Guidance for Management Plans and Budgets

Transcription

1 Guidance fr Management Plans and Budgets A Child and Adult Care Fd Prgram Handbk U.S. Department f Agriculture Fd and Nutritin Service December 2013 USDA is an equal pprtunity prvider and emplyer.

2 Plicy Memranda Thrughut the text, references have been made t numbered memranda issued by the Fd and Nutritin Service Natinal Office. The numbering system may differ frm yur State agency r FNS Reginal Office. The U.S. Department f Agriculture prhibits discriminatin against its custmers, emplyees, and applicants fr emplyment n the bases f race, clr, natinal rigin, age, disability, sex, gender identify, religin, reprisal, and where applicable, plitical beliefs, marital status, familial r parental status, sexual rientatin, r all r part f an individual s incme is derived frm any public assistance prgram, r prtected genetic infrmatin in emplyment r in any prgram r activity cnducted r funded by the Department (Nt all prhibited bases will apply t all prgrams and/r emplyment activities.) If yu wish t file a Civil Rights prgram cmplaint f discriminatin, cmplete the USDA Prgram Discriminatin Cmplain Frm, fund nline at r at any USDA ffice, r call (866) t request the frm. Yu may als write a letter cntaining all f the infrmatin requested in the frm. Send yur cmpleted cmplaint frm r letter t us by mail at U.S. Department f Agriculture, Directr, Office f Adjudicatin, 1400 Independence Avenue, S.W., Washingtn, D.C , by fax (202) r at prgram.intake@usda.gv. Individuals wh are deaf, hard f hearing, r have speech disabilities may cntact USDA thrugh the Federal Relay Service at (800) ; r (800) (Spanish). USDA is an equal pprtunity prvider and emplyer.

3 Cntents Intrductin... 5 Backgrund... 5 Wh Administers the Prgram?... 6 Abut This Guidance... 7 Part 1. Institutin Management Plans General Guidance... 8 A. Develping the Management Plan... 8 B. New Institutins/Spnsring Organizatins... 8 C. Participating Institutins D. Perfrmance Standards E. Additinal Tpics Cvered in the Management Plan F. Reviewing & Apprving the Management Plan G. Revising/Amending a Management Plan H. Mnitring the Management Plan Part 2. Budgets General Infrmatin and Guidance A. Csts ) Allwable Csts ) Direct Csts and Indirect Cst Plans ) Allcable Csts ) Csts Require Prir, Specific Written, r FNS Apprval ) Unallwable Csts B. Operating Csts and Administrative Csts ) Operating Csts ) Administrative Csts C. Incme / Funds D. Evaluating the Budget E. Apprving / Denying a Budget F. Revising r Amending Budgets G. Review f Fiscal Recrds H. Questins and Answers Part 3. Additinal Infrmatin fr Institutins by Type A. Independent Center Budgets B. Spnsring Organizatins f Centers C. Spnsring Organizatins f Day Care Hmes D. Multipurpse Organizatins E. Questins t Keep in Mind Regarding Spnsring Organizatins Guidance fr Management Plans and Budgets Page 3

4 Part 4. Acrnyms and Glssary Part 5. Resurces A. Financial Guidance B. Memranda Issued by FNS Relating t CACFP Management Plans and Budgets C. Attachments Guidance fr Management Plans and Budgets Page 4

5 Intrductin The Child and Adult Care Fd Prgram (CACFP) is a Federally-funded Prgram that prvides payments fr eligible meals served t participants wh meet age and incme requirements. Meals served by participating institutins and facilities must meet minimum guidelines set by the U.S. Department f Agriculture (USDA). The CACFP helps institutins and facilities serve wellbalanced, nutritius meals t the participants in their care. Serving nutritius meals helps imprve and maintain the health and nutritinal status f participants in a day care envirnment and can help them develp and maintain gd eating habits. Institutins earn Federal reimbursement fr meals served t eligible children, and eligible adults in an adult day care center, when the meals meet regulatry requirements. In additin, institutins which are r spnsring rganizatins f day care hmes (DCH) r centers are prvided Federal funds t accmplish administrative activities in supprt f the facilities which prvide meals t children. State agencies are respnsible fr prviding the structure and versight f institutins peratin and use f and accuntability fr Federal funds. Management plans and budgets are tls used by State agencies and institutins t manage the financial systems f the CACFP. Backgrund The Cde f Federal Regulatins (CFR) at 7 CFR 226.6(b)(1)(iv)(C) require CACFP institutins t submit an rganizatinal management plan and annual budgets as part f the applicatin prcess t ensure Prgram and fiscal integrity. Reviews and audits have been cnducted peridically by the Fd and Nutritin Service (FNS) and the USDA Office f Inspectr General (OIG). 1995: OIG Audit N AT OIG audited the DCH cmpnent f CACFP due t the results f State and Federal Prgram reviews. OIG selected five States fr inclusin in the audit. The audit fund serius types f regulatry nncmpliance and inadequate internal cntrls by States and spnsring rganizatins, and OIG recmmended changes t CACFP review requirements and management cntrls. 1999: OIG Audit Reprt N SF r SF The OIG cnducted targeted audits which were referred t cllectively as Operatin Kiddie Care. These audits cnfirmed the findings f the 1995 audits and develped additinal findings as well. Findings related t State agencies and spnsring rganizatins included the misuse f administrative funds. FNS was required t strengthen requirements f the Prgram in many areas f the CACFP. 2002: Child and Adult Care Fd Prgram: Imprving Management and Prgram Integrity (1st Interim rule) based n the Agricultural Risk Prtectin Actin f 2000 (Public Law ) and the Grain Standards and Warehuse Act f 2000 ( ). Required institutins t emply an apprpriate number f mnitring persnnel based n the number and characteristics f their facilities. Guidance fr Management Plans and Budgets Page 5

