OAA Budget & Financial Management

Title III Funding Formula

OAA Title III funds are distributed to states through a statutory formula based primarily on each state's share of the national population age 60 and older. The formula uses Census Bureau population estimates and is updated periodically as new population data becomes available. The formula also includes a floor provision ensuring that no state receives less than a minimum allotment (approximately 0.5% of the total for most states, with higher minimums for territories).

For FY2024, the total OAA appropriation across all titles was approximately $2.3 billion. The Title III allocation — the portion flowing to states through the formula — represents the largest share:

Note that Title III-E uses the population age 70 and older (rather than 60+) as its formula base, reflecting the reality that caregiving needs increase significantly in the older age cohorts. All other Title III sub-titles use the 60+ population.

Match Requirements by Title

OAA Title III programs require non-federal match, with the rate varying by sub-title. Understanding match requirements is essential for budget planning because the match obligation determines how much total program spending each dollar of federal OAA funding can support.

The match calculation uses the federal share as the base. For Title III-B/C/D, the federal share is 85% of total allowable program costs, so the non-federal match is 15/85 (approximately 17.65%) of the federal award amount. For Title III-E, the non-federal match is 25/75 (approximately 33.33%) of the federal award amount. This distinction matters for budget planning.

Allowable Match Sources

Non-federal match for OAA Title III can come from multiple sources:

• State appropriations: Many states provide general fund appropriations specifically designated as OAA match. This is the most common and most reliable match source
• Local government contributions: County or municipal funding provided to the AAA or its service providers specifically for OAA-eligible services
• In-kind contributions: Donated goods and services that meet 2 CFR 200 valuation standards — volunteer time, donated space, donated food commodities, pro bono professional services
• Program income: Revenue from voluntary contributions may be used toward match in some circumstances, subject to ACL guidance and SUA policies. Not all states allow voluntary contributions to count as match — check your state's specific policy
• Private donations: Cash donations from individuals, foundations, or businesses may count as match if properly documented and not derived from other federal sources

The critical rule: non-federal match may not come from other federal funding sources. You cannot use CSBG, Medicaid, or other federal funds as match for OAA Title III unless specifically authorized by statute. State funds and local funds are generally allowable, but verify that the same funds are not being used as match for another federal program simultaneously.

In-Kind Match Documentation

In-kind contributions are a significant match source for many OAA programs, particularly nutrition programs that rely on volunteer meal delivery drivers and donated kitchen facilities. Proper documentation is essential:

• Volunteer time: Must be valued at rates consistent with what the organization would pay for the same work, or at rates consistent with the volunteer's professional rate if providing professional services (e.g., a CPA providing free accounting services). Time sheets must be maintained
• Donated space: Valued at the fair rental value of comparable space in the area. Documentation should include a lease equivalent or appraisal
• Donated food: USDA commodities provided through the Nutrition Services Incentive Program (NSIP) are valued at their USDA-determined value. Other donated food is valued at fair market value
• Donated equipment and supplies: Valued at fair market value at the time of donation, with documentation of the valuation method

Intrastate Funding Formula

Each SUA develops an intrastate funding formula (IFF) that determines how OAA Title III funds are distributed among AAAs within the state. The OAA requires that the IFF take into account the geographic distribution of older individuals, with particular attention to the distribution of older individuals with greatest economic need and greatest social need, with particular attention to low-income minority older individuals.

Common factors used in intrastate funding formulas include:

• 60+ population: The total population age 60 and older in each PSA, typically the primary factor
• Low-income 60+ population: The population age 60+ with incomes below the poverty level, weighted to reflect the targeting requirement
• Minority 60+ population: The racial and ethnic minority population age 60+, weighted to reflect social need targeting
• Rural 60+ population: The population age 60+ living in rural areas, weighted to ensure adequate proportion in rural PSAs
• Geographic factors: Square mileage, population density, or transportation infrastructure costs that affect the cost of service delivery in different PSAs

The IFF is part of the state plan and must be approved by ACL. AAA directors should understand their state's IFF because it determines their base allocation and any changes to the formula can significantly affect their funding level.

Transfer Authority Between Title III-B and III-C

One of the most important budget flexibilities available to AAAs is the authority to transfer funds between Title III-B (Supportive Services) and Title III-C (Nutrition Programs). The OAA permits each AAA to transfer up to 40% of its allocation between these two titles in either direction, subject to state approval.

