reason to separate students from the mainstream school environment.

MV721 4 Homeless children and youths should have access to the education and other services that such children and youths need to ensure that such children and youths have an opportunity to meet the same challenging State student academic achievement standards to which all students are held.

MV722 GRANTS FOR STATE AND LOCAL ACTIVITIES FOR THE EDUCATION OF HOMELESS CHILDREN AND YOUTHS

MV722a GENERAL AUTHORITY- The Secretary is authorized to make grants to States in accordance with the provisions of this section to enable such States to carry out the activities described in subsections d through g.

MV722b APPLICATION- No State may receive a grant under this section unless the State educational agency submits an application to the Secretary at such time, in such manner, and containing or accompanied by such information as the Secretary may reasonably require.

MV722c ALLOCATION AND RESERVATIONS-MV722c1 ALLOCATION-MV722c1A Subject to subparagraph B, the Secretary is authorized to allot to each State an amount that

bears the same ratio to the amount appropriated for such year under section 726 that remains after the Secretary reserves funds under paragraph 2 and uses funds to carry out section 724 d and h, as the amount allocated under section 1122 of the Elementary and Secondary Education Act of 1965 to the State for that year bears to the total amount allocated under section 1122 of such Act to all States for that year, except that no State shall receive less than the greater of--

MV722c1Ai $150,000;MV722c1Aii one-fourth of 1% of the amount appropriated under section 726 for that year; orMV722c1Aiii the amount such State received under this section for fiscal year 2001.

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV722c1B If there are insufficient funds in a fiscal year to allot to each State the minimum amount

under subparagraph A, the Secretary shall ratably reduce the allotments to all States based on the proportionate share that each State received under this subsection for the preceding fiscal year.

MV722c2 RESERVATIONS--MV722c2A The Secretary is authorized to reserve 0.1% of the amount appropriated for each fiscal year

under section 726 to be allocated by the Secretary among the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, according to their respective need for assistance under this subtitle, as determined by the Secretary.

MV722c2Bi The Secretary shall transfer 1% of the amount appropriated for each fiscal year under section 726 to the Department of the Interior for programs for Indian students served by schools funded by the Secretary of the Interior, as determined under the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.), that are consistent with the purposes of the programs described in this subtitle.

MV722c2Bii The Secretary and the Secretary of the Interior shall enter into an agreement, consistent with the requirements of this subtitle, for the distribution and use of the funds described in clause i under terms that the Secretary determines best meet the purposes of the programs described in this subtitle. Such agreement shall set forth the plans of the Secretary of the Interior for the use of the amounts transferred, including appropriate goals, objectives, and milestones.

MV722c3 STATE DEFINED- For purposes of this subsection, the term ‘State’ does not include the United States Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.

MV722d ACTIVITIES- Grants under this section shall be used for the following:MV722d1 To carry out the policies set forth in section 721 in the State. MV722d2 To provide activities for, and services to, homeless children, including preschool-aged

homeless children, and youths that enable such children and youths to enroll in, attend, and succeed in school, or, if appropriate, in preschool programs.

MV722d3 To establish or designate an Office of Coordinator for Education of Homeless Children and Youths in the State educational agency in accordance with subsection f.

MV722d4 To prepare and carry out the State plan described in subsection g. MV722d5 To develop and implement professional development programs for school personnel to

heighten their awareness of, and capacity to respond to, specific problems in the education of homeless children and youths.

MV722e STATE AND LOCAL SUBGRANTS-MV722e1 MINIMUM DISBURSEMENTS BY STATES- From the sums made available each year

to carry out this subtitle, the State educational agency shall distribute not less than 75% in subgrants to local educational agencies for the purposes of carrying out section 723, except that States funded at the minimum level set forth in subsection c 1 shall distribute not less than 50% in subgrants to local educational agencies for the purposes of carrying out section 723.

MV722e2 USE BY STATE EDUCATIONAL AGENCY- A State educational agency may use funds

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)made available for State use under this subtitle to conduct activities under subsection f directly or through grants or contracts.

MV722e3 PROHIBITION ON SEGREGATING HOMELESS STUDENTS-MV722e3A IN GENERAL- Except as provided in subparagraph B and section 723 a 2 B ii, in

providing a free public education to a homeless child or youth, no State receiving funds under this subtitle shall segregate such child or youth in a separate school, or in a separate program within a school, based on such child’s or youth’s status as homeless.