6 Required institutins t meet the viability, capability, and accuntability perfrmance standards. 2004: Child and Adult Care Fd Prgram: Imprving Management and Prgram Integrity (2nd Interim rule) Prvided ptins fr simplifying the institutin s applicatin prcess and made agreements permanent. 2011: Child and Adult Care Fd Prgram: Imprving Management and Prgram Integrity (Final rule) Allwed participating institutins t submit nly the names f publicly-funded prgrams it is newly participating within since the previus year rather than reiterating their entire list each year. Required that an institutin s gverning bard f directrs must: (1) Meet n a regular basis; and (2) have the authrity t hire and fire the institutin s executive directr (i.e., the bard must be independent f the executive directr s cntrl). 2011: OIG Audit Reprt N SF, Review f Management Cntrls. Required spnsring rganizatins bards t be cmpsed f a majrity f members f the cmmunity wh are nt persnally financially interested in its activities, r related t its persnnel r t each ther. Als, t adhere t less-than-arms-length requirements, bard members must recuse themselves frm vtes n decisins relating t their wn cmpensatin and that f immediate family members and financially related parties. Required spnsrs t sign an annual disclsure f ptential cnflicts f interest, including specific identificatin f any dealings with less-than-arms-length entities and any relatinships between fficers, bard members, and emplyees. Require that prgram applicatin materials and NDL submittals include full legal names and any names frmerly used. Wh Administers the Prgram? USDA s FNS administers CACFP thrugh grants t States. The Prgram is administered within mst States by the State educatinal agency. In a few States it is administered by an alternate agency, such as the State health r agriculture department. Independent centers and spnsring rganizatins f DCHs and/r centers enter int agreements with the administering State agency t assume administrative and financial respnsibility fr CACFP peratins. The CACFP prvides reimbursement fr nutritius meals and snacks served t eligible children and adults wh are enrlled fr care at participating DCHs, child care centers, At-Risk Afterschl Meal Prgrams, emergency shelters, r in adult day care centers. Guidance fr Management Plans and Budgets Page 6

7 Abut This Guidance This handbk specifically fcuses n plans fr institutins (independent centers and spnsring rganizatins) t cnduct rganized and fiscally respnsible peratins f the CACFP management plans utline the institutin s plicies and prcedures fr administering and mnitring its wn peratins and thse f its spnsred facilities. Budgets utline the use f CACFP and ther funds fr meeting Prgram requirements. FNS recgnizes that maintaining a high-quality CACFP requires a cmmitment t excellence n the part f institutins and caregivers. We applaud the effrts f the many dedicated persns wh ensure that the participating children and adults are served whlesme, attractive, and nutritius meals in a sciable envirnment while meeting the requirements fr Federal assistance. The term institutin is used fr bth independent centers and spnsring rganizatins. Spnsring rganizatins can take several frms: 1. A public r nnprfit private rganizatin that is respnsible fr the administratin f the CACFP in: Definitins One r mre DCHs; One r mre child care centers, emergency shelters, at-risk afterschl care centers, utside-schl-hurs care centers (OSHCC), r adult day care centers which is a legally distinct entity frm the spnsring rganizatin (affiliated r unaffiliated centers); Any cmbinatin f child care centers, emergency shelters, at-risk afterschl care centers, OSHCC, adult day care centers, and DCHs; r An institutin enters int an agreement directly with the State agency. A facility enters int an agreement with an rganizatin that spnsrs the facility. A facility may be a child care center, atrisk afterschl care center, OSHCC, emergency shelter, adult day care center, r day care hme prvider. 2. A fr-prfit rganizatin that is respnsible fr the administratin f the CACFP in any cmbinatin f tw r mre child care centers, at-risk afterschl care centers, adult day care centers, r OSHCCs which are fr-prfit centers and are part f the same legal entity as the rganizatin. A fr-prfit spnsring rganizatin may spnsr nly thse centers that are legally part f the spnsring rganizatin (affiliated centers) and may nt spnsr DCHs. Fllwing are examples f types f spnsring rganizatins. A nnprfit institutin that spnsrs DCHs culd als spnsr centers. A nnprfit institutin, such as a Cmmunity Actin Agency, culd spnsr bth affiliated and unaffiliated centers. A fr-prfit business culd spnsr child care centers that it wns and perates (affiliated centers nly). Guidance fr Management Plans and Budgets Page 7

8 Part 1. Institutin Management Plans General Guidance The purpse f this part is t prvide guidance fr State agency staff in all aspects f the institutin management plan prcess. It will assist State agency staff in establishing written plicy and prcedures fr develping, reviewing, apprving, and mnitring management plans. State agencies will use institutins management plans t evaluate their viability, capability and accuntability (VCA). A. Develping the Management Plan CACFP regulatins require State agencies t develp applicatin prcedures t determine the eligibility f institutins. The applicatin fr spnsring rganizatins must include a management plan. Fr-prfit Bards Fr-prfit spnsring rganizatins are nt required t have a bard; the wner takes verall respnsibility fr the CACFP. Althugh the regulatins d nt require independent centers t submit a management plan, all institutins must demnstrate they have internal cntrls in place and dcument they meet the required perfrmance standards. The regulatins prvide specific requirements fr spnsring rganizatin management plans. All new spnsring rganizatins are required t submit a management plan as part f the Prgram applicatin. Spnsring rganizatins als are required t submit revisins t their apprved management plan when changes are made and annually certify that the apprved management plan n file at the State agency is current and up t date. B. New Institutins/Spnsring Organizatins Fllwing is the list f required elements f a management plan. 1. Detailed infrmatin must be btained n the rganizatin s management and administrative structure, identifying wners, principals, and individuals respnsible fr specific CACFP, administrative, fd service, and care-giving duties. 2. The Bard f Directrs is respnsible fr setting plicy, fiscal guidance, and nging gvernance. It regularly reviews the rganizatin s plicies, Prgrams, budgets and peratins. Decisins are dcumented in bard minutes which are maintained and available fr review. Bard Members Vte Bard members must recuse themselves frm vting n decisins relating t their wn cmpensatin and that f immediate family members and financially related parties. In additin, the Bard shuld have a screening system t identify any criminal cnfiscatins f Bard members and spnsring rganizatin respnsible principals/individuals (RP/I) which wuld disqualify them frm the Prgram. Guidance fr Management Plans and Budgets Page 8

