Nov. 22, 2002 CODE OF FEDERAL REGULATIONS 7 Parts 210 to 299 Revised as of January 1, 2003 Agriculture Containing a codification of documents of general applicability and future effect As of January 1, 2003 With Ancillaries

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 Table of Contents Page Explanation v Title 7: Subtitle B—Regulations of the Department of Agriculture (Continued) Chapter II—Food and Nutrition Service, Department of Agriculture 5 Finding Aids: Material Approved for Incorporation by Reference 973 Table of CFR Titles and Chapters 975 Alphabetical List of Agencies Appearing in the CFR 993 List of CFR Sections Affected 1003

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 INCORPORATION BY REFERENCE

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What is a proper incorporation by reference? The Director of the Federal Register will approve an incorporation by reference only when the requirements of 1 CFR part 51 are met. Some of the elements on which approval is based are:

(a) The incorporation will substantially reduce the volume of material published in the Federal Register.

(b) The matter incorporated is in fact available to the extent necessary to afford fairness and uniformity in the administrative process.

(c) The incorporating document is drafted and submitted for publication in accordance with 1 CFR part 51.

Properly approved incorporations by reference in this volume are listed in the Finding Aids at the end of this volume.

What if the material incorporated by reference cannot be found? If you have any problem locating or obtaining a copy of material listed in the Finding Aids of this volume as an approved incorporation by reference, please contact the agency that issued the regulation containing that incorporation. If, after contacting the agency, you find the material is not available, please notify the Director of the Federal Register, National Archives and Records Administration, Washington DC 20408, or call (202) 523-4534.

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 Raymond A. Mosley, Director, Office of the Federal Register. January 1, 2003. THIS TITLE

Title 7—Agriculture is composed of fifteen volumes. The parts in these volumes are arranged in the following order: parts 1-26, 27-52, 53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-1599, 1600-1899, 1900-1939, 1940-1949, 1950-1999, and part 2000 to end. The contents of these volumes represent all current regulations codified under this title of the CFR as of January 1, 2003.

The Food and Nutrition Service current regulations in the volume containing parts 210-299, include the Child Nutrition Programs and the Food Stamp Program. The regulations of the Federal Crop Insurance Corporation are found in the volume containing parts 400-699.

All marketing agreements and orders for fruits, vegetables and nuts appear in the one volume containing parts 900-999. All marketing agreements and orders for milk appear in the volume containing parts 1000-1199. Part 900—General Regulations is carried as a note in the volume containing parts 1000-1199, as a convenience to the user.

CFRORDR.FRM <LRH>7 CFR Ch. II (1-1-03 Edition)</LRH> <RRH>Food and Nutrition Service, USDA</RRH> <CFRTITLE> <TITLEHD> <PRTPAGE P="1"/> <HD SOURCE="HED">Title 7—Agriculture</HD> <P>(This book contains parts 210 to 299)</P> </TITLEHD> <CFRTOC> <PTHD>Part</PTHD> <SUBTI> <HD SOURCE="HED">SUBTITLE B—<E T="04">Regulations of the Department of Agriculture (Continued)</E> </HD> </SUBTI> <CHAPTI> <SUBJECT> <E T="04">chapter ii</E>—Food and Nutrition Service, Department of Agriculture</SUBJECT> <PG>210</PG> </CHAPTI> </CFRTOC> </CFRTITLE> <SUBTITLE> <PRTPAGE P="3"/> <HD SOURCE="HED">Subtitle B—Regulations of the Department of Agriculture (Continued)</HD> <CHAPTER> <TOC> <TOCHD> <PRTPAGE P="5"/> <HD SOURCE="HED">CHAPTER II—FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE</HD> </TOCHD> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>Nomenclature changes to chapter II appear at 59 FR 60062, Nov. 22, 1994; 60 FR 19490, Apr. 19, 1995; and 63 FR 9727, Feb. 26, 1998.</P> </EDNOTE> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER A—CHILD NUTRITION PROGRAMS</HD> </SUBCHAP> <PTHD>Part</PTHD> <PGHD>Page</PGHD> <CHAPTI> <PT>210</PT> <SUBJECT>National School Lunch Program</SUBJECT> <PG>7</PG> <PT>215</PT> <SUBJECT>Special Milk Program for Children</SUBJECT> <PG>68</PG> <PT>220</PT> <SUBJECT>School Breakfast Program</SUBJECT> <PG>83</PG> <PT>225</PT> <SUBJECT>Summer Food Service Program</SUBJECT> <PG>114</PG> <PT>226</PT> <SUBJECT>Child and Adult Care Food Program</SUBJECT> <PG>159</PG> <PT>227</PT> <SUBJECT>Nutrition Education and Training Program</SUBJECT> <PG>255</PG> <PT>235</PT> <SUBJECT>State administrative expense funds</SUBJECT> <PG>264</PG> <PT>240</PT> <SUBJECT>Cash in lieu of donated foods</SUBJECT> <PG>276</PG> <PT>245</PT> <SUBJECT>Determining eligibility for free and reduced price meals and free milk in schools</SUBJECT> <PG>282</PG> <PT>246</PT> <SUBJECT>Special Supplemental Nutrition Program for Women, Infants and Children</SUBJECT> <PG>308</PG> <PT>247</PT> <SUBJECT>Commodity Supplemental Food Program</SUBJECT> <PG>394</PG> <PT>248</PT> <SUBJECT>WIC Farmers’ Market Nutrition Program (FMNP)</SUBJECT> <PG>415</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER B—GENERAL REGULATIONS AND POLICIES—FOOD DISTRIBUTION</HD> </SUBCHAP> <CHAPTI> <PT>250</PT> <SUBJECT>Donation of foods for use in the United States, its territories and possessions and areas under its jurisdiction</SUBJECT> <PG>437</PG> <PT>251</PT> <SUBJECT>The Emergency Food Assistance Program</SUBJECT> <PG>485</PG> <PT>252</PT> <SUBJECT>National Commodity Processing Program</SUBJECT> <PG>497</PG> <PT>253</PT> <SUBJECT>Administration of the Food Distribution Program for households on Indian reservations</SUBJECT> <PG>506</PG> <PT>254</PT> <SUBJECT>Administration of the Food Distribution Program for Indian households in Oklahoma</SUBJECT> <PG>535</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER C—FOOD STAMP AND FOOD DISTRIBUTION PROGRAM</HD> </SUBCHAP> <CHAPTI> <PT>271</PT> <SUBJECT>General information and definitions</SUBJECT> <PG>538</PG> <PT>272</PT> <SUBJECT>Requirements for participating State agencies</SUBJECT> <PG>556</PG> <PT>273</PT> <SUBJECT>Certification of eligible households</SUBJECT> <PG>612<PRTPAGE P="6"/> </PG> <PT>274</PT> <SUBJECT>Issuance and use of coupons</SUBJECT> <PG>784</PG> <PT>275</PT> <SUBJECT>Performance reporting system</SUBJECT> <PG>825</PG> <PT>276</PT> <SUBJECT>State agency liabilities and Federal sanctions</SUBJECT> <PG>864</PG> <PT>277</PT> <SUBJECT>Payments of certain administrative costs of State agencies</SUBJECT> <PG>872</PG> <PT>278</PT> <SUBJECT>Participation of retail food stores, wholesale food concerns and insured financial institutions</SUBJECT> <PG>907</PG> <PT>279</PT> <SUBJECT>Administrative and judicial review—food retailers and food wholesalers</SUBJECT> <PG>932</PG> <PT>280</PT> <SUBJECT>Emergency food assistance for victims of disasters</SUBJECT> <PG>937</PG> <PT>281</PT> <SUBJECT>Administration of the Food Stamp Program on Indian reservations</SUBJECT> <PG>937</PG> <PT>282</PT> <SUBJECT>Demonstration, research, and evaluation projects</SUBJECT> <PG>943</PG> <PT>283</PT> <SUBJECT>Appeals of quality control (“QC”) claims</SUBJECT> <PG>944</PG> <PT>284</PT> <RESERVED>Provision of a nutrition assistance program for the Commonwealth of the Northern Mariana Islands (CNMI) [Reserved]</RESERVED> <PT>285</PT> <SUBJECT>Provision of a nutrition assistance grant for the Commonwealth of Puerto Rico</SUBJECT> <PG>963</PG> </CHAPTI> <SUBCHAP> <HD SOURCE="HED">SUBCHAPTER D—GENERAL REGULATIONS</HD> </SUBCHAP> <CHAPTI> <PT>295</PT> <SUBJECT>Availability of information and records to the public</SUBJECT> <PG>967</PG> <PT>296-299</PT> <RESERVED>[Reserved]</RESERVED> </CHAPTI> </TOC> <SUBCHAP TYPE="N"> <PRTPAGE P="7"/> <HD SOURCE="HED">SUBCHAPTER A—CHILD NUTRITION PROGRAMS</HD> <PART> <EAR>Pt. 210</EAR> <HD SOURCE="HED">PART 210—NATIONAL SCHOOL LUNCH PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECHD>Sec.</SECHD> <SECTNO>210.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <SECTNO>210.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>210.3</SECTNO> <SUBJECT>Administration.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Reimbursement Process for States and School Food Authorities</HD> <SECTNO>210.4</SECTNO> <SUBJECT>Cash and donated food assistance to States.</SUBJECT> <SECTNO>210.5</SECTNO> <SUBJECT>Payment process to States.</SUBJECT> <SECTNO>210.6</SECTNO> <SUBJECT>Use of Federal funds.</SUBJECT> <SECTNO>210.7</SECTNO> <SUBJECT>Reimbursement for school food authorities.</SUBJECT> <SECTNO>210.8</SECTNO> <SUBJECT>Claims for reimbursement.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Requirements for School Food Authority Participation</HD> <SECTNO>210.9</SECTNO> <SUBJECT>Agreement with State agency.</SUBJECT> <SECTNO>210.10</SECTNO> <SUBJECT>What are the nutrition standards and menu planning approaches for lunches and the requirements for afterschool snacks?</SUBJECT> <SECTNO>210.11</SECTNO> <SUBJECT>Competitive food services.</SUBJECT> <SECTNO>210.12</SECTNO> <SUBJECT>Student, parent and community involvement.</SUBJECT> <SECTNO>210.13</SECTNO> <SUBJECT>Facilities management.</SUBJECT> <SECTNO>210.14</SECTNO> <SUBJECT>Resource management.</SUBJECT> <SECTNO>210.15</SECTNO> <SUBJECT>Reporting and recordkeeping.