MV722e3B EXCEPTION- Notwithstanding subparagraph A, paragraphs 1 J i and 3 of subsection g, section 723 a 2, and any other provision of this subtitle relating to the placement of homeless children or youths in schools, a State that has a separate school for homeless children or youths that was operated in fiscal year 2000 in a covered county shall be eligible to receive funds under this subtitle for programs carried out in such school if--

MV722e3Bi the school meets the requirements of subparagraph C;MV722e3Bii any local educational agency serving a school that the homeless children and youths

enrolled in the separate school are eligible to attend meets the requirements of subparagraph E; and

MV722e3Biii the State is otherwise eligible to receive funds under this subtitle.MV722e3C SCHOOL REQUIREMENTS- For the State to be eligible under subparagraph B to receive

funds under this subtitle, the school described in such subparagraph shall--MV722e3Ci provide written notice, at the time any child or youth seeks enrollment in such school, and

at least twice annually while the child or youth is enrolled in such school, to the parent or guardian of the child or youth (or, in the case of an unaccompanied youth, the youth) that--

MV722e3Ci I shall be signed by the parent or guardian (or, in the case of an unaccompanied youth, the youth);

MV722e3Ci II sets forth the general rights provided under this subtitle;MV722e3Ci III specifically states--MV722e3Ci III aa the choice of schools homeless children and youths are eligible to attend, as provided in

subsection g 3 A;MV722e3Ci III bb that no homeless child or youth is required to attend a separate school for homeless

children or youths;MV722e3Ci III cc that homeless children and youths shall be provided comparable services described in

subsection g 4, including transportation services, educational services, and meals through school meals programs; and

MV722e3Ci III dd that homeless children and youths should not be stigmatized by school personnel; andMV722e3Ci IV provides contact information for the local liaison for homeless children and youths and the

State Coordinator for Education of Homeless Children and Youths;MV722e3Cii I provide assistance to the parent or guardian of each homeless child or youth (or, in the case

of an unaccompanied youth, the youth) to exercise the right to attend the parent’s or guardian’s (or youth’s) choice of schools, as provided in subsection g 3 A; and

MV722e3Cii II coordinate with the local educational agency with jurisdiction for the school selected by the parent or guardian (or youth), to provide transportation and other necessary services;

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV722e3Ciii ensure that the parent or guardian (or, in the case of an unaccompanied youth, the youth)

shall receive the information required by this subparagraph in a manner and form understandable to such parent or guardian (or youth), including, if necessary and to the extent feasible, in the native language of such parent or guardian (or youth); and

MV722e3Civ demonstrate in the school’s application for funds under this subtitle that such school-MV722e3Civ I is complying with clauses i and ii; andMV722e3Civ II is meeting (as of the date of submission of the application) the same Federal and State

standards, regulations, and mandates as other public schools in the State (such as complying with sections 1111 and 1116 of the Elementary and Secondary Education Act of 1965 and providing a full range of education and related services, including services applicable to students with disabilities).

MV722e3D SCHOOL INELIGIBILITY- A separate school described in subparagraph B that fails to meet the standards, regulations, and mandates described in subparagraph C iv II shall not be eligible to receive funds under this subtitle for programs carried out in such school after the first date of such failure.

MV722e3E LOCAL EDUCATIONAL AGENCY REQUIREMENTS- For the State to be eligible to receive the funds described in subparagraph B, the local educational agency described in subparagraph B ii shall--

MV722e3Ei implement a coordinated system for ensuring that homeless children and youths--MV722e3Ei I are advised of the choice of schools provided in subsection g 3 A; MV722e3Ei II are immediately enrolled, in accordance with subsection g 3 C, in the school selected under

subsection g 3 A; andMV722e3Ei III are promptly provided necessary services described in subsection g 4, including

transportation, to allow homeless children and youths to exercise their choices of schools under subsection g 3 A;

MV722e3Eii document that written notice has been provided--MV722e3Eii I in accordance with subparagraph C i for each child or youth enrolled in a separate school

under subparagraph B; andMV722e3Eii II in accordance with subsection g 6 A v;MV722e3Eiii prohibit schools within the agency’s jurisdiction from referring homeless children or

youths to, or requiring homeless children and youths to enroll in or attend, a separate school described in subparagraph B;

MV722e3Eiv identify and remove any barriers that exist in schools within the agency’s jurisdiction that may have contributed to the creation or existence of separate schools described in subparagraph B; and

MV722e3Ev not use funds received under this subtitle to establish--MV722e3Ev I new or additional separate schools for homeless children or youths; orMV722e3Ev II new or additional sites for separate schools for homeless children or youths, other than the

sites occupied by the schools described in subparagraph B in fiscal year 2000.MV722e3F REPORT-MV722e3Fi PREPARATION- The Secretary shall prepare a report on the separate schools and local

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)educational agencies described in subparagraph B that receive funds under this subtitle in accordance with this paragraph. The report shall contain, at a minimum, information on--

MV722e3Fi I compliance with all requirements of this paragraph;MV722e3Fi II barriers to school access in the school districts served by the local educational agencies;

andMV722e3Fi III the progress the separate schools are making in integrating homeless children and youths

into the mainstream school environment, including the average length of student enrollment in such schools.

