Sneak Preview: Topeka Followed Severance Law in Head Start Case

December 8, 2011 | By Jerry Ashworth | Post a Comment

(The following is an excerpt from an article in the January 2012 issue of the Federal Grants Management Handbook.) Head Start program grantees who can justify that severance pay to former employees is contractually obligated and is proper and reasonable under the applicable cost principles can likely withstand a legal challenge.

In a recent decision, the Department of Health and Human Services Departmental Appeals Board reversed the Administration for Children and Families’ disallowance of about $30,470 in Head Start funds sought by the Board of Education (BOE) of Topeka (Kan.) Public Schools. Although ACF in April 2011 disallowed about $33,106 that BOE charged to a Head Start grant from 2009-2010 for payments made to seven retired teachers, payments to six of the teachers remained in dispute.

ACF said it disallowed the payments because BOE did not seek prior approval from ACF to charge them to the grant. ACF classified the payments as “abnormal and mass severance pay,” which the applicable cost principles allow with prior agency approval. It added that the payments were “not necessary and reasonable for the proper and efficient administration” of the Head Start program. The appeals board, however, disputed the ACF’s determination.

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