</SUBJECT> <SECTNO>210.16</SECTNO> <SUBJECT>Food service management companies.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Requirements for State Agency Participation</HD> <SECTNO>210.17</SECTNO> <SUBJECT>Matching Federal funds.</SUBJECT> <SECTNO>210.18</SECTNO> <SUBJECT>Administrative reviews.</SUBJECT> <SECTNO>210.19</SECTNO> <SUBJECT>Additional responsibilities.</SUBJECT> <SECTNO>210.20</SECTNO> <SUBJECT>Reporting and recordkeeping.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—State Agency and School Food Authority Responsibilities</HD> <SECTNO>210.21</SECTNO> <SUBJECT>Procurement.</SUBJECT> <SECTNO>210.22</SECTNO> <SUBJECT>Audits.</SUBJECT> <SECTNO>210.23</SECTNO> <SUBJECT>Other responsibilities.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Additional Provisions</HD> <SECTNO>210.24</SECTNO> <SUBJECT>Withholding payments.</SUBJECT> <SECTNO>210.25</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <SECTNO>210.26</SECTNO> <SUBJECT>Penalties.</SUBJECT> <SECTNO>210.27</SECTNO> <SUBJECT>Educational prohibitions.</SUBJECT> <SECTNO>210.28</SECTNO> <SUBJECT>Pilot project exemptions.</SUBJECT> <SECTNO>210.29</SECTNO> <SUBJECT>Management evaluations.</SUBJECT> <SECTNO>210.30</SECTNO> <SUBJECT>Regional office addresses.</SUBJECT> <SECTNO>210.31</SECTNO> <SUBJECT>OMB control numbers.</SUBJECT> <APP>Appendix A to Part 210—Alternate Foods for Meals</APP> <APP>Appendix B to Part 210—Categories of Foods of Minimal Nutritional Value</APP> <APP>Appendix C to Part 210—Child Nutrition Labeling Program</APP> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>42 U.S.C. 1751-1760, 1779.</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>53 FR 29147, Aug. 2, 1988, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECTION> <SECTNO>§ 210.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <P>(a) <E T="03">Purpose of the program.</E> Section 2 of the National School Lunch Act (42 U.S.C. 1751), states: “It is declared to be the policy of Congress, as a measure of national security, to safeguard the health and well-being of the Nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food, by assisting the States, through grants-in-aid and other means, in providing an adequate supply of food and other facilities for the establishment, maintenance, operation, and expansion of nonprofit school lunch programs.” Pursuant to this act, the Department provides States with general and special cash assistance and donations of foods acquired by the Department to be used to assist schools in serving nutritious lunches to children each school day. In furtherance of Program objectives, participating schools shall serve lunches that are nutritionally adequate, as set forth in these regulations, and shall to the extent practicable, ensure that participating children gain a full understanding of the relationship between proper eating and good health.</P> <P>(b) <E T="03">Scope of the regulations.</E> This part sets forth the requirements for participation in the National School Lunch and Commodity School Programs. It specifies Program responsibilities of State and local officials in the areas of program administration, preparation and service of nutritious lunches, payment of funds, use of program funds, program monitoring, and reporting and recordkeeping requirements.</P> </SECTION> <SECTION> <SECTNO>§ 210.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purpose of this part:<PRTPAGE P="8"/> </P> <P> <E T="03">Act</E> means the National School Lunch Act, as amended.</P> <P> <E T="03">Afterschool care program</E> means a program providing organized child care services to enrolled school-age children afterschool hours for the purpose of care and supervision of children. Those programs shall be distinct from any extracurricular programs organized primarily for scholastic, cultural or athletic purposes.</P> <P> <E T="03">Attendance factor</E> means a percentage developed no less than once each school year which accounts for the difference between enrollment and attendance. The attendance factor may be developed by the school food authority, subject to State agency approval, or may be developed by the State agency. In the absence of a local or State attendance factor, the school food authority shall use an attendance factor developed by FNS. When taking the attendance factor into consideration, school food authorities shall assume that all children eligible for free and reduced price lunches attend school at the same rate as the general school population.</P> <P> <E T="03">Average Daily Participation</E> means the average number of children, by eligibility category, participating in the Program each operating day. These numbers are obtained by dividing (a) the total number of free lunches claimed during a reporting period by the number of operating days in the same period; (b) the total number of reduced price lunches claimed during a reporting period by the number of operating days in the same period; and (c) the total number of paid lunches claimed during a reporting period by the number of operating days in the same period.</P> <P> <E T="03">Child</E> means—(a) a student of high school grade or under as determined by the State educational agency, who is enrolled in an educational unit of high school grade or under as described in paragraphs (a) and (b) of the definition of “School,” including students who are mentally or physically disabled as defined by the State and who are participating in a school program established for the mentally or physically disabled; or (b) a person under 21 chronological years of age who is enrolled in an institution or center as described in paragraphs (c) and (d) of the definition of “School;” or (c) For purposes of reimbursement for meal supplements served in afterschool care programs, an individual enrolled in an afterschool care program operated by an eligible school who is 12 years of age or under, or in the case of children of migrant workers and children with disabilities, not more than 15 years of age.</P> <P> <E T="03">CND</E> means the Child Nutrition Division of the Food and Nutrition Service of the Department.</P> <P> <E T="03">Commodity School Program</E> means the Program under which participating schools operate a nonprofit lunch program in accordance with this part and receive donated food assistance in lieu of general cash assistance. Schools participating in the Commodity School Program shall also receive special cash and donated food assistance in accordance with § 210.4(c).</P> <P> <E T="03">Days</E> means calendar days unless otherwise specified.</P> <P> <E T="03">Department</E> means the United States Department of Agriculture.</P> <P> <E T="03">Distributing agency</E> means a State agency which enters into an agreement with the Department for the distribution to schools of donated foods pursuant to part 250 of this chapter.</P> <P> <E T="03">Donated foods</E> means food commodities donated by the Department for use in nonprofit lunch programs.</P> <P> <E T="03">Fiscal year</E> means a period of 12 calendar months beginning October 1 of any year and ending with September 30 of the following year.</P> <P> <E T="03">FNS</E> means the Food and Nutrition Service, United States Department of Agriculture.</P> <P> <E T="03">FNSRO</E> means the appropriate Regional Office of the Food and Nutrition Service of the Department.</P> <P> <E T="03">Food component</E> means one of the four food groups which comprise reimbursable meals planned under a food-based menu planning approach. The four food components are: meat/meat alternate; grains/breads; fruits/vegetables; and milk.</P> <P> <E T="03">Food item</E> means one of the five foods offered in lunches under a food-based menu planning approach: meat/meat alternate; grains/breads; two servings of fruits/vegetables; and milk.</P> <P> <E T="03">Food service management company</E> means a commercial enterprise or a nonprofit organization which is or may <PRTPAGE P="9"/>be contracted with by the school food authority to manage any aspect of the school food service.</P> <P> <E T="03">Free lunch</E> means a lunch served under the Program to a child from a household eligible for such benefits under 7 CFR part 245 and for which neither the child nor any member of the household pays or is required to work.</P> <P> <E T="03">Lunch</E> means a meal service that meets the applicable nutrition standards and portion sizes in § 210.10 for lunches.</P> <P> <E T="03">Menu item</E> means, under Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu Planning, any single food or combination of foods. All menu items or foods offered as part of the reimbursable meal may be considered as contributing towards meeting the nutrition standards provided in § 210.10, except for those foods that are considered as foods of minimal nutritional value as provided for in § 210.11(a)(2) which are not offered as part of a menu item in a reimbursable meal. For the purposes of a reimbursable lunch, a minimum of three menu items must be offered, one of which must be an entree (a combination of foods or a single food item that is offered as the main course) and one of which must be fluid milk. Under offer versus serve, a student shall select, at a minimum, an entree and one other menu item. If more than three menu items are offered, the student may decline up to two menu items; however, the entree cannot be declined.