MV722e3Fii COMPLIANCE WITH INFORMATION REQUESTS- For purposes of enabling the Secretary to prepare the report, the separate schools and local educational agencies shall cooperate with the Secretary and the State Coordinator for Education of Homeless Children and Youths established in the State under subsection d 3, and shall comply with any requests for information by the Secretary and State Coordinator for such State.

MV722e3Fiii SUBMISSION- Not later than 2 years after the date of enactment of the McKinney-Vento Homeless Education Assistance Improvements Act of 2001, the Secretary shall submit the report described in clause i to--

MV722e3Fiii I the President;MV722e3Fiii II the Committee on Education and the Workforce of the House of Representatives; andMV722e3Fiii III the Committee on Health, Education, Labor, and Pensions of the Senate.MV722e3G DEFINITION- For purposes of this paragraph, the term “covered county” means--MV722e3Gi San Joaquin County, California;MV722e3Gii Orange County, California;MV722e3Giii San Diego County, California; andMV722e3Giv Maricopa County, Arizona.MV722f FUNCTIONS OF THE OFFICE OF COORDINATOR- The Coordinator for Education of

Homeless Children and Youths established in each State shall-MV722f1 gather reliable, valid, and comprehensive information on the nature and extent of the

problems homeless children and youths have in gaining access to public preschool programs and to public elementary schools and secondary schools, the difficulties in identifying the special needs of such children and youths, any progress made by the State educational agency and local educational agencies in the State in addressing such problems and difficulties, and the success of the programs under this subtitle in allowing homeless children and youths to enroll in, attend, and succeed in, school;

MV722f2 develop and carry out the State plan described in subsection g; MV722f3 collect and transmit to the Secretary, at such time and in such manner as the Secretary may

require, a report containing such information as the Secretary determines is necessary to assess the educational needs of homeless children and youths within the State;

MV722f4 facilitate coordination between the State educational agency, the State social services agency, and other agencies (including agencies providing mental health services) to provide services to homeless children, including preschool-aged homeless children, and youths, and to families of such children and youths;

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV722f5 in order to improve the provision of comprehensive education and related services to

homeless children and youths and their families, coordinate and collaborate with--MV722f5A educators, including child development and preschool program personnel;MV722f5B providers of services to homeless and runaway children and youths and homeless families

(including domestic violence agencies, shelter operators, transitional housing facilities, runaway and homeless youth centers, and transitional living programs for homeless youths);

MV722f5C local educational agency liaisons designated under subsection g 1 J ii for homeless children and youths; and

MV722f5D community organizations and groups representing homeless children and youths and their families; and

MV722f6 provide technical assistance to local educational agencies in coordination with local educational agency liaisons designated under subsection g 1 J ii, to ensure that local educational agencies comply with the requirements of section 722 e 3 and paragraphs 3 through 7 of subsection g.

MV722g STATE PLAN-MV722g1 IN GENERAL- Each State shall submit to the Secretary a plan to provide for the education

of homeless children and youths within the State. Such plan shall include the following:MV722g1A A description of how such children and youths are (or will be) given the opportunity to

meet the same challenging State academic achievement standards all students are expected to meet.

MV722g1B A description of the procedures the State educational agency will use to identify such children and youths in the State and to assess their special needs.

MV722g1C A description of procedures for the prompt resolution of disputes regarding the educational placement of homeless children and youths.

MV722g1D A description of programs for school personnel (including principals, attendance officers, teachers, enrollment personnel, and pupil services personnel) to heighten the awareness of such personnel of the specific needs of runaway and homeless youths.

MV722g1E A description of procedures that ensure that homeless children and youths who meet the relevant eligibility criteria are able to participate in Federal, State, or local food programs.

MV722g1F A description of procedures that ensure that--MV722g1Fi homeless children have equal access to the same public preschool programs, administered

by the State agency, as provided to other children in the State;MV722g1Fii homeless youths and youths separated from the public schools are identified and accorded

equal access to appropriate secondary education and support services; andMV722g1Fiii homeless children and youths who meet the relevant eligibility criteria are able to

participate in Federal, State, or local before- and after-school care programs.MV722g1G Strategies to address problems identified in the report provided to the Secretary under

subsection f 3. MV722g1H Strategies to address other problems with respect to the education of homeless children and

youths, including problems resulting from enrollment delays that are caused by--

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV722g1Hi immunization and medical records requirements;MV722g1Hii residency requirements;MV722g1Hiii lack of birth certificates, school records, or other documentation;MV722g1Hiv guardianship issues; orMV722g1Hv uniform or dress code requirements.MV722g1I A demonstration that the State educational agency and local educational agencies in the

State have developed, and shall review and revise, policies to remove barriers to the enrollment and retention of homeless children and youths in schools in the State.

