BACKGROUND: Community participation in peripheral public health facilities has in many countries focused on including community representatives in Health Facility Management Committees (HFMCs). In Kenya, HFMC roles are being expanded with the phased implementation of the Health Sector Services Fund (HSSF). Under HSSF, HFMCs manage facility funds which are dispersed directly from central level into facility bank accounts. We assessed how prepared HFMCs were to undertake this new role in advance of HSSF roll out, and considered the implications for Kenya and other similar settings. METHODS: Data were collected through a nationally representative sample of 248 public health centres and dispensaries in 24 districts in 2010. Data collection included surveys with in-charges (n = 248), HFMC members (n = 464) and facility users (n = 698), and record reviews. These data were supplemented by semi-structured interviews with district health managers in each district. RESULTS: Some findings supported preparedness of HFMCs to take on their new roles. Most facilities had bank accounts and HFMCs which met regularly. HFMC members and in-charges generally reported positive relationships, and HFMC members expressed high levels of motivation and job satisfaction. Challenges included users' low awareness of HFMCs, lack of training and clarity in roles among HFMCs, and some indications of strained relations with in-charges. Such challenges are likely to be common to many similar settings, and are therefore important considerations for any health facility based initiatives involving HFMCs. CONCLUSION: Most HFMCs have the basic requirements to operate. However to manage their own budgets effectively and meet their allocated roles in HSSF implementation, greater emphasis is needed on financial management training, targeted supportive supervision, and greater community awareness and participation. Once new budget management roles are fully established, qualitative and quantitative research on how HFMCs are adapting to their expanded roles, especially in financial management, would be valuable in informing similar financing mechanisms in Kenya and beyond.