</P> <P> <E T="03">National School Lunch Program</E> means the Program under which participating schools operate a nonprofit lunch program in accordance with this part. General and special cash assistance and donated food assistance are made available to schools in accordance with this part.</P> <P> <E T="03">Net cash resources</E> means all monies, as determined in accordance with the State agency's established accounting system, that are available to or have accrued to a school food authority's nonprofit school food service at any given time, less cash payable. Such monies may include, but are not limited to, cash on hand, cash receivable, earnings on investments, cash on deposit and the value of stocks, bonds or other negotiable securities.</P> <P> <E T="03">Nonprofit</E>, when applied to schools or institutions eligible for the Program, means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1954, as amended; or, in the Commonwealth of Puerto Rico, certified as nonprofit by the Governor.</P> <P> <E T="03">Nonprofit school food service</E> means all food service operations conducted by the school food authority principally for the benefit of schoolchildren, all of the revenue from which is used solely for the operation or improvement of such food services.</P> <P> <E T="03">Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu Planning</E> means ways to develop lunch menus based on the analysis for nutrients in the menu items and foods offered over a school week to determine if specific levels for a set of key nutrients and calories were met in accordance with § 210.10(i)(5). However, for the purposes of Assisted Nutrient Standard Menu Planning, lunch menu planning and analysis are completed by other entities and must incorporate the production quantities needed to accommodate the specific service requirements of a particular school or school food authority in accordance with § 210.10(j).</P> <P> <E T="03">OIG</E> means the Office of the Inspector General of the Department.</P> <P> <E T="03">Point of Service</E> means that point in the food service operation where a determination can accurately be made that a reimbursable free, reduced price or paid lunch has been served to an eligible child.</P> <P> <E T="03">Program</E> means the National School Lunch Program and the Commodity School Program.</P> <P> <E T="03">Reduced price lunch</E> means a lunch served under the Program: (a) to a child from a household eligible for such benefits under 7 CFR part 245; (b) for which the price is less than the school food authority designated full price of the lunch and which does not exceed the maximum allowable reduced price specified under 7 CFR part 245; and (c) for which neither the child nor any member of the household is required to work.</P> <P> <E T="03">Reimbursement</E> means Federal cash assistance including advances paid or payable to participating schools for lunches meeting the requirements of § 210.10 and served to eligible children.<PRTPAGE P="10"/> </P> <P> <E T="03">Revenue</E>, when applied to nonprofit school food service, means all monies received by or accruing to the nonprofit school food service in accordance with the State agency's established accounting system including, but not limited to, children's payments, earnings on investments, other local revenues, State revenues, and Federal cash reimbursements.</P> <P> <E T="03">School</E> means: (a) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (b) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; or (c) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, <E T="03">except for</E> residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term “residential child care institutions” includes, but is not limited to: homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is intended for the care of children confined for 30 days or more.</P> <P> <E T="03">School food authority</E> means the governing body which is responsible for the administration of one or more schools; and has the legal authority to operate the Program therein <E T="03">or</E> be otherwise approved by FNS to operate the Program.</P> <P> <E T="03">School week</E> means the period of time used to determine compliance with the nutrition standards and the appropriate calorie and nutrient levels in § 210.10. Further, if applicable, school week is the basis for conducting Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu Planning for lunches as provided in § 210.10(i) and § 210.10(j). The period shall be a normal school week of five consecutive days; however, to accommodate shortened weeks resulting from holidays and other scheduling needs, the period shall be a minimum of three consecutive days and a maximum of seven consecutive days. Weeks in which school lunches are offered less than three times shall be combined with either the previous or the coming week.</P> <P> <E T="03">School year</E> means a period of 12 calendar months beginning July 1 of any year and ending June 30 of the following year.</P> <P> <E T="03">Secretary</E> means the Secretary of Agriculture.</P> <P> <E T="03">7 CFR part 3015</E> means the Uniform Federal Assistance Regulations published by the Department to implement OMB Circulars A-21, A-87, A-102, A-110, and A-122; and Executive Order 12372. (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P> <E T="03">7 CFR part 3017</E> means the Department's regulation to implement Executive Order 12549, covering governmentwide rules on suspension and debarment as well as The Drug Free Workplace Act of 1988.</P> <P> <E T="03">7 CFR part 3018</E> means the Department's Common Rule regarding Governmentwide New Restrictions on Lobbying. Part 3018 implements the requirements established by section 319 of the 1990 Appropriations Act for the Department of Interior and Related Agencies (Pub. L. 101-121).</P> <P> <E T="03">7 CFR part 3052</E> means the Department's regulations implementing OMB Circular A-133, “Audits of State, Local Governments, and Non-Profit Organizations.” (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P> <E T="03">State</E> means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.<PRTPAGE P="11"/> </P> <P> <E T="03">State agency</E> means (a) the State educational agency; (b) any other agency of the State which has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program in schools, as specified in § 210.3(b); or (c) the FNSRO, where the FNSRO administers the Program as specified in § 210.3(c).</P> <P> <E T="03">State educational agency</E> means, as the State legislature may determine, (a) the chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (b) a board of education controlling the State department of education.</P> <P> <E T="03">Student with disabilities</E> means any child who has a physical or mental impairment as defined in § 15b.3 of the Department's nondiscrimination regulations (7 CFR part 15b).</P> <P> <E T="03">Subsidized lunch</E> (paid lunch) means a lunch served to children who are either not eligible for or elect not to receive the free or reduced price benefits offered under 7 CFR part 245. The Department subsidizes each paid lunch with both general cash assistance and donated foods. Although a paid lunch student pays for a large portion of his or her lunch, the Department's subsidy accounts for a significant portion of the cost of that lunch.</P> <P> <E T="03">Yogurt</E> means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration's Definition and Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, 21 CFR 131.200, 21 CFR 131.203, and 21 CFR 131.206, respectively.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12580, Mar. 28, 1989; 56 FR 32939, July 17, 1991; 58 FR 42487, Aug. 10, 1993; 60 FR 31207, June 13, 1995; 62 FR 10189, Mar. 6, 1997; 64 FR 50740, Sept. 20, 1999; 65 FR 26912, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) <E T="03">FNS.</E> FNS will act on behalf of the Department in the administration of the Program. Within FNS, the CND will be responsible for Program administration.</P> <P>(b) <E T="03">States.</E> Within the States, the responsibility for the administration of the Program in schools, as defined in § 210.2, shall be in the State educational agency. If the State educational agency is unable to administer the Program in public or private nonprofit residential child care institutions or nonprofit private schools, then Program administration for such schools may be assumed by FNSRO as provided in paragraph (c) of this section, or such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer such schools. Each State agency desiring to administer the Program shall enter into a written agreement with the Department for the administration of the Program in accordance with the applicable requirements of this part; part 235; part 245; parts 15, 15a, 15b, and 3015 of Departmental regulations; and FNS instructions.</P> <P>(c) <E T="03">FNSRO.</E> The FNSRO will administer the Program in nonprofit private schools or public or nonprofit private residential child care institutions if the State agency is prohibited by law from disbursing Federal funds paid to such schools. In addition, the FNSRO will continue to administer the Program in those States in which nonprofit private schools or public or nonprofit private residential child care institutions have been under continuous FNS administration since October 1, 1980, unless the administration of the Program in such schools is assumed by the State. The FNSRO will, in each State in which it administers the Program, assume all responsibilities of a State agency as set forth in this part and part 245 of this chapter as appropriate. References in this part to “State agency” include FNSRO, as applicable, when it is the agency administering the Program.