MV722g1J Assurances that--MV722g1Ji the State educational agency and local educational agencies in the State will adopt policies

and practices to ensure that homeless children and youths are not stigmatized or segregated on the basis of their status as homeless;

MV722g1Jii local educational agencies will designate an appropriate staff person, who may also be a coordinator for other Federal programs, as a local educational agency liaison for homeless children and youths, to carry out the duties described in paragraph 6 A; and

MV722g1Jiii the State and its local educational agencies will adopt policies and practices to ensure that transportation is provided, at the request of the parent or guardian (or in the case of an unaccompanied youth, the liaison), to and from the school of origin, as determined in paragraph 3 A, in accordance with the following, as applicable:

MV722g1Jiii I If the homeless child or youth continues to live in the area served by the local educational agency in which the school of origin is located, the child’s or youth’s transportation to and from the school of origin shall be provided or arranged by the local educational agency in which the school of origin is located.

MV722g1Jiii II If the homeless child’s or youth’s living arrangements in the area served by the local educational agency of origin terminate and the child or youth, though continuing his or her education in the school of origin, begins living in an area served by another local educational agency, the local educational agency of origin and the local educational agency in which the homeless child or youth is living shall agree upon a method to apportion the responsibility and costs for providing the child with transportation to and from the school of origin. If the local educational agencies are unable to agree upon such method, the responsibility and costs for transportation shall be shared equally.

MV722g2 COMPLIANCE-MV722g2A IN GENERAL- Each plan adopted under this subsection shall also describe how the State

will ensure that local educational agencies in the State will comply with the requirements of paragraphs 3 through 7.

MV722g2B COORDINATION- Such plan shall indicate what technical assistance the State will furnish to local educational agencies and how compliance efforts will be coordinated with the local educational agency liaisons designated under paragraph 1 J ii.

MV722g3 LOCAL EDUCATIONAL AGENCY REQUIREMENTS-MV722g3A IN GENERAL- The local educational agency serving each child or youth to be assisted

under this subtitle shall, according to the child’s or youth’s best interest--

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV722g3Ai continue the child’s or youth’s education in the school of origin for the duration of

homelessness--MV722g3Ai I in any case in which a family becomes homeless between academic years or during an

academic year; orMV722g3Ai II for the remainder of the academic year, if the child or youth becomes permanently housed

during an academic year; orMV722g3Aii enroll the child or youth in any public school that nonhomeless students who live in the

attendance area in which the child or youth is actually living are eligible to attend.MV722g3B BEST INTEREST- In determining the best interest of the child or youth under

subparagraph A, the local educational agency shall--MV722g3Bi to the extent feasible, keep a homeless child or youth in the school of origin, except when

doing so is contrary to the wishes of the child’s or youth’s parent or guardian;MV722g3Bii provide a written explanation, including a statement regarding the right to appeal under

subparagraph E, to the homeless child’s or youth’s parent or guardian, if the local educational agency sends such child or youth to a school other than the school of origin or a school requested by the parent or guardian; and

MV722g3Biii in the case of an unaccompanied youth, ensure that the homeless liaison designated under paragraph 1 J ii assists in placement or enrollment decisions under this subparagraph, considers the views of such unaccompanied youth, and provides notice to such youth of the right to appeal under subparagraph E.

MV722g3C ENROLLMENT-MV722g3Ci The school selected in accordance with this paragraph shall immediately enroll the

homeless child or youth, even if the child or youth is unable to produce records normally required for enrollment, such as previous academic records, medical records, proof of residency, or other documentation.

MV722g3Cii The enrolling school shall immediately contact the school last attended by the child or youth to obtain relevant academic and other records.

MV722g3Ciii If the child or youth needs to obtain immunizations, or immunization or medical records, the enrolling school shall immediately refer the parent or guardian of the child or youth to the local educational agency liaison designated under paragraph 1 J ii, who shall assist in obtaining necessary immunizations, or immunization or medical records, in accordance with subparagraph D.