9 Develping an Apprpriate Bard f Directrs An acceptable Bard cnsists f a majrity f the members whse livelihd is independent frm and wh hlds n persnal fiscal interest in the institutin s activities and wh are nt related t each ther r t its persnnel. State agencies must determine if any member f the Bard f Directrs has fiscal ties t the spnsring rganizatin r the spnsring rganizatin s staff. Thse members may nt have acceptable detachment t make decisins fr the CACFP institutin based n slely what is best fr the institutin, whether r nt the decisin affects the Bard member s fiscal psitin. State agencies must als determine if any members f the Bard f Directrs are als spnsring rganizatin fficials r family members f the spnsring rganizatin s fficials. The definitin f family member and the number and type f family members permitted n a Bard f Directrs are gverned by State law. Fr purpses f this determinatin, the State agency may accept the spnsring rganizatin fficial s respnse as t whether Bard members are family members and the nature f the relatinship. Hwever, a State agency may request clarificatin if the fficial s respnse is nt cnsistent with ther infrmatin cncerning the bard; fr example, if Bard members have the same last name as the Executive Directr. 3. An institutin s administrative budget must include prjected CACFP administrative earnings and expenses. 4. The institutin must utline the prcedures it will use t administer the CACFP in, and disburse payments t, the facilities under its spnsrship. 5. The institutin must maintain apprpriate recrds t dcument cmpliance with CACFP requirements, including budgets, accunting recrds, apprved budgets and amendments, and, if a spnsring rganizatin, management plans and apprpriate recrds n facility peratins [7 CFR 226.6(b)(1)(xviii)(C)(3)]; 6. The institutin must demnstrate that its participatin will help ensure the delivery f CACFP benefits t therwise unserved facilities r participants accrding t the State agency criteria. The State agency must develp criteria fr determining whether a new spnsring rganizatin s participatin will help ensure delivery f benefits t therwise unserved facilities r participants, and must disseminate these criteria t new spnsring rganizatins when they request infrmatin abut applying t the CACFP [7 CFR 226.6(a)(1)(xi)]; 7. The institutin must prvide mandatry training n CACFP duties and respnsibilities t key staff (as defined by State agency) frm all new spnsred facilities prir t the beginning f CACFP peratins. Tpics must include instructin, apprpriate t the level f staff experience and duties n: The CACFP meal pattern, Meal cunts, Claims submissin, Guidance fr Management Plans and Budgets Page 9

10 Claim review prcedures, Recrdkeeping requirements, Civil rights requirements, and Reimbursement system. 8. Spnsring rganizatins are required t emply sufficient mnitring staff t adequately cnduct required review activities. A Full-Time Equivalent (FTE) staff year is the amunt f wrk that ne persn, wrking full-time 40 hurs per week, wuld perfrm in a year. 7 CFR (b)(1) requires that spnsring rganizatins have: 1 FTE fr each 50 t 150 DCHs it spnsrs; and/r 1 FTE fr each 25 t 150 centers it spnsrs. Activities that may be cnsidered mnitring include: Preparatin and review f files befre cnducting a review; Cnducting the review; Writing the review reprt; Technical assistance related t review findings; Fllw-up activities, including review f crrective actin and clsure f the review; and Activities related t the annual updating f children s enrllment frms [7 CFR (b)(1)]. State agencies are required t establish factrs that it will cnsider in determining whether a spnsring rganizatin has sufficient staff t perfrm required mnitring functins [7 CFR 226.6(b)(1)]. Spnsring rganizatins must demnstrate that they have an adequate number f FTEs t accmplish the annual mnitring requirements fr their DCHs and/r centers. Dcumentatin includes prviding jb descriptins that include the percentage f time each staff persn devtes t mnitring-related activities. State Staffing Factrs A rutine standard wuld establish the amunt f time a spnsr s mnitr is expected t spend cnducting a DCH review. 9. Spnsring rganizatins must include in their respective management plan, plicies restricting utside emplyment by all emplyees that interferes with an emplyee s perfrmance f Prgram-related duties and respnsibilities, including utside emplyment that cnstitutes a real r apparent cnflict f interest [(7 CFR (b)(7)]. Guidance fr Management Plans and Budgets Page 10

11 EXAMPLE: A spnsring rganizatin s mnitr als wrks full-time with a tax preparatin ffice during tax seasn. The mnitr wuld be unable t cnduct reviews f prviders during the day if they wrk elsewhere full-time; therefre, this demnstrates a cnflict f interest. 10. The management plan must include prcedures the spnsring rganizatin will implement t cmply with the requirement t maintain cmplete and apprpriate recrds f the fllwing n file as required by 7 CFR (e) and ther State agency requirements; Cpies f applicatins and supprting dcuments submitted t the State agency: Facility participant enrllment frms (except fr emergency shelters, atrisk afterschl, r OSHCCs (7 CFR 226.2)); Facility participant Incme Eligibility Frms (nt emergency shelters r atrisk afterschl centers) including tier I children in tier II DCHs; Surce dcuments used t classify tier I DCHs; e.g., incme, schl, census); Daily recrds t supprt facility claims; Daily recrds indicating the number f meals by type, served t persns perfrming labr necessary t the fd service (nt DCHs); Cpies f invices, receipts, r ther recrds required by the State agency t dcument administrative csts claimed by the institutin; Operating csts claimed by the institutin as incme t the CACFP nnprfit fd service; and Cpies f all claims fr reimbursement sent t the State agency. Receipts fr all CACFP payments received frm the State agency; Infrmatin cntaining the dates and amunts f disbursements t each spnsred facility; Cpies f menus and any ther fd service recrds required by the State agency; Cpies f facility review reprts, with lcatin, date, prblems nted, required crrective actin, apprved crrective actin plans, and implemented crrective actin plans; Infrmatin n training sessins, date, lcatin, attendees, and tpics presented; and Dcuments f annual training fr each staff member with mnitring functins. Guidance fr Management Plans and Budgets Page 11