</P> <P>(d) <E T="03">School food authorities.</E> The school food authority shall be responsible for the administration of the Program in schools. State agencies shall ensure that school food authorities administer the Program in accordance with the applicable requirements of this part; <PRTPAGE P="12"/>part 245; parts 15, 15a, 15b, and 3015 of Departmental regulations; and FNS instructions.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Reimbursement Process for States and School Food Authorities</HD> <SECTION> <SECTNO>§ 210.4</SECTNO> <SUBJECT>Cash and donated food assistance to States.</SUBJECT> <P>(a) <E T="03">General.</E> To the extent funds are available, FNS will make cash assistance available in accordance with the provisions of this section to each State agency for lunches and meal supplements served to children under the National School Lunch and Commodity School Programs. To the extent donated foods are available, FNS will provide donated food assistance to distributing agencies for each lunch served in accordance with the provisions of this part and part 250 of this chapter.</P> <P>(b) <E T="03">Assistance for the National School Lunch Program.</E> The Secretary will make cash and/or donated food assistance available to each State agency and distributing agency, as appropriate, administering the National School Lunch Program, as follows:</P> <P>(1) <E T="03">Cash assistance for lunches:</E> Cash assistance payments are composed of a <E T="03">general</E> cash assistance payment, authorized under section 4 of the Act, and a <E T="03">special</E> cash assistance payment, authorized under section 11 of the Act. General cash assistance is provided to each State agency for <E T="03">all</E> lunches served to children in accordance with the provisions of the National School Lunch Program. Special cash assistance is provided to each State agency for lunches served under the National School Lunch Program to children determined eligible for free or reduced price lunches in accordance with part 245 of this chapter. The total general cash assistance paid to each State for any fiscal year shall not exceed the lesser of amounts reported to FNS as reimbursed to school food authorities in accordance with § 210.5(d)(3) or the total calculated by multiplying the number of lunches reported in accordance with § 210.5(d)(1) for each month of service during the fiscal year, by the applicable national average payment rate prescribed by FNS. The total special assistance paid to each State for any fiscal year shall not exceed the lesser of amounts reported to FNS as reimbursed to school food authorities in accordance with § 210.5(d)(3) or the total calculated by multiplying the number of free and reduced price lunches reported in accordance with § 210.5(d)(1) for each month of service during the fiscal year by the applicable national average payment rate prescribed by FNS. In accordance with section 11 of the Act, FNS will prescribe annual adjustments to the per meal national average payment rate (general cash assistance) and the special assistance national average payment rates (special cash assistance) which are effective on July 1 of each year. These adjustments, which reflect changes in the food away from home series of the Consumer Price Index for all Urban Consumers, are annually announced by Notice in July of each year in the <E T="04">Federal Register.</E> FNS will also establish maximum per meal rates of reimbursement within which a State may vary reimbursement rates to school food authorities. These maximum rates of reimbursement are established at the same time and announced in the same Notice as the national average payment rates.</P> <P>(2) <E T="03">Donated food assistance.</E> For each school year, FNS will provide distributing agencies with donated foods for lunches served under the National School Lunch Program as provided under part 250 of this chapter. The per lunch value of donated food assistance is adjusted by the Secretary annually to reflect changes as required under section 6 of the Act. These adjustments, which reflect changes in the Price Index for Foods Used in Schools and Institutions, are effective on July 1 of each year and are announced by Notice in the <E T="04">Federal Register</E> in July of each year.</P> <P>(3) <E T="03">Cash assistance for meal supplements.</E> For those eligible schools (as defined in § 210.10(n)(1)) operating afterschool care programs and electing to serve meal supplements to enrolled children, funds shall be made available to each State agency, each school year in an amount no less than the sum of the products obtained by multiplying:<PRTPAGE P="13"/> </P> <P>(i) The number of meal supplements served in the afterschool care program within the State to children from families that do not satisfy the income standards for free and reduced price school meals by 2.75 cents;</P> <P>(ii) The number of meal supplements served in the afterschool care program within the State to children from families that satisfy the income standard for free school meals by 30 cents;</P> <P>(iii) The number of meal supplements served in the afterschool care program within the State to children from families that satisfy the income standard for reduced price school meals by 15 cents.</P> <P>(4) The rates in paragraph (b)(3) are the base rates established in August 1981 for the CACFP. FNS shall prescribe annual adjustments to these rates in the same Notice as the National Average Payment Rates for lunches. These adjustments shall ensure that the reimbursement rates for meal supplements served under this part are the same as those implemented for meal supplements in the CACFP.</P> <P>(c) <E T="03">Assistance for the Commodity School Program.</E> FNS will make special cash assistance available to each State agency for lunches served in commodity schools in the same manner as special cash assistance is provided in the National School Lunch Program. Payment of such amounts to State agencies is subject to the reporting requirements contained in § 210.5(d). FNS will provide donated food assistance in accordance with part 250 of this chapter. Of the total value of donated food assistance to which it is entitled, the school food authority may elect to receive cash payments of up to 5 cents per lunch served in its commodity school(s) for donated foods processing and handling expenses. Such expenses include any expenses incurred by or on behalf of a commodity school for processing or other aspects of the preparation, delivery, and storage of donated foods. The school food authority may have all or part of these cash payments retained by the State agency for use on its behalf for processing and handling expenses by the State agency or it may authorize the State agency to transfer to the distributing agency all or any part of these payments for use on its behalf for these expenses. Payment of such amounts to State agencies is subject to the reporting requirements contained in § 210.5(d). The total value of donated food assistance is calculated on a school year basis by adding:</P> <P>(1) The applicable national average payment rate (general cash assistance) prescribed by the Secretary for the period of July 1 through June 30 multiplied by the total number of lunches served during the school year under the Commodity School Program; and</P> <P>(2) The national per lunch average value of donated foods prescribed by the Secretary for the period of July 1 through June 30 multiplied by the total number of lunches served during the school year under the Commodity School Program.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 58 FR 42487, Aug. 10, 1993; 60 FR 31207, June 13, 1995; 65 FR 26912, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.5</SECTNO> <SUBJECT>Payment process to States.</SUBJECT> <P>(a) <E T="03">Grant award.</E> FNS will specify the terms and conditions of the State agency's grant in a grant award document and will generally make payments available by means of a Letter of Credit issued in favor of the State agency. The State agency shall obtain funds for reimbursement to participating school food authorities through procedures established by FNS in accordance with 7 CFR part 3015. State agencies shall limit requests for funds to such times and amounts as will permit prompt payment of claims or authorized advances. The State agency shall disburse funds received from such requests without delay for the purpose for which drawn. FNS may, at its option, reimburse a State agency by Treasury Check. FNS will pay by Treasury Check with funds available in settlement of a valid claim if payment for that claim cannot be made within the grant closeout period specified in paragraph (d) of this section.</P> <P>(b) <E T="03">Cash-in-lieu of donated foods.</E> All Federal funds to be paid to any State in place of donated foods will be made available as provided in part 240 of this chapter.</P> <P>(c) <E T="03">Recovery of funds.</E> FNS will recover any Federal funds made available to the State agency under this part <PRTPAGE P="14"/>which are in excess of obligations reported at the end of each fiscal year in accordance with the reconciliation procedures specified in paragraph (d) of this section. Such recoveries shall be reflected by a related adjustment in the State agency's Letter of Credit.