MV722g3D RECORDS- Any record ordinarily kept by the school, including immunization or medical records, academic records, birth certificates, guardianship records, and evaluations for special services or programs, regarding each homeless child or youth shall be maintained--

MV722g3Di so that the records are available, in a timely fashion, when a child or youth enters a new school or school district; and

MV722g3Dii in a manner consistent with section 444 of the General Education Provisions Act (20 U.S.C. 1232g).

MV722g3E ENROLLMENT DISPUTES- If a dispute arises over school selection or enrollment in a school--

MV722g3Ei the child or youth shall be immediately admitted to the school in which enrollment is

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)sought, pending resolution of the dispute;

MV722g3Eii the parent or guardian of the child or youth shall be provided with a written explanation of the school’s decision regarding school selection or enrollment, including the rights of the parent, guardian, or youth to appeal the decision;

MV722g3Eiii the child, youth, parent, or guardian shall be referred to the local educational agency liaison designated under paragraph 1 J ii, who shall carry out the dispute resolution process as described in paragraph 1 C as expeditiously as possible after receiving notice of the dispute; and

MV722g3Eiv in the case of an unaccompanied youth, the homeless liaison shall ensure that the youth is immediately enrolled in school pending resolution of the dispute.

MV722g3F PLACEMENT CHOICE- The choice regarding placement shall be made regardless of whether the child or youth lives with the homeless parents or has been temporarily placed elsewhere.

MV722g3G SCHOOL OF ORIGIN DEFINED- In this paragraph, the term ‘school of origin’ means the school that the child or youth attended when permanently housed or the school in which the child or youth was last enrolled.

MV722g3H CONTACT INFORMATION- Nothing in this subtitle shall prohibit a local educational agency from requiring a parent or guardian of a homeless child to submit contact information.

MV722g4 COMPARABLE SERVICES- Each homeless child or youth to be assisted under this subtitle shall be provided services comparable to services offered to other students in the school selected under paragraph 3, including the following:

MV722g4A Transportation services.MV722g4B Educational services for which the child or youth meets the eligibility criteria, such as

services provided under title I of the Elementary and Secondary Education Act of 1965 or similar State or local programs, educational programs for children with disabilities, and educational programs for students with limited English proficiency.

MV722g4C Programs in vocational and technical education.MV722g4D Programs for gifted and talented students.MV722g4E School nutrition programs.MV722g5 COORDINATION-MV722g5A IN GENERAL- Each local educational agency serving homeless children and youths that

receives assistance under this subtitle shall coordinate--MV722g5Ai the provision of services under this subtitle with local social services agencies and other

agencies or programs providing services to homeless children and youths and their families, including services and programs funded under the Runaway and Homeless Youth Act (42 U.S.C. 5701 et seq.); and

MV722g5Aii with other local educational agencies on interdistrict issues, such as transportation or transfer of school records.

MV722g5B HOUSING ASSISTANCE- If applicable, each State educational agency and local educational agency that receives assistance under this subtitle shall coordinate with State

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)and local housing agencies responsible for developing the comprehensive housing affordability strategy described in section 105 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12705) to minimize educational disruption for children and youths who become homeless.

MV722g5C COORDINATION PURPOSE- The coordination required under subparagraph A and B shall be designed to--

MV722g5Ci ensure that homeless children and youths have access and reasonable proximity to available education and related support services; and

MV722g5Cii raise the awareness of school personnel and service providers of the effects of short-term stays in a shelter and other challenges associated with homelessness.

MV722g6 LOCAL EDUCATIONAL AGENCY LIAISON-MV722g6A DUTIES- Each local educational agency liaison for homeless children and youths,

designated under paragraph 1 J ii, shall ensure that--MV722g6Ai homeless children and youths are identified by school personnel and through coordination

activities with other entities and agencies;MV722g6Aii homeless children and youths enroll in, and have a full and equal opportunity to succeed

in, schools of that local educational agency;MV722g6Aiii homeless families, children, and youths receive educational services for which such

families, children, and youths are eligible, including Head Start and Even Start programs and preschool programs administered by the local educational agency, and referrals to health care services, dental services, mental health services, and other appropriate services;

MV722g6Aiv the parents or guardians of homeless children and youths are informed of the educational and related opportunities available to their children and are provided with meaningful opportunities to participate in the education of their children;

MV722g6Av public notice of the educational rights of homeless children and youths is disseminated where such children and youths receive services under this Act, such as schools, family shelters, and soup kitchens;

MV722g6Avi enrollment disputes are mediated in accordance with paragraph 3 E; and MV722g6Avii the parent or guardian of a homeless child or youth, and any unaccompanied youth, is fully

informed of all transportation services, including transportation to the school of origin, as described in paragraph 1 J iii, and is assisted in accessing transportation to the school that is selected under paragraph 3 A.

