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Pass through Requirements

Last Updated: 2006

A “pass through requirement” transfers money through a recipient government to a public or private third party. Funds for a pass through program may originate with another government or from private parties. Most common are “Pass through Grants,” which the Governmental Accounting Standards Board defines as grants “received by a recipient government to transfer to or spend on behalf of a secondary recipient.”

Pass through programs generally require the recipient governments to administer the program. While the recipient government often has some administrative discretion, pass through programs usually come with specific requirements. For example, the government creating the pass through may require the recipient government to administer the program, monitor compliance, determine eligibility of secondary recipients, and provide matching or supplemental funds.

The national government often sends federal funds to state governments with the requirement that those funds be “passed through” to county, municipal, township, and Native American governments or private parties. The Department of Homeland Security (DHS) encourages local governments to improve their security through pass through grants. The Federal Emergency Management Agency (FEMA) distributes its disaster preparedness funds through pass through programs. Before 1996 the federal government required states to “pass through” up to $50 they collected in child support to the family on cash assistance. The 1996 welfare law removed that requirement; subsequently 30 states eliminated the pass through, 19 states maintained or reduced it, and 3 states expanded it. Medicaid passes federal funds through state governments to private recipients.

SEE ALSO: MedicaidNative AmericansWelfare Policy