12 11. Spnsring rganizatins f DCHs must prvide a descriptin f its system fr making tier I determinatins, and a descriptin f the system f ntifying tier II hmes f their ptins fr reimbursement [7 CFR 226.6(b)(1)(iv)]. Using the Management Plan fr Statewide Prgram Imprvement Thrughut an annual perating cycle, a trend f similar inaccuracies by institutins may develp. The State agency may add an element t the management plan addressing the trend. This recrdkeeping requirement wuld nt be an additinal State agency requirement. [CACFP , Additinal State Agency Requirements, March 29, 2013.] C. Participating Institutins Participating institutins are nt required t submit a renewal applicatin. Instead, they are required t annually submit: Updated licensing infrmatin fr each independent center r spnsred facility participating in CACFP. The State agency may chse t btain this infrmatin directly frm the State licensing agency rather than requiring submissin by the institutin; A single certificatin that any infrmatin previusly submitted t the State agency is current, r that the institutin has submitted any changes r updates t the State agency. This certificatin must address all required elements. State agencies may add t this list ther infrmatin required annually fr prper administratin f the Prgram, including but nt limited t the infrmatin described in 7 CFR 226.6(f)(3)(iv); Fr spnsring rganizatins, a budget fr the upcming year and, if required by the State agency, a budget fr independent centers. Additinally, participating institutins must prvide mandatry training sessins fr key staff (as defined by the State agency) frm all DCHs and adult day care facilities nt less frequently than annually. Tpics must include instructin, apprpriate t the level f staff experience and duties n: The CACFP meal pattern; Meal cunts; Claims submissin; Claim review prcedures; Recrdkeeping requirements; Reimbursement system; and Cmpliance with civil rights requirements. All annual respnsibilities cntained in 7 CFR 226.6(f)(1) cntinue t apply. State agencies shuld refer t the prttype ffered in CACFP , Child and Adult Care Fd Prgram Annual Infrmatin Certificatin, April 8, Guidance fr Management Plans and Budgets Page 12

13 D. Perfrmance Standards Perfrmance standards utline expectatins fr institutins administratin f the CACFP. All new institutins must demnstrate they meet the three specific perfrmance standards required by CACFP regulatins. Participating institutins must certify they maintain these perfrmance standards thrugh the applicatin prcess. The State agency can nly apprve applicatins frm new and participating institutins that meet the perfrmance standards, and must deny applicatins frm institutins which d nt meet the perfrmance standards that demnstrate its VCA. Perfrmance Standard 1 Financial Viability and Management A new r participating institutin must be financially viable. This examinatin f the institutin s fiscal and planning abilities can be a frm f self-evaluatin fr the institutin as it utlines and assesses the details f its wn peratin. The institutin needs t dcument in the applicatin that: There are adequate resurces t perate the CACFP n a daily basis (funding surces). Specifically, what are the surces f the institutin s incme and expenses? The institutin s budget may include, amng ther items, incme frm children s tuitin and meal reimbursement. Des the institutin already have sufficient enrllment f children r enugh spnsred centers r DCHs t supprt the expenses it has included in its budget? If nt, has the State agency judged it a reasnable expectatin that the institutin will be able t d s? Has the institutin crrectly determined the amunt f reimbursement it is likely t receive n a mnthly basis (number f children identified r estimated t be eligible fr free, reduced-price r paid meals multiplied by the number f meals it expects t claim)? If nt, the State agency may prvide technical assistance and determine the institutin s level f skill in develping a realistic budget and whether these surces f incme are likely t supprt the institutin s peratin n a daily basis. Has the institutin identified the numerus expenses f perating a business beynd thse f fd service; such as, prperty taxes and insurance, salaries, licensing and building maintenance, and childcare supplies? Again, the State agency can use this infrmatin t determine if the rganizatin has the skills and infrmatin needed t maintain a financially viable child care institutin. There are sufficient recruitment pprtunities t supprt apprving an additinal institutin s participatin. If the applicant is a spnsring rganizatin, the State agency is als required t ensure the spnsr has acceptable recruitment plicies and it is nt simply recruiting frm ther spnsring rganizatins. There are adequate resurces t pay emplyees during perids f temprary interruptins in CACFP payments (with nn-prgram funds); Guidance fr Management Plans and Budgets Page 13

14 There are adequate resurces t pay debts when fiscal claims have been assessed against them (with nn-prgram funds); The institutin can dcument its financial viability (via audits, financial Statements, etc.); and The submitted budget cntains csts that are necessary, reasnable, allwable, and dcumented. Perfrmance Standard 2 Administrative Capability The new institutin must be capable f administering the CACFP. T demnstrate administrative capability, the new institutin must dcument that it has: Apprpriate and effective management practices in place t ensure CACFP-cmpliant peratins; Adequate number and type f staff; Adequate number f mnitring staff (spnsring rganizatin); Written plicies and prcedures that assign CACFP respnsibilities and duties (spnsring rganizatin); and Written plicies and prcedures that ensure cmpliance with civil rights cmpliance (spnsring rganizatin). Perfrmance Standard 3 Prgram Accuntability New and participating institutins must have internal cntrls and ther management systems in place t guarantee fiscal accuntability and ther CACFP peratinal requirements. The new institutin must dcument and guarantee it has: An independent gverning bard f directrs cnsisting f a chairpersn and members wh are neither related t ne anther nr the institutin directr, nr have a persnal financial interest in the institutin. Fr-prfit spnsring rganizatins are nt required t have a bard, s the wner s accuntability will be evaluated; Fiscal accuntability including a written financial system with management cntrls; Fiscal integrity and accuntability fr all funds and prperty, received, held, and dispersed; Integrity and accuntability f all expenses incurred; A system ensuring claims will be prcessed accurately, and timely; Funds and prperty are safeguarded and used fr authrized CACFP purpses; and A system f safeguards and cntrls in place t prevent and detect imprper financial activities by emplyees. Guidance fr Management Plans and Budgets Page 14