MV722g6B NOTICE- State coordinators established under subsection d 3 and local educational agencies shall inform school personnel, service providers, and advocates working with homeless families of the duties of the local educational agency liaisons.

MV722g6C LOCAL AND STATE COORDINATION- Local educational agency liaisons for homeless children and youths shall, as a part of their duties, coordinate and collaborate with State coordinators and community and school personnel responsible for the provision of education and related services to homeless children and youths.

MV722g7 REVIEW AND REVISIONS-MV722g7A IN GENERAL- Each State educational agency and local educational agency that receives

assistance under this subtitle shall review and revise any policies that may act as barriers to

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)the enrollment of homeless children and youths in schools that are selected under paragraph 3.

MV722g7B CONSIDERATION- In reviewing and revising such policies, consideration shall be given to issues concerning transportation, immunization, residency, birth certificates, school records and other documentation, and guardianship.

MV722g7C SPECIAL ATTENTION- Special attention shall be given to ensuring the enrollment and attendance of homeless children and youths who are not currently attending school.

MV723 LOCAL EDUCATIONAL AGENCY SUBGRANTS FOR THE EDUCATION OF HOMELESS CHILDREN AND YOUTHS

MV723a GENERAL AUTHORITY-MV723a1 IN GENERAL- The State educational agency shall, in accordance with section 722 e, and

from amounts made available to such agency under section 726, make subgrants to local educational agencies for the purpose of facilitating the enrollment, attendance, and success in school of homeless children and youths.

MV723a2 SERVICES-MV723a2A IN GENERAL- Services under paragraph 1--MV723a2Ai may be provided through programs on school grounds or at other facilities;MV723a2Aii shall, to the maximum extent practicable, be provided through existing programs and

mechanisms that integrate homeless children and youths with nonhomeless children and youths; and

MV723a2Aiii shall be designed to expand or improve services provided as part of a school’s regular academic program, but not to replace such services provided under such program.

MV723a2B SERVICES ON SCHOOL GROUNDS- If services under paragraph 1 are provided on school grounds, schools--

MV723a2Bi may use funds under this subtitle to provide the same services to other children and youths who are determined by the local educational agency to be at risk of failing in, or dropping out of, school, subject to the requirements of clause ii; and

MV723a2Bii except as otherwise provided in section 722 e 3 B, shall not provide services in settings within a school that segregate homeless children and youths from other children and youths, except as necessary for short periods of time--

MV723a2Bii I for health and safety emergencies; orMV723a2Bii II to provide temporary, special, and supplementary services to meet the unique needs of

homeless children and youths.MV723a3 REQUIREMENT- Services provided under this section shall not replace the regular

academic program and shall be designed to expand upon or improve services provided as part of the school’s regular academic program.

MV723b APPLICATION- A local educational agency that desires to receive a subgrant under this section shall submit an application to the State educational agency at such time, in such manner, and containing or accompanied by such information as the State educational agency may reasonably require. Such application shall include the following:

MV723b1 An assessment of the educational and related needs of homeless children and youths in the

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)area served by such agency (which may be undertaken as part of needs assessments for other disadvantaged groups).

MV723b2 A description of the services and programs for which assistance is sought to address the needs identified in paragraph 1.

MV723b3 An assurance that the local educational agency’s combined fiscal effort per student, or the aggregate expenditures of that agency and the State with respect to the provision of free public education by such agency for the fiscal year preceding the fiscal year for which the determination is made, was not less than 90% of such combined fiscal effort or aggregate expenditures for the second fiscal year preceding the fiscal year for which the determination is made.

MV723b4 An assurance that the applicant complies with, or will use requested funds to comply with, paragraphs 3 through 7 of section 722 g.

MV723b5 A description of policies and procedures, consistent with section 722 e 3, that the agency will implement to ensure that activities carried out by the agency will not isolate or stigmatize homeless children and youths.

MV723c AWARDS-MV723c1 IN GENERAL- The State educational agency shall, in accordance with the requirements of

this subtitle and from amounts made available to it under section 726, make competitive subgrants to local educational agencies that submit applications under subsection b. Such subgrants shall be awarded on the basis of the need of such agencies for assistance under this subtitle and the quality of the applications submitted.

MV723c2 NEED- In determining need under paragraph 1, the State educational agency may consider the number of homeless children and youths enrolled in preschool, elementary, and secondary schools within the area served by the local educational agency, and shall consider the needs of such children and youths and the ability of the local educational agency to meet such needs. The State educational agency may also consider the following:

MV723c2A The extent to which the proposed use of funds will facilitate the enrollment, retention, and educational success of homeless children and youths.