</P> <P>(d) <E T="03">Substantiation and reconciliation process.</E> Each State agency shall maintain Program records as necessary to support the reimbursement payments made to school food authorities under § 210.7 and § 210.8 and the reports submitted to FNS under this paragraph. The State agency shall ensure such records are retained for a period of 3 years or as otherwise specified in § 210.23(c).</P> <P>(1) <E T="03">Monthly report.</E> Each State agency shall submit a final Report of School Program Operations (FNS-10) to FNS for each month. The final reports shall be limited to claims submitted in accordance with § 210.8 of this part. For the month of October, the final report shall include the total number of children approved for free lunches, the total number of children approved for reduced price lunches, and the total number of children enrolled in participating public schools, private schools, and residential child care institutions, respectively, as of the last day of operation in October. The final reports shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State's report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments to a State's report shall always be made regardless of when it is determined that such adjustments are necessary. FNS authorization is not required for downward adjustments. Any adjustments to a State's report shall be reported to FNS in accordance with procedures established by FNS.</P> <P>(2) <E T="03">Quarterly report.</E> Each State agency shall also submit to FNS a quarterly Financial Status Report (SF-269) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter.</P> <P>(3) <E T="03">End of year report.</E> Each State agency shall submit a final Financial Status Report (SF-269) for each fiscal year. This final fiscal year grant closeout report shall be postmarked and/or submitted to FNS within 120 days after the end of each fiscal year or part thereof that the State agency administered the Program. Obligations shall be reported only for the fiscal year in which they occur. FNS will not be responsible for reimbursing Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred. Grant closeout procedures are to be carried out in accordance with 7 CFR part 3015.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12580, Mar. 28, 1989; 56 FR 32939, July 17, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.6</SECTNO> <SUBJECT>Use of Federal funds.</SUBJECT> <P> <E T="03">General.</E> State agencies shall use Federal funds made available under the Program to reimburse or make advance payments to school food authorities in connection with lunches and meal supplements served in accordance with the provisions of this part; <E T="03">except that,</E> with the approval of FNS, any State agency may reserve an amount up to one percent of the funds earned in any fiscal year under this part for use in carrying out special developmental projects. Advance payments to school food authorities may be made at such times and in such amounts as are necessary to meet the current fiscal obligations. All Federal funds paid to any State in place of donated foods shall be used as provided in part 240 of this chapter.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 58 FR 42487, Aug. 10, 1993]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.7</SECTNO> <SUBJECT>Reimbursement for school food authorities.</SUBJECT> <P>(a) <E T="03">General.</E> Reimbursement payments to finance nonprofit school food service operations shall be made only to school food authorities operating under a written agreement with the State agency. Subject to the provisions of § 210.8(c), such payments may be made for lunches and meal supplements served in accordance with provisions of this part and part 245 in the calendar month preceding the calendar <PRTPAGE P="15"/>month in which the agreement is executed. These reimbursement payments include general cash assistance for all lunches served to children under the National School Lunch Program and special cash assistance payments for free or reduced price lunches served to children determined eligible for such benefits under the National School Lunch and Commodity School Programs. Reimbursement payments shall also be made for meal supplements served to eligible children in afterschool care programs in accordance with the rates established in § 210.4(b)(3). Approval shall be in accordance with part 245 of this chapter.</P> <P>(b) <E T="03">Assignment of rates.</E> At the beginning of each school year, State agencies shall establish the per meal rates of reimbursement for school food authorities participating in the Program. These rates of reimbursement may be assigned at levels based on financial need; <E T="03">except that,</E> the rates are not to exceed the maximum rates of reimbursement established by the Secretary under § 210.4(b) and are to permit reimbursement for the total number of lunches in the State from funds available under § 210.4. Within each school food authority, the State agency shall assign the same rate of reimbursement from general cash assistance funds for all lunches served to children under the Program. Assigned rates of reimbursement may be changed at any time by the State agency, <E T="03">provided that</E> notice of any change is given to the school food authority. The total general and special cash assistance reimbursement paid to any school food authority for lunches served to children during the school year are not to exceed the sum of the products obtained by multiplying the total reported number of lunches, by type, served to eligible children during the school year by the applicable maximum per lunch reimbursements prescribed for the school year for each type of lunch.</P> <P>(c) <E T="03">Reimbursement limitations</E>. To be entitled to reimbursement under this part, each school food authority shall ensure that Claims for Reimbursement are limited to the number of free, reduced price and paid lunches and meal supplements that are served to children eligible for free, reduced price and paid lunches and meal supplements, respectively, for each day of operation.</P> <P>(1) <E T="03">Lunch count system</E>. To ensure that the Claim for Reimbursement accurately reflects the number of lunches and meal supplements served to eligible children, the school food authority shall, at a minimum:</P> <P>(i) Correctly approve each child's eligibility for free and reduced price lunches and meal supplements based on the requirements prescribed under 7 CFR part 245;</P> <P>(ii) Maintain a system to issue benefits and to update the eligibility of children approved for free or reduced price lunches and meal supplements. The system shall:</P> <P>(A) Accurately reflect eligibility status as well as changes in eligibility made after the initial approval process due to verification findings, transfers, reported changes in income or household size, etc.; and</P> <P>(B) Make the appropriate changes in eligibility after the initial approval process on a timely basis so that the mechanism the school food authority uses to identify currently eligible children provides a current and accurate representation of eligible children. Changes in eligibility which result in increased benefit levels shall be made as soon as possible but no later than 3 operating days of the date the school food authority makes the final decision on a child's eligibility status. Changes in eligibility which result in decreased benefit levels shall be made as soon as possible but no later than 10 operating days of the date the school food authority makes the final decision on the child's eligibility status.</P> <P>(iii) Base Claims for Reimbursement on lunch counts, taken daily at the point of service, which correctly identify the number of free, reduced price and paid lunches served to eligible children;</P> <P>(iv) Correctly record, consolidate and report those lunch and supplement counts on the Claim for Reimbursement; and</P> <P>(v) Ensure that Claims for Reimbursement do not request payment for any excess lunches produced, as prohibited in § 210.10(a)(2), or non-Program lunches (i.e., a la carte or adult <PRTPAGE P="16"/>lunches) or for more than one meal supplement per child per day.</P> <P>(2) <E T="03">Point of service alternatives.</E> </P> <P>(i) State agencies may authorize alternatives to the point of service lunch counts provided that such alternatives result in accurate, reliable counts of the number of free, reduced price and paid lunches served, respectively, for each serving day. State agencies are encouraged to issue guidance which clearly identifies acceptable point of service alternatives and instructions for proper implementation. School food authorities may select one of the State agency approved alternatives without prior approval.</P> <P>(ii) In addition, on a case-by-case basis, State agencies may authorize school food authorities to use other alternatives to the point of service lunch count; provided that such alternatives result in an accurate and reliable lunch count system. Any request to use an alternative lunch counting method which has not been previously authorized under paragraph (2)(i) is to be submitted in writing to the State agency for approval. Such request shall provide detail sufficient for the State agency to assess whether the proposed alternative would provide an accurate and reliable count of the number of lunches, by type, served each day to eligible children. The details of each approved alternative shall be maintained on file at the State agency for review by FNS.