15 Recrdkeeping systems t accunt fr and retain required Prgram recrds; such as, training dcumentatin, reviews, crrective actin, and serius deficiency prcesses, etc.; Prvide adequate and regular training f spnsring rganizatin staff and spnsred facilities in accrdance with 7 CFR (e)(12) and (e)(14); (d)(2) and (d)(3). Perfrm mnitring in accrdance with 7 CFR (d)(4) t ensure that spnsred facilities accuntably and apprpriately perate the Prgram. If a spnsr f DCHs, accurately classify DCHs as tier I r tier II in accrdance with 7 CFR (f); and Have a system in place t ensure that administrative csts funded frm Prgram reimbursements d nt exceed regulatry limits set frth at 7 CFR (a); (b)(1); and Meal service peratins cmply with CACFP requirements, such as; Prvide meals that meet the meal patterns set frth in 7 CFR ; Operate a fd service that cnfrms with applicable State and lcal health and sanitatin requirements; Cmply with civil rights requirements; Maintain cmplete and apprpriate recrds n file; and Submit accurate claims fr reimbursement. As a way f evaluating VCA, the State agency culd review the Bard minutes fr the three mst recent meetings and determine if CACFP versight is dcumented in the minutes [7 CFR 226.6(b)(1)(viii) and CACFP , Additinal State Agency Requirements, March 29, 2013.] E. Additinal Tpics Cvered in the Management Plan Prcurement The management plan is an apprpriate dcument fr the State agency t cllect the institutin s prcurement prcedures fr fds, supplies, equipment, and ther gds and services. Prper prcurement prcedures are required n purchases f any amunt. Small purchase prcedures are allwed fr purchased gds and services with a ttal value under $150,000. Cmpetitive sealed bids are necessary fr purchased gds and services with a ttal value ver $150,000. Each institutin must have a prcess fr each type f prcurement. State and Lcal Threshlds State gvernments and lcal rganizatins may set prcurement-related threshlds that are different than the Federal threshlds. In these cases, institutins must fllw the requirements with the lwest threshld. State agencies are bligated t require all institutins t fllw the prcurement prvisins established in 7 CFR [7 CFR 226.6(j)] r institutins may use their wn prcedures fr prcurement with CACFP funds, hwever: Guidance fr Management Plans and Budgets Page 15

16 Public institutins must cmply with State r lcal laws and standards established in 7 CFR , Private nnprfit institutins must cmply with standards established in 7 CFR , Fr-prfit institutins must cmply with standards established in 7 CFR , See the prcurement guidance and trainings ffered by the Natinal Fd Service Management Institute and CACFP Federal Small Purchase Threshld Adjustment, Octber, 10, Banking The CACFP regulatins d nt require institutins t maintain any specific type f banking system. CACFP funds may be cmingled with ther funds in ne single bank accunt r they may be kept separate frm ther funds in a segregated bank accunt. Hwever, if funds are cmingled, the institutin and State agency must be able t track CACFP-related incme and expenses separately frm ther funds. Supprt Dcuments Submissin f supprting dcumentatin is necessary fr sme elements f the management plan. An rganizatinal chart, r similar dcument, is necessary t determine what psitins are assciated with the peratin f the CACFP. Mnitring schedules are needed t evaluate a spnsring rganizatin s ability t cnduct reviews. Training plans are required t demnstrate cmpliance with specific spnsring rganizatin training requirements. Gverning bard cmpsitin is necessary t determine cmpliance with perfrmance standard 3. (Fr-prfit institutins are nt required t have a bard, s the wner s ability t meet perfrmance standard 3 must be dcumented.) Written plicies such as the institutin s cmpensatin plicy will establish cnsistency in treatment f similarly-titled staff. Written prcedures are needed t dcument the institutin s internal cntrl prcesses. State Agency Frms A well-written management plan will prvide mre detail than simply listing the basic infrmatin required, but instead, will clearly lay ut the institutin s methds fr meeting Prgram requirements. Interrgative management plans elicit cmprehensive answers. State agencies frms are prly develped if they simply ask questins that allw yes/n answers. Similarly, questins that are nt answered cmpletely by the institutin d nt prvide the level f infrmatin needed t adequately evaluate the institutin. State agencies must fllw up with institutins t ensure that the apprpriate level f detail is prvided t ensure adequate review f the institutin. Guidance fr Management Plans and Budgets Page 16

17 Best practices include: Offering a frm that cllects mnitring FTE infrmatin and includes the State staffing factrs, instead f, List the number f mnitrs and hw many hurs they perfrm mnitring functins. Creating an element in the management plan regarding the institutin recrdkeeping practices fr review recrds, banking and fiscal recrds, bard meeting minutes, claim recrds and training recrds, such as where the recrds are stred, wh has access t the recrds, etc. Asking the institutin t describe its accunting systems, hw they are rganized, wh is respnsible, and hw they are used. Types f management plans A State agency may develp ne management plan prttype frm that all the institutins use, r develp a management plan prttype fr a specific type f institutin, such as: Independent centers; Spnsring rganizatins f unaffiliated centers; Spnsring rganizatins f affiliated centers; Affiliated r Unaffiliated Centers An affiliated center is part f the same legal entity as the spnsring rganizatin; it is wned in whle r in part by the CACFP spnsring rganizatin. An unaffiliated center is legally distinct frm the spnsring rganizatin. Spnsring rganizatins f DCHs; Multi-Prgram spnsring rganizatins; and Multipurpse spnsring rganizatins (which spnsr the CACFP and nn-cacfp prgrams). An example f an unaffiliated facility may be a Bys and Girls Club that is spnsred by the lcal fd bank. Spnsred centers are cnsidered either affiliated r unaffiliated. Part 2 f this guidance cvers general requirements fr all independent centers and spnsring rganizatins. Part 3 utlines additinal requirements specific t the type f institutin. F. Reviewing & Apprving the Management Plan The State agency shuld nly apprve a management plan that includes an adequate respnse frm the spnsring rganizatin r independent center. A simple Yes r N t a questin requiring details must be returned fr additinal infrmatin. It is als imprtant t match respnses listed in the management plan with budget and cst allcatin plans. Guidance fr Management Plans and Budgets Page 17