MV723c2B The extent to which the application--MV723c2Bi reflects coordination with other local and State agencies that serve homeless children and

youths; andMV723c2Bii describes how the applicant will meet the requirements of section 722 g 3.MV723c2C The extent to which the applicant exhibits in the application and in current practice a

commitment to education for all homeless children and youths.MV723c2D Such other criteria as the State agency determines appropriate.MV723c3 QUALITY- In determining the quality of applications under paragraph 1, the State

educational agency shall consider the following:MV723c3A The applicant’s needs assessment under subsection b 1 and the likelihood that the program

presented in the application will meet such needs.MV723c3B The types, intensity, and coordination of the services to be provided under the program.MV723c3C The involvement of parents or guardians of homeless children or youths in the education of

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)their children.

MV723c3D The extent to which homeless children and youths will be integrated within the regular education program.

MV723c3E The quality of the applicant’s evaluation plan for the program.MV723c3F The extent to which services provided under this subtitle will be coordinated with other

services available to homeless children and youths and their families.MV723c3G Such other measures as the State educational agency considers indicative of a high-quality

program, such as the extent to which the local educational agency will provide case management or related services to unaccompanied youths.

MV723c4 DURATION OF GRANTS- Grants awarded under this section shall be for terms not to exceed 3 years.

MV723d AUTHORIZED ACTIVITIES- A local educational agency may use funds awarded under this section for activities that carry out the purpose of this subtitle, including the following:

MV723d1 The provision of tutoring, supplemental instruction, and enriched educational services that are linked to the achievement of the same challenging State academic content standards and challenging State student academic achievement standards the State establishes for other children and youths.

MV723d2 The provision of expedited evaluations of the strengths and needs of homeless children and youths, including needs and eligibility for programs and services (such as educational programs for gifted and talented students, children with disabilities, and students with limited English proficiency, services provided under title I of the Elementary and Secondary Education Act of 1965 or similar State or local programs, programs in vocational and technical education, and school nutrition programs).

MV723d3 Professional development and other activities for educators and pupil services personnel that are designed to heighten the understanding and sensitivity of such personnel to the needs of homeless children and youths, the rights of such children and youths under this subtitle, and the specific educational needs of runaway and homeless youths.

MV723d4 The provision of referral services to homeless children and youths for medical, dental, mental, and other health services.

MV723d5 The provision of assistance to defray the excess cost of transportation for students under section 722 g 4 A, not otherwise provided through Federal, State, or local funding, where necessary to enable students to attend the school selected under section 722 g 3.

MV723d6 The provision of developmentally appropriate early childhood education programs, not otherwise provided through Federal, State, or local funding, for preschool-aged homeless children.

MV723d7 The provision of services and assistance to attract, engage, and retain homeless children and youths, and unaccompanied youths, in public school programs and services provided to nonhomeless children and youths.

MV723d8 The provision for homeless children and youths of before- and after-school, mentoring, and summer programs in which a teacher or other qualified individual provides tutoring, homework assistance, and supervision of educational activities.

MV723d9 If necessary, the payment of fees and other costs associated with tracking, obtaining, and

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)transferring records necessary to enroll homeless children and youths in school, including birth certificates, immunization or medical records, academic records, guardianship records, and evaluations for special programs or services.

MV723d10 The provision of education and training to the parents of homeless children and youths about the rights of, and resources available to, such children and youths.

MV723d11 The development of coordination between schools and agencies providing services to homeless children and youths, as described in section 722 g 5.

MV723d12 The provision of pupil services (including violence prevention counseling) and referrals for such services.

MV723d13 Activities to address the particular needs of homeless children and youths that may arise from domestic violence.

MV723d14 The adaptation of space and purchase of supplies for any nonschool facilities made available under subsection a 2 to provide services under this subsection.

MV723d15 The provision of school supplies, including those supplies to be distributed at shelters or temporary housing facilities, or other appropriate locations.

MV723d16 The provision of other extraordinary or emergency assistance needed to enable homeless children and youths to attend school.

MV724 SECRETARIAL RESPONSIBILITIESMV724a REVIEW OF STATE PLANS- In reviewing the State plan submitted by a State

educational agency under section 722 g, the Secretary shall use a peer review process and shall evaluate whether State laws, policies, and practices described in such plan adequately address the problems of homeless children and youths relating to access to education and placement as described in such plan.

MV724b TECHNICAL ASSISTANCE- The Secretary shall provide support and technical assistance to a State educational agency to assist such agency in carrying out its responsibilities under this subtitle, if requested by the State educational agency.

