State Matching Fund Options for NBCP Grantees

To receive grant funding under the National Background Check Program (NBCP), a State must guarantee that it will make available matching non-Federal funds—referred to as the “State match” or “State matching funds”—to cover a portion of the cost of implementing the program in that State. As specified in Section 6201 of the Patient Protection and Affordable Care Act, the State match will be in a ratio of 1 to 3, with each $1 in State-guaranteed non-Federal funds being matched by $3 in Federal funds. A maximum of $3 million in Federal grant funds are available for a newly participating State, or half of this amount for a State that previously participated in the pilot program, under Section 307 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Several non-participating States have indicated that it is difficult to obtain the funds required for the State match. This resource paper identifies sources that States are allowed to use to provide the State match. In addition, it describes several specific sources of funds that NBCP grantee States have used to match Federal funds.

What types of State match funds can States use?
How can the non-Federal match be used during the grant?
What are examples of State funds from an existing program?
What are examples of State funds other than from an existing program?
What are “in-kind” contributions?
What are examples of in-kind sources of non-Federal funds?
What if I have additional questions regarding State matching funds?
Additional Resources

What types of State match funds can States use?

The NBCP grant allows for a “soft” match—that is, the match may include sources other than budget amounts appropriated by the State. The Centers for Medicare & Medicaid Services (CMS) grant solicitation for the NBCP breaks the match into “cash” and “in-kind” categories. In general, any match originating from any State agency is considered a “cash” contribution, whereas donations (from providers or industry associations, for example) are “in-kind” contributions. Also, Civil Money Penalty (CMP) funds collected from long term care facilities as a result of federally imposed CMPs may be used, with certain restrictions, for no more than 36 months, which includes program development time and the initial year of program implementation [1].

How can the non-Federal match be used during the grant?

State funds can be used directly on the development, implementation, and operation of a new NBCP-compliant background check program or to support an existing (legacy) background check system if NBCP-compliant improvements are being made. State funds that currently support an existing State background check program may be counted as matching funds, provided that the Federal funds expenditures are directed toward a comparable expansion or improvement in the program as described in the State grant proposal.

More specifically, State matching funds may be used to keep the existing background check program running during the statewide “conversion from fingerprint cards to electronic fingerprint capture, addition of Federal Bureau of Investigation (FBI) checks to a State-only background check program, or expansion of the types of providers and number of background checks that are being conducted”. The following example is from an approved NBCP grant:

• Example 1: In the proposal of an NBCP State, the staff of the State CJIS Agency will process the applicant fingerprints and provide criminal history results in accordance with established business process to continue the existing State criminal history records check screenings. The cost of staff time, including salary, fringe benefits, and the State approved indirect costs, amounted to over $350,000; these costs were properly counted as a portion of the State match. In this example, new capabilities including FBI checks and other enhancements would be developed and implemented using Federal funds.

What are examples of State funds from an existing program?

Background check–related fees: Fees collected by the State for the existing and proposed background check program can be counted toward the non-Federal fund match. This means that any fingerprint collection fees collected by the State, and the fees received from providers or applicants to process State or Federal background checks during the grant period can be used toward the non-Federal fund match. The following examples are from actual approved NBCP grant applications. Each example shows how a different NBCP grantee State used costs from its State-specific criminal records checking process to meet NBCP grant State match requirements.

• Example 2: An NBCP State issued a statewide electronic fingerprinting contract to collect and process the fingerprint-based criminal record checks required by the NBCP. Although equipment and operations were provided by the vendor, the State CJIS agency incurred other implementation costs of over $400,000. These costs were legitimately counted toward the State match.
• Example 3: An NBCP State calculated that the State CJIS Agency would incur fees of $75,000 to enroll new applicants in FBI rap back program. These fees were counted toward the State match.

Cost of grantee agency staff time used for the State background check program, and paid by the State: Salaries, fringe benefits, and State indirect or overhead costs for staff working on the existing or proposed background check program can be used to fulfill the non-Federal match requirement. To qualify as a non-Federal fund match, however, staff time may not be used to match any other current Federal grant.

• Example 4: The manager of the State long term care facility licensing bureau budgets 50 percent of her time to the NBCP grant, and the other 50 percent on a different Federal grant program; 50 percent of her State salary, benefits, and overhead costs may be counted toward the State match requirement, as shown in the table below.

• Example 5: The State IT agency allocates a person to be the full-time manager of the NBCP grant on a contract that is paid from State funds (not Federal funds). That employee’s entire salary, benefits, and indirect/overhead costs may be counted toward the State match.
• Example 6: A State agency’s Background Screening Unit has five full-time employees and three part-time employees devoted to the existing background check program. The salary, benefits, and indirect/overhead costs of all these employees may be counted toward the State match.

What are examples of State funds other than from an existing program?

Sources that count toward the State match other than funds from an existing background check program include the following:

Cost of State staff outside the grantee agency, paid by the State (and not paid by Federal funds): That portion of time budgeted for background check program development and operation by IT staff, registry database managers, or State law enforcement staff, if not paid by Federal funds, may be counted toward the State match.

General revenue funds: State general revenue funds qualify as a source of non-Federal fund match. General revenue funds are usually comprised of proceeds collected by the State through various taxes and fees.

CMP: CMP funds collected from long term care facilities as a result of Federally imposed CMPs are State funds and may be counted toward the non-Federal match, with the conditions described below [1].

What are “in-kind” contributions?

In-kind contributions are “contributions other than cash”. In practice, these often are donations of equipment, materials, or services by persons or organizations outside the State agency. Note that donations may include money, but this is considered “in kind.” In-kind contributions

“must add real value to a project commensurate with the dollar value assigned to the contribution, be necessary for the successful conduct of the program, and offset expenses that the program would of necessity incur if the in-kind contribution was not provided. They may not represent costs for functions that the contributor must otherwise provide under State or local law in the absence of the background check program.”

What are examples of in-kind sources of non-Federal funds?

• Example 7: Advisory groups: Many grantee States establish an advisory group that includes representation from organizations outside the State government. The donated labor from outside staff may count as an in-kind contribution toward the non-Federal match.
• Example 8: Training facilities: The value of any resources used for training of providers can be counted toward the non-Federal match. For example, if a nursing home chain provides a training room in which the State trains providers in its background check program or the Automated Background Check Management System, the use of the room would be considered an in-kind donation.

What if I have additional questions regarding State matching funds?

Please contact CMS via email at background_checks@cms.hhs.gov for more information or with questions regarding acceptable revenue sources for State matching funds.

Additional Resources

1. Use of Federally Imposed Civil Money Penalty (CMP) Funds by States—Update: Ref: CMS S & C memo 12-13-NH. The information provided in this memorandum supersedes earlier guidance to States for directing CMP funds toward efforts that will benefit nursing home residents except for the guidance in S&C-11-12-NH. Available at: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/SCLetter12_13.pdf