18 State agencies are bligated t ntify a new r participating institutin, in writing, f the applicatin apprval r disapprval, within 30 calendar days f receipt f a cmplete applicatin [7 CFR 226.6(b)(3)]. A cmplete applicatin is ne that in which all the necessary infrmatin has been submitted fr State agency evaluatin. G. Revising/Amending a Management Plan The State agency shuld include in its written applicatin apprval prcedures instances when spnsring rganizatins shuld submit revisins t the management plan. Fr example, the State agency s prcedures may require spnsring rganizatins t submit revisins during the year when factrs within the management plan change. The State agency will require a spnsring rganizatin t revise its management plan when Prgram reviews uncver differences in hw the spnsring rganizatin is perating; hwever, this is nt the preferred methd since it is after-the-fact and may signal a lack f administrative capability f the spnsring rganizatin t alert the State agency f changes in critical management functins. H. Mnitring the Management Plan Best Practice Include in the written ntificatin f the apprved budget, the number f mnitring FTE s established at the time f apprval. Mnitring FTE s can fluctuate as the spnsring rganizatin adds r reduces spnsred facilities. The State agency will use a spnsring rganizatin s management plan thrughut the year as a living dcument that can be referred t fr infrmatin abut the spnsring rganizatin s nging activity, and certainly during a review t ensure the institutin is perating accrding t its plan. Administrative functins utlined in the management will be evaluated as part f a Prgram review t determine cmpliance with requirements utlined in the Mnitring Handbk fr State Agencies CACFP Handbk. Rereading the management plan prir t the review is critical fr infrming the State agency mnitrs f what prcedures they shuld find at the spnsrship. When the mnitr knws what t expect, they will mre easily recgnize variatins in peratin utside what the spnsring rganizatin stated in its management plan and what the State agency had apprved. Guidance fr Management Plans and Budgets Page 18

19 Part 2. Budgets General Infrmatin and Guidance The purpse f this part is t prvide general budget infrmatin and guidance t State agency staff and institutins participating in the CACFP. It further highlights infrmatin t cnsider when reviewing and apprving budgets t ensure fiscal viability and accuntability and cmpliance with Prgram requirements. The budget must reflect the institutin s anticipated needs and financial resurces t perate the CACFP. Once the initial budget has been apprved, the institutin is expected t adhere t it r t submit apprpriate amendments t the State agency fr apprval shuld the need arise. The institutin s actual expenditures will be submitted t the State agency fr review and apprval with the institutin s mnthly claim fr reimbursement. The State agency will determine what level f detail is required t be submitted with the claim; such as nly the expenditures, r the expenditures plus receipts. Sme State agencies will require receipts nly during reviews. There are five types f institutins that must submit a budget fr the State agency s apprval: Independent centers (as a new applicant and then as the State agency requires); Spnsring rganizatins f DCHs; Spnsring rganizatins f affiliated centers; Spnsring rganizatins f unaffiliated centers, and Multipurpse and multi-prgram spnsring rganizatins. Institutins must submit an administrative budget t include prjected CACFP administrative earnings and expenses and nn-prgrams funds that may be used in Prgram administratin. The budget must include sufficient detail fr the State agency t determine whether the expenditures are allwable, necessary, and reasnable [7 CFR 226.6(f)(1)(iv)]. The budget must reflect the institutin s anticipated needs fr the cming fiscal year, detail line item csts, and supprt allcatin f csts. The budget als must identify an adequate level f funding fr all required administrative functins, such as mnitring and training. If budgeted csts exceed the expected CACFP reimbursement, institutins must indicate hw these csts will be cvered with nn-prgram funds. Based n all f this infrmatin, the State agency can assess whether the institutin is financially viable, has adequate financial resurces t withstand temprary interruptins f CACFP payments, and can cntinue t perate when fiscal claims are assessed against the institutin. The State agency will establish a methd fr institutins t identify and budget all csts f perating the Prgram including the administrative time spent n claim preparatin, and all required Prgram paperwrk and mnitring activities. In additin t meeting regulatry requirements, the budgeting prcess will help the institutin learn abut the reimbursement prcess and hw much it will cst them t perate the Prgram, establish Prgram revenue, and identify nn-prgram revenue surces t pay fr unfunded CACFP csts. Institutins must accunt fr all csts f peratin thrugh the cnsistent applicatin f Generally Accepted Accunting Principles (U.S. GAAP). State agencies must determine if the institutin is utilizing acceptable accunting practices via the budget and mnitring activities. Guidance fr Management Plans and Budgets Page 19