MV724c NOTICE- The Secretary shall, before the next school year that begins after the date of enactment of the McKinney-Vento Homeless Education Assistance Improvements Act of 2001, create and disseminate nationwide a public notice of the educational rights of homeless children and youths and disseminate such notice to other Federal agencies, programs, and grantees, including Head Start grantees, Health Care for the Homeless grantees, Emergency Food and Shelter grantees, and homeless assistance programs administered by the Department of Housing and Urban Development.

MV724d EVALUATION AND DISSEMINATION- The Secretary shall conduct evaluation and dissemination activities of programs designed to meet the educational needs of homeless elementary and secondary school students, and may use funds appropriated under section 726 to conduct such activities.

MV724e SUBMISSION AND DISTRIBUTION- The Secretary shall require applications for grants under this subtitle to be submitted to the Secretary not later than the expiration of the 60-day period beginning on the date that funds are available for purposes of making such grants and shall make such grants not later than the expiration of the 120-day period beginning on such date.

MV724f DETERMINATION BY SECRETARY- The Secretary, based on the information received

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)from the States and information gathered by the Secretary under subsection h, shall determine the extent to which State educational agencies are ensuring that each homeless child and homeless youth has access to a free appropriate public education, as described in section 721 1.

MV724g GUIDELINES- The Secretary shall develop, issue, and publish in the Federal Register, not later than 60 days after the date of enactment of the McKinney-Vento Homeless Education Assistance Improvements Act of 2001, school enrollment guidelines for States with respect to homeless children and youths. The guidelines shall describe--

MV724g1 successful ways in which a State may assist local educational agencies to immediately enroll homeless children and youths in school; and

MV724g2 how a State can review the State’s requirements regarding immunization and medical or school records and make such revisions to the requirements as are appropriate and necessary in order to enroll homeless children and youths in school immediately.

MV724h INFORMATION-MV724h1 IN GENERAL- From funds appropriated under section 726, the Secretary shall, directly or

through grants, contracts, or cooperative agreements, periodically collect and disseminate data and information regarding--

MV724h1A the number and location of homeless children and youths;MV724h1B the education and related services such children and youths receive;MV724h1C the extent to which the needs of homeless children and youths are being met; andMV724h1D such other data and information as the Secretary determines to be necessary and relevant to

carry out this subtitle.MV724h2 COORDINATION- The Secretary shall coordinate such collection and dissemination with

other agencies and entities that receive assistance and administer programs under this subtitle.

MV724i REPORT- Not later than 4 years after the date of enactment of the McKinney-Vento Homeless Education Assistance Improvements Act of 2001, the Secretary shall prepare and submit to the President and the Committee on Education and the Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate a report on the status of education of homeless children and youths, which shall include information on--

MV724i1 the education of homeless children and youths; andMV724i2 the actions of the Secretary and the effectiveness of the programs supported under this

subtitle.MV725 DEFINITIONS. For purposes of this subtitle:MV725 1 The terms ‘enroll’ and ‘enrollment’ include attending classes and participating fully in

school activities.MV725 2 The term ‘homeless children and youths’--MV725 2A means individuals who lack a fixed, regular, and adequate nighttime residence (within the

meaning of section 103(a)(1)); andMV725 2B includes--

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McKinney-Vento Homeless Assistance Act (January 2002) (MV)MV725 2Bi children and youths who are sharing the housing of other persons due to loss of housing,

economic hardship, or a similar reason; are living in motels, hotels, trailer parks, or camping grounds due to the lack of alternative adequate accommodations; are living in emergency or transitional shelters; are abandoned in hospitals; or are awaiting foster care placement;

MV725 2Bii children and youths who have a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings (within the meaning of section 103(a)(2)(C));

MV725 2Biii children and youths who are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; and

MV725 2Biv migratory children (as such term is defined in section 1309 of the Elementary and Secondary Education Act of 1965) who qualify as homeless for the purposes of this subtitle because the children are living in circumstances described in clauses i through iii.

MV725 3 The terms ‘local educational agency’ and ‘State educational agency’ have the meanings given such terms in section 9101 of the Elementary and Secondary Education Act of 1965.

MV725 4 The term ‘Secretary’ means the Secretary of Education.MV725 5 The term ‘State’ means each of the 50 States, the District of Columbia, and the

Commonwealth of Puerto Rico.MV725 6 The term ‘unaccompanied youth’ includes a youth not in the physical custody of a parent

or guardian.MV726 AUTHORIZATION OF APPROPRIATIONS. For the purpose of carrying out this subtitle,

there are authorized to be appropriated $70,000,000 for fiscal year 2002 and such sums as may be necessary for each of fiscal years 2003 through 2007.

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