By law, all grantees under the Teacher Quality Enhancement (TQE) Grants Program must provide a minimum contribution to their projects with non-federal funds. The purpose of this matching requirement is to enhance the level of project services and to have the grantee and its partners take some significant ownership of the project through investment of their own resources. In-kind and cash matching contributions also help promote sustainability of project services and other beneficial outcomes after federal funding ends. The non-federal resources contributed each year are evidence of continued support and commitment from the grantee and its partners to the institutionalization of their TQE project.

What are the matching requirements for the TQE Program, as specified in Sec. 205(c) of the Higher Education Act and Sec. 611.62 of the TQE regulations (34 CFR 611.62)? What is the proper timing of matching contributions? What are the consequences for failure to provide the required level of matching contributions? What types of non-federal contributions may a grantee count toward the TQE matching requirement? What are appropriate sources of matching contributions? Are there any limitations with respect to matching contributions? How should grantees document matching contributions?

Matching and Cost Sharing Requirements

1. What are the matching requirements for the TQE Program, as specified in Sec. 205(c) of the Higher Education Act and Sec. 611.62 of the TQE regulations (34 CFR 611.62)?

Each state receiving a grant under the State Grant Program or Teacher Recruitment Grant Program must provide on an annual basis from non-federal sources, an amount that is at least equal to 50 percent of the amount of the grant award, to carry out the activities (explained in the approved application and annual work plans) supported by grant funds.

Each partnership receiving a grant under the Partnership Grant Program or Teacher Recruitment Grant Program must provide from non-federal sources an amount that is at least 25 percent of the TQE grant for the first year, 35 percent for the second year, and 50 percent for all subsequent years.

NOTE: The matching contributions may be in cash and/or in-kind. In any fiscal year, grantees whose approved applications and budgets identified an amount of match that exceeds the statutory minimum for any project period must meet that higher amount. If you are having trouble meeting match, call your program officer.

2. What is the proper timing of matching contributions?

Grantees are required by the TQE program regulations at 34 CFR 611.62 to comply with the matching percentage stated in their applications for each individual year of the grant, based on the amount of federal grant funds obligated in that year. Thus -

1. If a state grantee proposed to meet no more than the 50 percent cost share in Year 1 and $200,000 of federal funds in year one was awarded, the grantee would need to match $100,000 in year one.
2. If a partnership grantee that received a $500,000 award in year one had proposed to meet no more than the 25 percent cost share in year one and obligated only $250,000 in that year, it would need to provide a match of $62,500 in year one. In year two, when it obligated the remaining $250,000 awarded in year one, the grantee would have to match the remaining $62,500 associated with the year one award. It also would need that year to match any obligations of its year two award at 35 percent.

3. What are the consequences for failure to provide the required level of matching contributions?

Potential consequences: Failure to provide the level of cost share reflected in the approved budget may result in a reduction of the future federal awards, a need to refund federal grant funds to the Department of Education (Department), and/or possible termination of the grant.

Audits: Cost sharing commitments are subject to audit, including audit by the Department's Office of the Inspector General.

4. What types of non-federal contributions may a grantee count toward the TQE matching requirement?

Types of matching: In preparing their project application, the lead applicant and partners should have worked together on a plan for addressing the participating school districts' teacher quality and shortage problems through the TQE project, that includes the contributions and uses of both federal and non-federal resources. After the Department makes a TQE award, the lead applicant and partners then have responsibility for carrying out this plan by implementing the scope and objectives of the approved application and budget.

Both the grantee (e.g., local or state educational agency, college or university, nonprofit organization) and partnering entities may contribute funds or services for any activity that could be supported with federal dollars provided through a TQE program grant award.