20 Examples f budget frms are in Part 4 f this guidance; Resurces. A. Csts 1) Allwable Csts The Federal Gvernment has identified csts that are generally allwable fr all institutins that expend Federal funds. Hwever, due t limitatins impsed by CACFP statutry, regulatry, and plicy cnsideratins, sme csts that are listed in the fiscal regulatins may nt be allwable CACFP csts. Therefre, State agencies must refer t FNS Instructin 796-2, Rev. 4 Financial Management in the Child and Adult Care Fd Prgram, when reviewing an institutin s expenditures fr CACFP reimbursement. CACFP funds may be used t pay fr expenditures that meet FNS s definitin f allwable, are reasnable and necessary, and have State agency apprval. An institutin may have csts that are necessary and reasnable fr peratin f the institutin but are nt allwed as Prgram csts. Prgram funds may nt be used t cver unallwable csts. Institutins must include all csts in the budget. The allwable csts must be apprved in advance by the State agency thrugh the annual budget apprval prcess befre the institutin can charge them t CACFP. Once a cst has been determined allwable, the State agency must then use gd judgment t determine if a cst is necessary and reasnable fr the peratin f the CACFP befre apprving that cst in the institutin s budget. Necessary and Reasnable A cst is allwable when it meets the guidelines f FNS Instructin 796-2, Rev. 4. Hwever, fr purpses f the CACFP, the cst must als be necessary and reasnable. Necessity is determined by the nature f the activity, while reasnableness is determined by the amunt f the cst. A cst is necessary when the activity r functin is: Generally recgnized as rdinary, Required fr the institutin t perate the Prgram, and Accmplished as part f perating the Prgram accrding t regulatry requirements. A cst is cnsidered reasnable when the amunt f the cst reflects what a sensible r practical persn wuld pay in the same situatin. In business, there is smetimes an abundance f funds s luxuries becme the nrm, but extravagance is nt apprpriate fr a business perating CACFP, that is a Federally-funded Prgram. The csts t the Prgram must be reasnable fr a publicly-funded Prgram. These csts are the result f sund business practice. EXAMPLES: 1. An independent center cks fd frm scratch. The ld ven is n lnger wrking and is nt repairable s the center purchased a new ven t ck meals fr the children. This wuld be a reasnable actin. Hwever, if the ven csts $3300 and the center serves 15 children, this expense is nt reasnable. Guidance fr Management Plans and Budgets Page 20

21 2. A spnsring rganizatin may hire a bkkeeper t handle financial management, including claim cnslidatin and submissin and disbursement f payments. The pay rate fr the bkkeeper shuld be reasnable and cmparable t what ther bkkeepers prviding similar services wuld receive. 3. A spnsring rganizatin leases an expensive luxury vehicle t cnduct CACFP pre-apprval and mnitring visits. The vehicle is als used t supprt nn-cacfp functins. The spnsring rganizatin allcated a prtin f the vehicle lease in the CACFP budget. Althugh a leasing a vehicle may be a necessary expense in rder t accmplish mnitring visits, the allcated prtin f the lease wuld be denied in the budget because leasing an expensive luxury vehicle is nt necessary r reasnable. Hwever, the mileage csts fr cnducting CACFP visits are allwable as lng as prper dcumentatin, such as a mileage lg, is maintained. Additinal Requirements fr Csts t be Allwable The use f Federal funds requires a high standard f cnsideratin. In additin t being necessary and reasnable, csts must meet a number f ther requirements. The fllwing cnsideratins must be made f each cst apprved. Legal under State and Lcal Law In rder t be allwable, the cst must be authrized r at least nt prhibited under Federal, State r lcal laws and regulatins. Sme State r lcal laws are mre restrictive than Federal laws and regulatins and may therefre prhibit certain csts. EXAMPLE: Sme States r lcal gvernments/rganizatins have lwer small purchase threshlds than the current Federal small purchase threshld. An institutin wishing t vend meals r prcure ther services must make sure it fllws the State/lcal small purchase threshld if the State/lcal small purchase threshld is lwer than Federal threshld. Cnfrm with Federal Regulatins The cst must cnfrm t limits r exclusins, as set frth in FNS Instructin 796-2, Rev. 4 and Federal laws, r ther gverning regulatins. If a cst is prhibited by the IRS, it cannt be allwed in CACFP. EXAMPLE: Persnal expenses are nt deductible as business expenses under bth the IRS rules and CACFP regulatins. On the ther hand, car expenses assciated with cnducting CACFP reviews are allwable business expenses under all Federal laws, and reimbursement is based n the actual mileage driven t cnduct the reviews. Cnsistent Treatment The cst must be treated cnsistently thrugh the applicatin f U.S. GAAP principles. This means the same cst cannt be charged differently depending n the Prgram t which it is assigned [FNS Instructin 796-2, Rev. 4 (Sectin VII A 2)]. EXAMPLE: If an rganizatin pays $0.55 per mile fr business travel fr the staff that cnducts nn-cacfp travel, it cannt claim $0.60 per mile fr CACFP business travel. Guidance fr Management Plans and Budgets Page 21

22 Applicable Credits The cst must be net f all applicable credits. Only the actual cst t the institutin can be claimed; any purchase discunts, rebates, r allwances received, must be credited t the CACFP either as a cst reductin r by cash refund [FNS Instructin 796-2, Rev. 4 (Sectin VII A 3 h)]. EXAMPLE: A spnsring rganizatin budgets the full cst f 5 bxes f cpier ink cartridges t the CACFP ($100). A review f the spnsring rganizatin s invice fr the supplies shws the cst had been discunted based n the quantity rdered (5 percent discunt); therefre, nly the actual cst ($95) may be claimed. Adequate Dcumentatin All csts charged t the CACFP must be prperly dcumented with receipts, invices, r mileage lgs, and time and attendance recrds. Payments made must be dcumented in bank statements, registers, and accunting systems. The State agency may identify the specific dcumentatin it expects based n general business practices. EXAMPLE: The State agency may require a mileage lg be kept by each emplyee wh is claiming mileage reimbursement. The mileage lg requires the dates f each trip, the rigin and destinatin f each trip, the purpse fr each trip, and sme methd f determining mileage. EXAMPLE: If csts are claimed fr janitrial services related t the CACFP, invices including the hurly rate, time t cmplete jb and ttal cst must be submitted. This shuld be an fficial invice n letterhead and cancelled checks, electrnic payment transactins, r paid invices must be available fr review. Prir Apprval All csts require prir apprval befre they can be incurred that is, btaining the State agency s r FNS written permissin ahead f the expenditure is required. This apprval generally ccurs during the State agency s annual budget-apprval prcess r when the institutin has submitted an amendment t the budget. EXAMPLE: A spnsring rganizatin f centers wants t attend a cnference devted slely t the CACFP. The expenses will include air fares, ldging, meals, and registratin fee. The spnsring rganizatin must first get permissin frm the State agency befre making arrangements fr the cnference. If the spnsring rganizatin attends the cnference withut asking the State agency fr apprval, the expenses assciated with the cnference are unallwable csts and cannt be charged t CACFP. The spnsring rganizatin wuld have t pay fr these expenses with nn-cacfp funds. 2) Direct Csts and Indirect Cst Plans Sme csts are easy t identify as directly attributable t the CACFP meal service r administrative duties. Other csts are difficult t attribute t nly CACFP activities because the csts cver nn-prgram activities als; these are referred t as indirect csts and require special apprval. Due t differences in activities and accunting practices f institutins, a cst may be direct in ne institutin and indirect in anther. Guidance fr Management Plans and Budgets Page 22