</P> <P>(d) The State agency shall reimburse the school food authority for meal supplements served in eligible schools (as defined in § 210.10(n)(1)) operating afterschool care programs under the NSLP in accordance with the rates established in § 210.4(b).</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12581, Mar. 28, 1989; 56 FR 32939, July 17, 1991; 58 FR 42487, Aug. 10, 1993; 60 FR 31207, June 13, 1995; 65 FR 26912, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.8</SECTNO> <SUBJECT>Claims for reimbursement.</SUBJECT> <P>(a) <E T="03">Internal controls.</E> The school food authority shall establish internal controls which ensure the accuracy of lunch counts prior to the submission of the monthly Claim for Reimbursement. At a minimum, these internal controls shall include: an on-site review of the lunch counting and claiming system employed by each school within the jurisdiction of the school food authority; comparisons of daily free, reduced price and paid lunch counts against data which will assist in the identification of lunch counts in excess of the number of free, reduced price and paid lunches served each day to children eligible for such lunches; and a system for following up on those lunch counts which suggest the likelihood of lunch counting problems.</P> <P>(1) <E T="03">On-site reviews.</E> Every school year, each school food authority with more than one school shall perform no less than one on-site review of the lunch counting and claiming system employed by each school under its jurisdiction. The on-site review shall take place prior to February 1 of each school year. Further, if the review discloses problems with a school's meal counting or claiming procedures, the school food authority shall: ensure that the school implements corrective action; and, within 45 days of the review, conducts a follow-up on-site review to determine that the corrective action resolved the problems. Each on-site review shall ensure that the school's claim is based on the counting system authorized by the State agency under § 210.7(c) of this part and that the counting system, as implemented, yields the actual number of reimbursable free, reduced price and paid lunches, respectively, served for each day of operation.</P> <P>(2) <E T="03">School food authority claims review process.</E> Prior to the submission of a monthly Claim for Reimbursement, each school food authority shall review the lunch count data for each school under its jurisdiction to ensure the accuracy of the monthly Claim for Reimbursement. The objective of this review is to ensure that monthly claims include only the number of free, reduced price and paid lunches served on any day of operation to children currently eligible for such lunches.</P> <P>(i) Any school food authority that was found by its most recent administrative review conducted in accordance with § 210.18, to have no meal counting and claiming violations may:</P> <P>(A) Develop internal control procedures that ensure accurate meal counts. The school food authority shall submit any internal controls developed <PRTPAGE P="17"/>in accordance with this paragraph to the State agency for approval and, in the absence of specific disapproval from the State agency, shall implement such internal controls. The State agency shall establish procedures to promptly notify school food authorities of any modifications needed to their proposed internal controls or of denial of unacceptable submissions. If the State agency disapproves the proposed internal controls of any school food authority, it reserves the right to require the school food authority to comply with the provisions of paragraph (a)(3) of this section; or</P> <P>(B) Comply with the requirements of paragraph (a)(3) of this section.</P> <P>(ii) Any school food authority that was identified in the most recent administrative review conducted in accordance with § 210.18, or in any other oversight activity, as having meal counting and claiming violations shall comply with the requirements in paragraph (a)(3) of this section.</P> <P>(3) <E T="03">Edit checks.</E> (i) The following procedure shall be followed for school food authorities identified in paragraph (a)(2)(ii) of this section, by other school food authorities at State agency option, or, at their own option, by school food authorities identified in paragraph (a)(2)(i) of this section: the school food authority shall compare each school's daily counts of free, reduced price and paid lunches against the product of the number of children in that school currently eligible for free, reduced price and paid lunches, respectively, times an attendance factor.</P> <P>(ii) School food authorities that are identified in subsequent administrative reviews conducted in accordance with § 210.18 as not having meal counting and claiming violations and that are correctly complying with the procedures in paragraph (a)(3)(i) of this section have the option of developing internal controls in accordance with paragraph (a)(2)(i) of this section.</P> <P>(4) <E T="03">Follow-up activity.</E> The school food authority shall promptly follow-up through phone contact, on-site visits or other means when the internal controls used by schools in accordance with paragraph (a)(2)(i) of this section or the claims review process used by schools in accordance with paragraphs (a)(2)(ii) and (a)(3) of this section suggest the likelihood of lunch count problems. When problems or errors are identified, the lunch counts shall be corrected prior to submission of the monthly Claim for Reimbursement. Improvements to the lunch count system shall also be made to ensure that the lunch counting system consistently results in lunch counts of the actual number of reimbursable free, reduced price and paid lunches served for each day of operation.</P> <P>(5) <E T="03">Recordkeeping.</E> School food authorities shall maintain on file, each month's Claim for Reimbursement and all data used in the claims review process, by school. Records shall be retained as specified in § 210.23(c) of this part. School food authorities shall make this information available to the Department and the State agency upon request.</P> <P>(b) <E T="03">Monthly claims.</E> To be entitled to reimbursement under this part, each school food authority shall submit to the State agency, a monthly Claim for Reimbursement, as described in paragraph (c) of this section.</P> <P>(1) <E T="03">Submission timeframes.</E> A final Claim for Reimbursement shall be postmarked or submitted to the State agency not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless otherwise authorized by FNS.</P> <P>(2) <E T="03">State agency claims review process.</E> The State agency shall review each school food authority's Claim for Reimbursement, on a monthly basis, in an effort to ensure that monthly claims are limited to the number of free and reduced price lunches served, by type, to eligible children.</P> <P>(i) The State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the school food authority for the month of October times the days of operation times the attendance factor employed by the school food authority in accordance with paragraph (a)(3) of this section or the internal controls <PRTPAGE P="18"/>used by schools in accordance with paragraph (a)(2)(i) of this section. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s) as collected pursuant to paragraph (c)(2) of this section.</P> <P>(ii) In lieu of conducting the claims review specified in paragraph (b)(2)(i) of this section, the State agency may conduct alternative analyses for those Claims for Reimbursement submitted by residential child care institutions. Such alternatives analyses shall meet the objective of ensuring that the monthly Claims for Reimbursement are limited to the numbers of free and reduced price lunches served, by type, to eligible children.</P> <P>(3) <E T="03">Follow-up activity.</E> The State agency shall promptly follow-up through phone contact, on-site visits, or other means when the claims review process suggests the likelihood of lunch count problems.</P> <P>(4) <E T="03">Corrective action.</E> The State agency shall promptly take corrective action with respect to any Claim for Reimbursement which includes more than the number of lunches served, by type, to eligible children. In taking corrective action, State agencies may make adjustments on claims filed within the 60-day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month required under § 210.5(d) of this part. Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Except that, upward adjustments for the current and prior fiscal years resulting from any review or audit may be made, at the discretion of the State agency. Downward adjustments in amounts claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.</P> <P>(c) <E T="03">Content of claim</E>. The Claim for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Report of School Program Operations required under § 210.5(d) of this part. Such data shall include, at a minimum, the number of free, reduced price and paid lunches and meal supplements served to eligible children. The claim shall be signed by a school food authority official.