Chapter 17: Budget

In this chapter:


Section 330(e)(5)(A) and Section 330(k)(3)(I)(i) of the PHS Act; and 45 CFR 75.308(a) and 45 CFR 75 Subpart E


  • The health center must develop an annual budget that:
    • Identifies the projected costs of the Health Center Program project;
    • Identifies the projected costs to be supported by Health Center Program [award] funds, consistent with Federal Cost Principles1 and any other requirements or restrictions on the use of Federal funding; and
    • Includes all other non-Federal revenue sources that will support the Health Center Program project, including:
      • State, local, and other operational funding; and
      • Fees, premiums, and third-party reimbursements which the health center may reasonably be expected to receive for its operation of the Health Center Program project.
  • The health center must submit this budget annually by a date specified by HRSA for approval through the Federal award or designation process.

Demonstrating Compliance

A health center would demonstrate compliance with these requirements by fulfilling all of the following:

  1. The health center develops and submits to HRSA (for new or continued funding or designation from HRSA) an annual budget, also referred to as a “total budget,”2,3 that reflects projected costs and revenues necessary to support the health center’s proposed or HRSA-approved scope of project.
  2. In addition to the Health Center Program award, the health center’s annual budget includes all other projected revenue sources that will support the Health Center Program project, specifically:
    • Fees, premiums, and third-party reimbursements and payments that are generated from the delivery of services;
    • Revenues from state, local, or other Federal grants (for example, Ryan White, Healthy Start) or contracts;
    • Private support or income generated from contributions; and
    • Any other funding expected to be received for purposes of supporting the Health Center Program project.
  3. The health center’s annual budget identifies the portion of projected costs to be supported by the Federal Health Center Program award. Any proposed costs supported by the Federal award are consistent with the Federal Cost Principles4 and the terms and conditions5 of the award.
  4. If the health center organization conducts other lines of business (i.e., activities that are not part of the HRSA-approved scope of project), the costs of these other activities are not included in the annual budget for the Health Center Program project.6

The following points describe areas where health centers have discretion with respect to decision-making or that may be useful for health centers to consider when implementing these requirements:

  • The health center determines how to allocate projected costs between Health Center Program award funds, consistent with Federal requirements, and other projected revenue sources within the annual budget.


1. See 45 CFR Part 75 Subpart E: Cost Principles.

2. A health center’s “total budget” includes the Health Center Program Federal award funds and all other sources of revenue in support of the health center scope of project.

3. Any aspects of the requirement that relate to the use of Health Center Program Federal award funds are not applicable to look-alikes.

4. See 45 CFR Part 75 Subpart E: Cost Principles.

5. For example, health centers may not use HHS Federal award funds to support salary levels above the salary limitations on Federal awards.

6. As these other lines of business are not included in the health center’s total budget, they are not subject to Health Center Program requirements and not eligible for related Health Center Program benefits (for example, payment as a FQHC under Medicare/Medicaid/CHIP, 340B Program eligibility, Federal Tort Claims Act (FTCA) coverage).

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