How Transfer Authority Works

The 40% transfer limit applies to the total amount transferred between III-B and III-C. For example, if an AAA receives $500,000 in Title III-B and $800,000 in Title III-C, it could transfer up to 40% of either allocation to the other:

• III-B to III-C: Up to $200,000 (40% of $500,000) could be transferred from supportive services to nutrition
• III-C to III-B: Up to $320,000 (40% of $800,000) could be transferred from nutrition to supportive services

Transfer authority is a powerful tool for matching resource allocation to local needs. An AAA in an area with strong nutrition infrastructure but limited transportation might transfer funds from III-C to III-B to increase transportation capacity. Conversely, an AAA experiencing rapidly growing home-delivered meal demand might transfer III-B funds to III-C.

Transfer Authority Compliance

Transfer authority must be exercised carefully to avoid compliance issues:

• 40% limit: Exceeding the 40% transfer limit is a compliance violation. AAAs must track cumulative transfers during the fiscal year to ensure the limit is not exceeded
• State approval: Most states require prior approval for transfers above a certain threshold. Some states have restricted transfer authority below the federal 40% maximum
• Area plan consistency: Transfers should be consistent with the priorities described in the area plan. A large transfer that fundamentally changes the service mix may require a plan amendment
• Match implications: Transferred funds carry the match requirement of the receiving title. Since III-B and III-C both require 15% match, this is usually not an issue between these two titles

Administrative Cost Limits

While the OAA does not impose a universal administrative cost cap at the AAA level the way some programs do (for example, Head Start's 15% administrative cap), many SUAs establish state-level administrative cost policies that limit the percentage of OAA funds that can be spent on AAA administration versus direct services. These limits vary by state but typically range from 8% to 15% of the OAA allocation.

Additionally, the OAA limits the amount states may retain for state-level administration. Each SUA may retain a portion of its OAA allocation for state administrative costs, with the remainder flowing to AAAs for service delivery. ACL monitors state administrative cost ratios as part of its oversight of state plans.

AAAs should maintain clear cost allocation systems that accurately distinguish administrative costs from direct service costs and program development costs. Proper categorization prevents both under-reporting (which understates the true cost of program administration) and over-reporting (which may trigger state corrective action).

Cost-Sharing Policies

As discussed in the Eligibility & Targeting guide, the OAA permits states to implement cost-sharing for certain non-nutrition Title III-B supportive services. If your state has implemented cost sharing, the budget implications include:

• Revenue projection: Cost-sharing revenue must be projected in the budget and tracked separately from voluntary contributions. The projection should account for the fact that low-income participants are exempt from cost sharing
• Program income treatment: Cost-sharing revenue is program income and must be used to expand the services for which it was collected, in accordance with the program income requirements of 2 CFR 200
• Sliding scale development: If implementing cost sharing, the AAA must develop a sliding scale based on income that protects low-income participants (below FPL) from any cost-sharing obligation

Program Income from Voluntary Contributions

Voluntary contributions collected from OAA service participants generate program income. Under OAA and 2 CFR 200 rules, program income must be used to expand the service for which it was collected. This means that voluntary contributions collected at a congregate meal site must be used to provide additional congregate meal services, not redirected to unrelated purposes.

Program income from voluntary contributions can be significant — some nutrition programs collect substantial revenue that materially extends their service capacity beyond what OAA funds alone would support. AAAs should track program income carefully, budget for its use, and ensure it is spent within the appropriate service category.

Nutrition Services Incentive Program (NSIP)

The Nutrition Services Incentive Program, administered by ACL, provides additional resources to OAA nutrition programs based on the number of meals served in the prior year. States may receive NSIP funds as either cash grants or USDA commodity foods (or a combination). NSIP supplements OAA Title III-C nutrition funding and is a critical additional revenue source for nutrition programs.

For FY2024, the NSIP allocation was approximately $175 million nationally. The per-meal NSIP rate varies by year but is typically around $0.70–$0.80 per meal. NSIP funds may only be used for the purchase of food (if received as cash) used in the nutrition program — they cannot be used for labor, transportation, equipment, or other non-food costs.

Budget Planning Checklist

Use this checklist for your annual OAA budget development:

• Confirmed Title III allocation from SUA for each sub-title (B, C1, C2, D, E)
• Non-federal match sources identified and committed for each title at required rates (15% or 25%)
• In-kind match documented with proper valuation methods and time sheets
• Transfer authority between III-B and III-C documented and within 40% limit
• Administrative costs within state-established limits
• Program income from voluntary contributions budgeted for service expansion in appropriate category
• NSIP allocation budgeted for food purchases only
• Cost allocation plan current for organizations managing multiple funding streams
• Budget aligns with area plan service priorities and targeting strategies