</P> <P>(1) <E T="03">Consolidated claim</E>. The State agency may authorize a school food authority to submit a consolidated Claim for Reimbursement for all schools under its jurisdiction, <E T="03">provided that,</E> the data on each school's operations required in this section are maintained on file at the local office of the school food authority and the claim separates consolidated data for commodity schools from data for other schools. Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only lunches and meal supplements served in that month except if the first or last month of Program operations for any school year contains 10 operating days or less, such month may be combined with the Claim for Reimbursement for the appropriate adjacent month. However, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, a school food authority shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs.</P> <P>(2) <E T="03">October data</E>. For the month of October, the State agency shall also obtain, either through the Claim for Reimbursement or other means, the total number of children approved for free lunches and meal supplements, the total number of children approved for reduced price lunches and meal supplements, and the total number of children enrolled in the school food authority as of the last day of operation in October. The school food authority shall submit this data to the State agency no later than December 31 of each year. State agencies may establish shorter deadlines at their discretion. In addition, the State agency may require school food authorities to provide this data for a more current month if for use in the State agency <PRTPAGE P="19"/>claims review process under paragraph (c)(2) of this section.</P> <P>(d) <E T="03">Advance funds.</E> The State agency may advance funds available for the Program to a school food authority in an amount equal to the amount of reimbursement estimated to be needed for one month's operation. Following the receipt of claims, the State agency shall make adjustments, as necessary, to ensure that the total amount of payments received by the school food authority for the fiscal year does not exceed an amount equal to the number of lunches and meal supplements by reimbursement type served to children times the respective payment rates assigned by the State in accordance with § 210.7(b). The State agency shall recover advances of funds to any school food authority failing to comply with the 60-day claim submission requirements in paragraph (b) of this section.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12581, Mar. 28, 1989; 56 FR 32940, July 17, 1991; 58 FR 42487, Aug. 10, 1993; 60 FR 31207, June 13, 1995; 64 FR 50740, Sept. 20, 1999]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Requirements for School Food Authority Participation</HD> <SECTION> <SECTNO>§ 210.9</SECTNO> <SUBJECT>Agreement with State agency.</SUBJECT> <P>(a) <E T="03">Application.</E> An official of a school food authority shall make written application to the State agency for any school in which it desires to operate the Program. Applications shall provide the State agency with sufficient information to determine eligibility. The school food authority shall also submit for approval a Free and Reduced Price Policy Statement in accordance with part 245 of this chapter.</P> <P>(b) <E T="03">Agreement.</E> Each school food authority approved to participate in the program shall enter into a written agreement with the State agency that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency to suspend or terminate the agreement in accordance with § 210.25. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each school food authority with a single agreement with respect to the operation of those programs. The agreement shall contain a statement to the effect that the “School Food Authority and participating schools under its jurisdiction, shall comply with all provisions of 7 CFR parts 210 and 245.” This agreement shall provide that each school food authority shall, with respect to participating schools under its jurisdiction:</P> <P>(1) Maintain a nonprofit school food service and observe the limitations on the use of nonprofit school food service revenues set forth in § 210.14(a) and the limitations on any competitive school food service as set forth in § 210.11(b);</P> <P>(2) Limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service or such other amount as may be approved in accordance with § 210.19(a);</P> <P>(3) Maintain a financial management system as prescribed under § 210.14(c);</P> <P>(4) Comply with the requirements of the Department's regulations regarding financial management (7 CFR part 3015);</P> <P>(5) Serve lunches, during the lunch period, which meet the minimum requirements prescribed in § 210.10;</P> <P>(6) Price the lunch as a unit;</P> <P>(7) Serve lunches free or at a reduced price to all children who are determined by the school food authority to be eligible for such meals under 7 CFR part 245;</P> <P>(8) Claim reimbursement at the assigned rates only for reimbursable free, reduced price and paid lunches served to eligible children in accordance with 7 CFR part 210. Agree that the school food authority official signing the claim shall be responsible for reviewing and analyzing meal counts to ensure accuracy as specified in § 210.8 governing claims for reimbursement. Acknowledge that failure to submit accurate claims will result in the recovery of an overclaim and may result in the withholding of payments, suspension or termination of the program as specified in § 210.25. Acknowledge that if failure to submit accurate claims reflects embezzlement, willful mis-ap-pli-ca-tion of funds, theft, or fraudulent activity, the penalties specified in § 210.26 shall apply;</P> <P>(9) Count the number of free, reduced price and paid reimbursable meals <PRTPAGE P="20"/>served to eligible children at the point of service, or through another counting system if approved by the State agency;</P> <P>(10) Submit Claims for Reimbursement in accordance with § 210.8;</P> <P>(11) Comply with the requirements of the Department's regulations regarding nondiscrimination (7 CFR parts 15, 15a, 15b);</P> <P>(12) Make no discrimination against any child because of his or her eligibility for free or reduced price meals in accordance with the approved Free and Reduced Price Policy Statement;</P> <P>(13) Enter into an agreement to receive donated foods as required by 7 CFR part 250;</P> <P>(14) Maintain, in the storage, preparation and service of food, proper sanitation and health standards in conformance with all applicable State and local laws and regulations;</P> <P>(15) Accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department;</P> <P>(16) Maintain necessary facilities for storing, preparing and serving food;</P> <P>(17) Upon request, make all accounts and records pertaining to its school food service available to the State agency and to FNS, for audit or review, at a reasonable time and place. Such records shall be retained for a period of 3 years after the date of the final Claim for Reimbursement for the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the 3 year period as long as required for resolution of the issues raised by the audit;</P> <P>(18) Maintain files of currently approved and denied free and reduced price applications, respectively, and the names of children approved for free lunches based on documentation certifying that the child is included in a household approved to receive benefits under the Food Stamp Program, Food Distribution Program for Households on Indian Reservations (FDPIR) or Temporary Assistance for Needy Families (TANF).If the applications and/or documentation are maintained at the school food authority level, they shall be readily retrievable by school;</P> <P>(19) Retain the individual applications for free and reduced price lunches and meal supplements submitted by families for a period of 3 years after the end of the fiscal year to which they pertain or as otherwise specified under paragraph (b)(17) of this section.</P> <P>(20) No later than March 1, 1997, and no later than December 31 of each year thereafter, provide the State agency with a list of all elementary schools under its jurisdiction in which 50 percent or more of enrolled children have been determined eligible for free or reduced price meals as of the last operating day the preceding October. The State agency may designate a month other than October for the collection of this information, in which case the list must be provided to the State agency within 60 calendar days following the end of the month designated by the State agency. In addition, each school food authority shall provide, when available for the schools under its jurisdiction, and upon the request of a sponsoring organization of day care homes of the Child and Adult Care Food Program, information on the boundaries of the attendance areas for the elementary schools identified as having 50 percent or more of enrolled children certified eligible for free or reduced price meals.</P> <P>(c) <E T="03">Afterschool care requirements.