23 Direct csts are csts that can be easily identified directly t, and nly t, the CACFP. Sme examples f allwable direct csts are: Fd service emplyee salaries when their nly functin is t prepare CACFP participants meals; Depreciatin r use allwances n equipment used in the nnprfit fd service Prgram when the nly meals are fr participants; Cst f purchased fd fr use in the CACFP; and Salaries fr an ffice receptinist when wrking slely fr the CACFP. Indirect csts are thse that are incurred fr bth CACFP peratins and nn-cacfp activities in which the institutin may be invlved, such as the cst f water and utilities that are n a shared meter fr bth the institutin s CACFP and its nn-cacfp activities. The institutin must indicate in its budget, what methd it will use t determine what prtin f the ttal cst shuld be allcated t CACFP. Allcatin is the prcedure used t determine the amunt r percentage f cst charged t a particular functin/activity r Prgram, based n the benefits received, nt the surce f funds available t pay fr the cst. The institutin must prvide the State agency with the methd it will use t assign r allcate these shared csts. Sme examples f csts that are shared amng Prgrams are: Depreciatin and use allwances n buildings and equipment used fr cmmn purpses; Csts f perating and maintaining facilities, equipment, and grunds; Cst Allcatin Differs frm Indirect Csts Salaries fr an ffice receptinist and central accunting staff; and Payrll services. Indirect csts are assigned thrugh an indirect cst rate. An indirect cst rate is develped thrugh a cst allcatin rate prpsal. The cst allcatin rate prpsal is used t shw hw csts are allcated between tw r mre Prgrams. The indirect cst rate is Allcatin divides a single cst by percentage f space r use. Indirect cst rates are develped by first pling several csts, then dividing by a cnsidered percentage. cmputed by dividing the indirect csts by a direct cst base f allwable and unallwable csts. Spnsring rganizatins must submit a cst allcatin rate prpsal when indirect csts are listed in the budget. EXAMPLE: A Head Start Prgram perates CACFP. Bth the Head Start Prgram and CACFP use gas, electricity, water, and payrll services. These csts are shared csts as they are nt directly assciated with nly ne Prgram, but with bth. The institutin must develp a methd t assign t the CACFP its fair share f these indirect csts (i.e., a prtin f the csts). The methd used is a cst allcatin rate prpsal. Guidance fr Management Plans and Budgets Page 23

24 See FNS Instructin 796-2, Rev. 4 (Sectin VII B & C and Exhibit I) and Part 3, Sectin D f this guidance fr mre infrmatin n direct and indirect csts and cst allcatin rate prpsals. 3) Allcable Csts Sme csts benefit mre than ne Prgram r benefit bth CACFP and nn-cacfp activities. Only the share f the csts that benefits the CACFP can be assigned as Prgram csts. In ther wrds, the cst must be prperly allcated acrss CACFP and nn-cacfp activities. Sme csts may be pled tgether in a way that the individual expenses cannt be specifically assigned t the CACFP. Examples may include ccupancy fees, telephne, electricity, r data prcessing. In these instances, csts must be divided amng the varius users r Prgrams based n their percentage f use. This allcatin f csts ensures that the CACFP is nt charged mre than its share f the verall cst. EXAMPLE: A spnsring rganizatin f DCHs als acts as a child care resurce and referral agency. The directr spends 40 percent f his r her time n CACFP activities and 60 percent n resurce and referral activities, and this is dcumented thrugh the time sheet and time distributin reprt. The directr can allcate 40 percent f his r her salary t CACFP and the rest t resurce and referral. Staff that wrk n bth CACFP activities and resurce and referral activities must charge their time accrding t the percentage f time spent perfrming each prgrams activities. Time sheets dcumenting time spent n CACFP activities are required. When space csts are allcated between CACFP and nn-cacfp, the actual square ftage used by the Prgram must be determined. When the space is used by multiple prgrams, the space must be prrated by Prgram time t ttal time used [FNS Instructin 796-2, Rev. 4 (Sectin VII B)]. EXAMPLE: A spnsring rganizatin rents 1250 square feet f ffice space fr $1500 per mnth. The ffice space used by Prgram staff is 750 square feet ttal square feet 750 Prgram square feet = 60 percent f ttal space is used by Prgram staff. $1500 x 60 percent = $900. The Prgram s rental space csts $900 per mnth. Prgram staff spends 75 percent f their time wrking n CACFP duties and 25 percent f their time n nn-cacfp activities. The space Prgram staff use must als be allcated by Prgram time t nn-prgram time. $900 Prgram space x 75 percent Prgram time = $675 Prgram share t CACFP. Therefre, the spnsring rganizatin can nly charge $675 per mnth t the CACFP. See FNS Instructin 796-2, Rev. 4 (Sectin VII B) fr mre infrmatin n the allcatin requirements. Additinally, there may be instances when a spnsring rganizatin administers varius aspects f the CACFP. In that case, the spnsring rganizatin must allcate its csts between CACFP activities. Guidance fr Management Plans and Budgets Page 24