FUNDING HEAD START FACILITIES

This chapter discusses funding of Head Start facilities. It includes identifying sources of funds, applying for funding, and comparing leased and purchased facilities.

The Head Start program should not expect 100% financing for the facility and should be prepared to secure additional funds through grants or donations.

Lenders will usually require security for the loan and may require a credit enhancement or third party guarantee for at least a part of the loan amount. Head Start programs may need assistance in negotiating the most favorable loan terms and support from intermediary organizations to guarantee the loan or otherwise provide the necessary credit enhancement.

Identifying Funding Sources

In the past, Head Start programs have realized their space needs through leasing buildings paid for by Federal grants, and through receiving donations of facilities or facility space from churches and community agencies. These sources will continue to be important in the future, but in light of the need for improved and expanded facilities, programs must explore other funding sources, as well.

Planners should consider the following sources of funds, which Head Start programs have used previously:

Federal Funds

• Head Start grantee funding procedures vary each year and will be included in annual funding guidance. See section on Funding Resources.
• Head Start programs may seek loans to meet their non-Federal funding share. The Federal Community Reinvestment Act (GRA) requires banks and other private financial institutions to make loans to communities from which they draw deposits. Lending money for Head Start and child care facilities is one way that banks can meet their CRA obligations and may provide an incentive for banks to assist Head Start grantees.

State Sources:

• State laws providing funds for early childhood programs. Most States have enacted legislation to support preschool education and other early childhood programs. Many of these laws give priority to programs that low-income, educationally disadvantaged, or other at-risk children, and Head Start is often eligible. In addition, some States have earmarked funds specifically for Head Start. These funds may be available for building or rehabilitating facilities.
• Child Care and Development Block Grant (CCDBG) funds are some times available to support Head Start and child care facilities. Twenty five percent of the GCDBG funds are tobe used to improve quality and expand availability, and these resources can be used to provide grants or loans to help programs meet State standards. These funds cannot be used for land purchase or for the construction of buildings or facilities.
• Funds under the Individuals with Disabilities Education Act (IDEA) may be focused on Head Start under interagency agreements with State Education Agencies (SEAs)or Local Education Agencies (LEAs).
• State Community Development Block Grant (CDBG) funds may be available to help pay for Head Start facilities. In addition, the Section 108 loan guarantee provision of the CDBG, which focuses on expanding economic opportunities principally for low- and moderate-income persons, may be available to Head. Start and child care programs.

City and County Sources

• City and county governments sometimes provide direct budgetary support to Head Startprograms, including facilities, in addition to in-kind contributions of space.
• School systems can provide support to Head Start in many ways. Some schools operate Head Start as grantees or delegate agencies and can include facilities planning for Head Start as part of their overall planning. Other schools make classrooms or entire school buildings available to Head Start programs, or donate or sell school facilities to Head Start agencies. Schools may administer a variety of early childhood education program budgets (for example, Chapter I or Even Start) with Head Start operating under subcontractual arrangements. In addition, schools generally have specialists on their staff with extensive experience in dealing with architects, engineers, and contractors on building design and construction issues: these specialists are a possible source of technical assistance to Head Start programs.
• Public Housing Authorities may donate facilities for Head Start, particularly to provide services to public housing residents.
• Farmers Home Administration Community Facility Loans may be used to construct, enlarge or improve community health care, public safety and public services facilities, and for necessary equipment to operate approved facilities. Head Start programs in rural areas and towns of not more than 20,000 people may be eligible for these loans. The Administration provides technical assistance to applicants and makes periodic inspections.

Other Sources

• Some private businesses have developed collaborative relationships with local Head Start programs and have contributed to the development of facilities that provide both Head Start and child care services. In general, the business community can be a valuable resource to Head Start in the area of facilities.
• Some foundations have supported Head Start or child care facilities projects. Others have helped to launch intermediary organizations. (See section entitled, "Funding Resources" for more on these organizations.)
• Foundations might also be willing to provide direct support for facilities. Consult your local library for foundations in your area that have indicated a willingness to support such projects.
• Religious organizations often donate or lease space in their buildings for Head Start classrooms, make land available for modular facilities or Head Start centers, or provide cash subsidies to Head Start programs.

Estimating Costs: In preparing a loan application for Federal or non-Federal funds, it is critical that Head Start programs develop realistic estimates of all facilities costs and a budget that ensures that costs will be met as they come due. The estimates and budget should be developed for the current year and for future years for each facility for which funds are being sought and should include at least the information in the Head Start Budget Projection at the end of this chapter.

Leasing and Purchasing Facilities

Head Start programs have been given the legislative authority to purchase facilities, subject to Federal review and approval. Therefore, each Head Start agency should review its facilities needs, explore all feasible alternatives, and make careful long-term analyses and comparisons taking into account pro gram quality, cost, and other relevant factors, such as their previous experience with landlords.

For some programs, buying a facility will be the best choice. For others, a lease is in order. For still others, other options are more suitable. For example, there are lease purchase options that may offer favorable terms and fit the needs of some programs. For other programs, intermediary organizations (such as those described in Chapter 6) may play the role of a "friendly landlord," offering the benefits while minimizing the risks of ownership.

Many programs will continue to have quality facilities donated or made available for use on an in-kind basis. Larger programs can expect to operate a mixed system, using some in-kind space, some leased buildings, and some facilities owned by the Head Start agency.

Head Start grantees that decide to purchase a facility will have to complete a grant application as noted above and include specific information in the application. Justification for Purchase of a Head Start Facility, which appears at the end of this chapter, cites the applicable provisions of the Head Start Improvement Act and the information needed for the application.



Worksheet #12 - HEAD START BUDGET PROJECTION

Worksheet #13 - JUSTIFICATION FOR PURCHASE OF A HEAD START FACILITY



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