[Code of Federal Regulations]
[Title 45, Volume 4]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR1301.32]

[Page 96-98]
 
                        TITLE 45--PUBLIC WELFARE
 
CHAPTER XIII--OFFICE OF HUMAN DEVELOPMENT SERVICES, DEPARTMENT OF HEALTH 
                           AND HUMAN SERVICES
 
PART 1301_HEAD START GRANTS ADMINISTRATION--Table of Contents
 
             Subpart D_Personnel and General Administration
 
Sec.  1301.32  Limitations on costs of development and administration of a 

Head Start program.

    (a) General provisions. (1) Allowable costs for developing and 
administering a Head Start program may not exceed 15 percent of the 
total approved costs of the program, unless the responsible HHS official 
grants a waiver approving a higher percentage for a specific period of 
time not to exceed twelve months.
    (2) The limit of 15 percent for development and administrative costs 
is a maximum. In cases where the costs for development and 
administration are at or below 15 percent, but are judged by the 
responsible HHS official to be excessive, the grantee must eliminate 
excessive development and administrative costs.
    (b) Development and administrative costs. (1) Costs classified as 
development and administrative costs are those costs related to the 
overall management of the program. These costs can be in both the 
personnel and non-personnel categories.

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    (2) Grantees must charge the costs of organization-wide management 
functions as development and administrative costs. These functions 
include planning, coordination and direction; budgeting, accounting, and 
auditing; and management of purchasing, property, payroll and personnel.
    (3) Development and administrative costs include, but are not 
limited to, the salaries of the executive director, personnel officer, 
fiscal officer/bookkeeper, purchasing officer, payroll/insurance/
property clerk, janitor for administrative office space, and costs 
associated with volunteers carrying out administrative functions.
    (4) Other development and administrative costs include expenses 
related to administrative staff functions such as the costs allocated to 
fringe benefits, travel, per diem, transportation and training.
    (5) Development and administrative costs include expenses related to 
bookkeeping and payroll services, audits, and bonding; and, to the 
extent they support development and administrative functions and 
activities, the costs of insurance, supplies, copy machines, postage, 
and utilities, and occupying, operating and maintaining space.
    (c) Program costs. Program costs include, but are not limited to:
    (1) Personnel and non-personnel costs directly related to the 
provision of program component services and component training and 
transportation for staff, parents and volunteers;
    (2) Costs of functions directly associated with the delivery of 
program component services through the direction, coordination or 
implementation of a specific component;
    (3) Costs of the salaries of program component coordinators and 
component staff, janitorial and transportation staff involved in program 
component efforts, and the costs associated with parent involvement and 
component volunteer services; and
    (4) Expenses related to program staff functions, such as the 
allocable costs of fringe benefits, travel, per diem and transportation, 
training, food, center/classroom supplies and equipment, parent 
activities funds, insurance, and the occupation, operation and 
maintenance of program component space, including utilities.
    (d) Dual benefit costs. (1) Some costs benefit both the program 
components as well as development and administrative functions within 
the Head Start program. In such cases, grantees must identify and 
allocate appropriately the portion of the costs that are for development 
and administration.
    (2) Dual benefit costs include, but are not limited to, salaries, 
benefits and other costs (such as travel, per diem, and training costs) 
of staff who perform both program and development and administrative 
functions. Grantees must determine and allocate appropriately the part 
of these costs dedicated to development and administration.
    (3) Space costs, and costs related to space, such as utilities, are 
frequently dual benefit costs. The grantee must determine and allocate 
appropriately the amount or percentage of space dedicated to development 
and administration.
    (e) Relationship between development and administrative costs and 
indirect costs. (1) Grantees must categorize costs in a Head Start 
program as development and administrative or program costs. These 
categorizations are separate from the decision to charge such costs 
directly or indirectly.
    (2) Grantees must charge all costs, whether program or development 
and administrative, either directly to the project or as part of an 
indirect cost pool.
    (f) Requirements for compliance. (1) Head Start grantees must 
calculate the percentage of their total approved costs allocated to 
development and administration as a part of their budget submission for 
initial funding, refunding or for a request for supplemental assistance 
in connection with a Head Start program. These costs may be a part of 
the direct or the indirect cost pool.
    (2) The Head Start grant applicant shall delineate all development 
and administrative costs in its application.
    (3) Indirect costs which are categorized as program costs must be 
fully explained in the application.
    (g) Waiver. (1) The responsible HHS official may grant a waiver of 
the 15

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percent limitation on development and administrative costs and approve a 
higher percentage for a specific period of time not to exceed twelve 
months. The conditions under which a waiver will be considered are 
listed below and encompass those situations under which development and 
administrative costs are being incurred, but the provision of actual 
services has not begun or has been suspended. A waiver may be granted 
when:
    (i) A new Head Start grantee or delegate agency is being established 
or services are being expanded by an existing Head Start grantee or 
delegate agency, and the delivery of component services to children and 
families is delayed until all program development and planning is well 
underway or completed; or
    (ii) Component services are disrupted in an existing Head Start 
program due to circumstances not under the control of the grantee.
    (2) A Head Start grantee that estimates that the cost of development 
and administration will exceed 15 percent of total approved costs must 
submit a request for a waiver that explains the reasons for exceeding 
the limitation. This must be done as soon as the grantee determines that 
it cannot comply with the 15 percent limit, regardless of where the 
grantee is within the grant funding cycle.
    (3) The request for the waiver must include the period of time for 
which the waiver is requested. It must also describe the action the 
grantee will take to reduce its development and administrative costs so 
that the grantee will be able to assure that these costs will not exceed 
15 percent of the total approved costs of the program after the 
completion of the waiver period.
    (4) If granted, the waiver and the period of time for which it will 
be granted will be indicated on the Financial Assistance Award.
    (5) If a waiver requested as a part of a grant application for 
funding or refunding is not approved, no Financial Assistance Award will 
be awarded to the Head Start program until the grantee resubmits a 
revised budget that complies with the 15 percent limitation.

(Information collection requirements contained in paragraphs (f) (2) and 
(3) of this section were approved on January 26, 1993, by the Office of 
Management and Budget under Control Number 0980-1043).

[57 FR 41885, Sept. 14, 1992, as amended at 58 FR 26918, May 6, 1993]