EDGAR and applicable cost principles: All contributions, including cash and third party in-kind, are allowable provided they meet the criteria contained in Sec. 74.23 of the Education Department General Administrative Regulations (EDGAR) for colleges and universities, and Sec. 80.24 of EDGAR for state and local governments including local educational agencies. In addition, any items that would be allowable under the applicable cost principles if charged directly to the grant may be included as match for the grantee's cost sharing requirement. These EDGAR requirements incorporate by reference the cost principles in applicable Office of Management and Budget Circulars: A-87 for state and local governments (including local educational agencies), A-21 for institutions of higher education, and A-122 for nonprofit organizations. Please review both section 74.23 and 80.24 of EDGAR and the OMB Circulars that apply to your type of organization ¹. The content of these circulars, such as requirements that costs be reasonable, necessary, allocable to the grant, and consistently applied, apply to both costs charged to federal grant funds and to matching contributions.

Indirect costs: A TQE grantee may charge indirect costs based on an indirect cost rate of eight percent or the grantee's negotiated indirect cost rate, whichever is less. Unrecovered indirect costs cannot be counted as match. Thus, if a grantee has a negotiated indirect cost rate of 40 percent, the grantee may use no more than eight percent indirect cost as match, and may not claim any of the unrecovered indirect costs based on the 40 percent indirect cost rate as a matching contribution.

5. What are appropriate sources of matching contributions?

Sources of matching contributions: Matching contributions may be made from any non-federal source, including non-federal grants. Under sections CFR 74.23 and 80.24 of EDGAR, matching or cost sharing requirements may be satisfied by: (1) allowable costs incurred by the grantee, cash, and/or (2) the value of third party in-kind contributions.

Changes in the source of matching contributions: If a grantee finds that one or more of the partners in its original grant application not meeting matching commitments to the TQE project, the grantee may (and probably should) find a new partner to provide additional resources. In such cases, the grantee's program officer should be notified.

6. Are there any limitations with respect to matching contributions?

Matching contributions can be counted only one time: A matching contribution may be counted as cost sharing towards only one federally assisted project. Thus, the same contribution may not be counted as cost sharing for two or more federal grants (including multiple TQE grants).

Matching contributions must be incurred solely to advance the TQE project: If matching contributions benefit both a TQE project and another project or entity, the amount of matching contributions that may be credited to the TQE project must be proportionate to the extent of benefit of the TQE project. For example, if a TQE partner hires a counselor to advise TQE preservice teachers and other preservice teachers who are not participants in the TQE project, only the value of the time the counselor works to assist TQE preservice teachers may be counted as match. Also, please note that if a TQE project staff member divides his or her time between a TQE project and another activity (whether or not that other activity is federally funded), the grantee must maintain appropriate time and effort reports that reflect the percentage of time actually devoted to the particular TQE project.

7. How should grantees document matching contributions?

Documentation of match: Grantees must adequately document that their projects have provided and properly valued their non-federal matching contributions the same way they must document their use of TQE grant funds. To avoid potential audit findings, documentation of match should:

1. Capture the cost sharing identified with a particular project;
2. Contain adequate source documentation for claimed cost sharing;
3. Provide clear valuation of in-kind documentation consistent with OMB cost principles; and
4. Provide support of cost sharing by grant partners.

Fiscal agent's responsibilities: The fiscal agent (e.g., state agency in the case of a state grant, the lead partner in the case of a partnership grant) of a TQE project is responsible for maintaining documentation of all matching contributions for the entire grant - even matching provided by its partners. In the event that a grantee is audited, documentation of match should be housed with or easily accessible to the fiscal agent. (See section 75.730 of EDGAR.)

Valuation of in-kind contributions: In-kind contributions that are counted toward a matching requirement (like cash) must be verifiable from the records of the grantee. These records also must show how the value of third-party contributions was derived. (See, generally, Sections 74.23(a)(1) and (c) and 80.24(a)(6) of EDGAR.)

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¹ The Home page for all circulars is http://www.whitehouse.gov/omb/circulars/index.html. Requirements vary by type of organization, and by whether the donation came from the grantee or a third party. In some cases, such as in the case of donated space or equipment, valuation must be made using depreciation or use allowance rather than fair market value.

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If you have specific questions regarding these requirements, contact:

Andrea C. Baird, Program Officer
U.S. Department of Education
Teacher Quality Enhancement Grants Program
1990 K Street, N.W., Room 7091
Washington, DC 20006
Telephone: 202-502-7797
E-Mail: andrea.baird@ed.gov

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