Find answers to commonly asked questions regarding the updated Head Start Program Performance Standards (the Performance Standards) that allow programs to consider excessive housing costs in their family eligibility verification process (45 CFR §1302.12(i)(1)(ii)). The responses below provide examples of applying the housing adjustment, outline acceptable housing expenses, and explain documentation requirements to support eligibility decisions.

How do I apply the housing adjustment flexibility to the family income?

To determine the housing cost adjustment for a family, follow these steps:

• Step 1: Identify the family’s gross annual income.
• Step 2: Determine if the family’s gross annual income is above or below the federal poverty line.
  • If the family’s gross annual income is below the federal poverty line for a family of their size, the family is “income eligible” for Head Start services and there is no need to apply a housing adjustment.
  • If the family’s gross annual income is above the federal poverty line for a family of their size, proceed to Step 3.
• Step 3: Identify the family’s annual housing expenses based on documentation.
• Step 4: Determine if the family’s annual housing expenses are more than 30% of the family’s total gross income.
  • If housing costs are less than 30% of the family’s gross income, no housing adjustment may be applied.
  • If housing costs are more than 30% of the family’s gross income, proceed to step 5.
• Step 5: Adjust the family’s income by subtracting the family’s annual housing expenses that are more than 30% of the family’s gross income from the family’s annual gross income.

The following scenario provides an example of the housing adjustment applied to a family of three.

Scenario: A family of three living near Edgewater, Chicago, has a total gross family income of $30,000 a year. This family spends $14,000 on housing expenses. 

• Step 1: The program calculates gross family income at $30,000.
• Step 2: The gross family income of $30,000 is $4,180 above the $25,820 poverty line for a family of three (2024 Poverty Guidelines).
• Step 3: The program may request available bills, bank statements, and other relevant documentation to determine the family’s total annual housing expenses. The program determines that this family spends $14,000 a year on housing expenses.
• Step 4: In this scenario, 30% of the family’s income is $9,000 ($30,000 x 30% = $9,000) $14,000 (the family’s total housing expenses) is $5,000 more than $9,000. Therefore, their housing expenses exceed 30% of their family income by $5,000.
• Step 5: The program may adjust the family’s income by the amount spent on housing expenses above 30% of the family income which is $5,000. The family income is adjusted from $30,000 per year to $25,000 per year, which brings them below the poverty line for their family size. 

Result: The family can be enrolled into the Head Start program through the income-eligibility category.

What expenses can be included in housing costs?

Housing costs may include rent or mortgage payments, homeowner’s or renter’s insurance, utilities, interest, and taxes on the home. Utilities include electricity, gas, water, sewer, and trash. If families use alternative fuel sources to heat their homes instead of gas or electricity (e.g., fuel oil, propane, coal, firewood), that heating fuel can be counted as a utility. The Housing Cost Adjustment Calculator tool does not have a line for each of these types of heating sources; however, programs may use the “Gas” line on the calculator to add these costs. 

In alignment with policies set by the Department of Housing and Urban Development, internet and phone expenses may not be counted as utilities in housing costs for the purposes of the housing adjustment. In addition, one-time costs to improve or repair the home (e.g., weatherization, roof repair, HVAC replacement) and home-maintenance (e.g., lawn care, cleaning services) may not be included in housing costs.

Homeowners association (HOA) fees may include both costs that would and would not qualify as described in the housing costs definition. If a family can itemize costs from HOA fees that qualify (e.g., utilities), those may be included.

Similarly, if other housing costs are bundled together, and a family can itemize costs that qualify, those may be included.

Do I have to apply the housing adjustment to every family when determining income eligibility?

No. The use of the housing adjustment is optional and may be used at the discretion of Head Start agencies. Some agencies may decide not to use the housing adjustment if the program is fully enrolled with eligible families in need of program services without factoring in housing costs. For example, families may be eligible for Head Start services based on other categories, such as being eligible for public assistance or experiencing homelessness, as defined by the McKinney-Vento Homeless Assistance Act. We encourage programs to only apply the housing adjustment where necessary and as a method to further promote enrolling eligible families in need of program services. Programs should continue to prioritize enrollment based on their established criteria for identifying children most in need of services.

What type of documentation is acceptable for calculating housing costs?

Documentation for housing expenses will vary by household. A program can use bills, bank statements, or other relevant documentation to determine housing costs.

If a family pays for housing expenses to a third party through an online payment portal system, payment apps, or documentation of the transaction from a bank statement can be used. In general, copies of documentation from third parties are considered credible and adequate for determining housing expenses.

Similar to income document verification, if a family does not have bills or bank statements, they can use written statements from third parties (e.g., landlords, sub-lessors). Note that a self-declaration for specific housing expenses is not acceptable.

In working with families to collect this information please keep in mind that collecting a written statement from a third party may be challenging for some, especially for families with informal housing arrangements. Families should be advised of their options and how it may impact their eligibility for the program. However, no family is required to produce documentation of housing costs if they choose not to do so. Programs should move forward with eligibility determination and housing adjustments with the eligible housing costs for which families are willing to share documentation.

Copies of any documents used should be retained while the family is enrolled in the program.

What span of time should the documentation of housing costs cover?

The span of time during which a program collects documentation of housing costs can vary. A family may have recently moved or had an increase in their rent, in which case multiple months of documentation may not be readily available. A program should use documentation of housing costs that best represents current circumstances, and programs can take documentation from one month of housing and multiply by 12 to calculate the average total expenses that a family has throughout the year.

Should the program account for the variability of utility costs from season to season?

It is not necessary for the program to account for seasonal variance in utility costs. In general, the program should use readily available documentation provided by the family to calculate annual housing expenses. A program should not impose an undue burden on families to produce comprehensive records to account for variability in utility expenses across seasons.

What should we do if documentation is incomplete on housing costs?

It is not necessary to account for all housing expenses if documentation is not available or is burdensome to obtain. In most cases, the majority of housing expenses will be the cost of rent or mortgage. If a family can only provide documentation of rent, this alone can be used, even if other housing expenses exist, but documentation is unavailable or burdensome for the family to collect.

How do we calculate housing costs for families that are doubled-up with another family or when living with relatives that contribute to housing costs?

Only housing expenses that come from the family income involved in the eligibility determination should be considered for purposes of the housing adjustment flexibility.

Note that families that are doubled-up or living with relatives are potentially eligible for Head Start services through another category. Programs must carefully and sensitively learn from families whether they live with relatives or friends due to a crisis (e.g., loss of income, natural disaster, domestic violence) or another economic-related hardship. If so, that family meets the definition of experiencing homelessness under the McKinney-Vento Act.

Can programs use the housing adjustment flexibility for “over-income” families already enrolled in the program and change the basis for which that child was determined to be income-eligible, thus making another slot available?

Yes. Programs may revise the basis for an eligibility determination now that the housing adjustment flexibility is part of the Performance Standards, and they may determine a child to be income-eligible who was previously enrolled as over-income.

Last Updated: November 14, 2024