</E> Those school food authorities with eligible schools (as defined in § 210.10(n)(1)) that elect to serve meal supplements during afterschool care programs, shall agree to:</P> <P>(1) Serve meal supplements which meet the minimum requirements prescribed in § 210.10;</P> <P>(2) Price the meal supplement as a unit;</P> <P>(3) Serve meal supplements free or at a reduced price to all children who are determined by the school food authority to be eligible for free or reduced price school meals under 7 CFR part 245;</P> <P>(4) If charging for meals, the charge for a reduced price meal supplement shall not exceed 15 cents;</P> <P>(5) Claim reimbursement at the assigned rates only for meal supplements served in accordance with the agreement;<PRTPAGE P="21"/> </P> <P>(6) Claim reimbursement for no more than one meal supplement per child per day;</P> <P>(7) Review each afterschool care program two times a year; the first review shall be made during the first four weeks that the school is in operation each school year, except that an afterschool care program operating year round shall be reviewed during the first four weeks of its initial year of operation, once more during its first year of operation, and twice each school year thereafter; and</P> <P>(8) Comply with all requirements of this part, except that, claims for reimbursement need not be based on “point of service” meal supplement counts (as required by § 210.9(b)(9)).</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12581, Mar. 28, 1989; 56 FR 32941, July 17, 1991; 58 FR 42488, Aug. 10, 1993; 60 FR 31208, June 13, 1995; 62 FR 901, Jan. 7, 1997; 63 FR 9104, Feb. 24, 1998; 64 FR 50740, Sept. 20, 1999; 64 FR 72471, Dec. 28, 1999; 65 FR 26912, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.10</SECTNO> <SUBJECT>What are the nutrition standards and menu planning approaches for lunches and the requirements for afterschool snacks?</SUBJECT> <P>(a) <E T="03">What are the general requirements</E>?</P> <P>(1) <E T="03">General nutrition requirements.</E> Schools must provide nutritious and well-balanced meals to all the children they serve.</P> <P>(i) <E T="03">Requirements for lunch.</E> For children age 2 or older, schools must offer lunches that meet, at a minimum, the nutrition standards in paragraph (b) of this section. Compliance with the nutrition standards and the appropriate nutrient and calorie levels is determined by averaging lunches planned to be offered over a school week. Under any menu planning approach, schools must plan and produce at least enough food to meet the appropriate calorie and nutrient levels for the ages/grades of the children in the school (see paragraphs (c), (d), (i)(1) or (l) of this section, depending on the menu planning approach used). Also, if schools use one of the food-based menu planning approaches, they must plan and produce at least enough food to offer each child the minimum quantities under the meal pattern (see paragraph (k) of this section). Schools offering lunches to infants must meet the meal pattern requirements in paragraph (o) of this section.</P> <P>(ii) <E T="03">Requirements for afterschool snacks.</E> Schools offering afterschool snacks in afterschool care programs must meet the meal pattern requirements in paragraph (n) of this section. Schools must plan and produce enough food to offer each child the minimum quantities under the meal pattern in paragraph (n) of this section. The component requirements for meal supplements served under the Child and Adult Care Food Program authorized under part 226 of this chapter also apply to afterschool snacks served in accordance with paragraph (n) of this section.</P> <P>(2) <E T="03">Unit pricing.</E> Schools must price each meal as a unit. Schools need to consider participation trends in an effort to provide one reimbursable lunch and, if applicable, one reimbursable afterschool snack for each child every day. If there are leftover meals, schools may offer them to the students but cannot get reimbursement for them.</P> <P>(3) <E T="03">Production and menu records.</E> Schools must keep production and menu records for the meals they produce. These records must show how the meals contribute to the required food components, food items or menu items every day. In addition, for lunches, these records must show how the lunches contribute to the nutrition standards in paragraph (b) of this section and the appropriate calorie and nutrient levels for the ages/grades of the children in the school (see paragraphs (c), (d), or (i)(1) or (l) of this section, depending on the menu planning approach used) over the school week. If applicable, schools or school food authorities must maintain nutritional analysis records to demonstrate that lunches meet, when averaged over each school week:</P> <P>(i) The nutrition standards provided in paragraph (b) of this section; and</P> <P>(ii) The nutrient and calorie levels for children for each age or grade group in accordance with paragraphs (c) or (i)(1) of this section or developed under paragraph (l) of this section.</P> <P>(b) <E T="03">What are the specific nutrition standards for lunches?</E> Children age 2 and above must be offered lunches that meet the following nutrition standards for their age/grade group:<PRTPAGE P="22"/> </P> <P>(1) Provision of one-third of the Recommended Dietary Allowances (RDAs) for protein, calcium, iron, vitamin A and vitamin C in the appropriate levels for the ages/grades (see paragraphs (c), (d), (i)(1) or (l) of this section, depending on the menu planning approach used);</P> <P>(2) Provision of the lunchtime energy allowances (calories) in the appropriate levels (see paragraphs (c), (d),(i)(1) or (l) of this section, depending on the menu planning approach used);</P> <P>(3) These applicable recommendations from the 1995 Dietary Guidelines for Americans:</P> <P>(i) Eat a variety of foods;</P> <P>(ii) Limit total fat to 30 percent of total calories;</P> <P>(iii) Limit saturated fat to less than 10 percent of total calories;</P> <P>(iv) Choose a diet low in cholesterol;</P> <P>(v) Choose a diet with plenty of grain products, vegetables, and fruits; and</P> <P>(vi) Choose a diet moderate in salt and sodium.</P> <P>(4) These measures of compliance with the applicable recommendations of the 1995 Dietary Guidelines for Americans:</P> <P>(i) Limit the percent of calories from total fat to 30 percent of the actual number of calories offered;</P> <P>(ii) Limit the percent of calories from saturated fat to less than 10 percent of the actual number of calories offered;</P> <P>(iii) Reduce sodium and cholesterol levels; and</P> <P>(iv) Increase the level of dietary fiber.</P> <P>(5) School food authorities have several ways to plan menus. The minimum levels of nutrients and calories that lunches must offer depends on the menu planning approach used and the ages/grades served. The menu planning approaches are:</P> <P>(i) Nutrient standard menu planning (see paragraphs (c) and (i) of this section);</P> <P>(ii) Assisted nutrient standard menu planning (see paragraphs (c) and (j) of this section);</P> <P>(iii) Traditional food-based menu planning (see paragraphs (d)(1) and (k) of this section);</P> <P>(iv) Enhanced food-based menu planning (see paragraphs (d)(2) and (k) of this section); or</P> <P>(v) Alternate menu planning (see paragraph (l) of this section).</P> <P>(c) <E T="03">What are the levels for nutrients and calories for lunches planned under the nutrient standard or assisted nutrient standard menu planning approaches</E>?</P> <P>(1) <E T="03">Required levels.</E> The required levels are:</P> <GPH DEEP="100" SPAN="2"> <GID>ER09MY00.000</GID> </GPH> <P>(2) <E T="03">Optional levels.</E> Optional levels are:</P> <GPH DEEP="144" SPAN="2"> <PRTPAGE P="23"/> <GID>ER09MY00.001</GID> </GPH> <P>(3) <E T="03">Customized levels.</E> Schools may also develop a set of nutrient and calorie levels for a school week. These levels are customized for the age groups of the children in the particular school or school food authority.</P> <P>(d) <E T="03">What are the nutrient and calorie levels for lunches planned under the food-based menu planning approaches?</E> </P> <P>(1) <E T="03">Traditional approach.</E> For the traditional food-based menu planning approach, the required levels are:</P> <GPH DEEP="133" SPAN="2"> <GID>EN17MY00.000</GID> </GPH> <P>(2) <E T="03">Enhanced approach.</E> For the enhanced food-based menu planning approach, the required levels are:</P> <GPH DEEP="172" SPAN="2"> <PRTPAGE P="24"/> <GID>ER09MY00.003</GID> </GPH> <P>(e) <E T="03">Must schools offer choices at lunch?</E> FNS encourages schools to offer children a selection of foods and menu items at lunch. Choices provide variety and encourage consumption. Schools may offer choices of reimbursable lunches or foods within a reimbursable lunch. Children who are eligible for free or reduced price lunches must be allowed to take any reimbursable lunch or any choices offered as part of a reimbursable lunch. Schools may establish different unit prices for each lunch offered provided that the benefits made available to children eligible for free or reduced price lunches are not affected.</P> <P>(f) <E T="03">What are the requirements for lunch periods?</E> </P> <P>(1) <E T="03">Timing.</E> Schools must offer lunches meeting the requirements of this section during the period the school has designated as the lunch period. Schools must offer lunches between 10:00 a.m. and 2:00 p.m. Schools may request an exemption from these times only from FNS.</P> <P>(2) <E T="03">Lunch periods for young children.</E> With State agency approval, schools are encouraged to serve children ages one through five over two service periods. Schools may divide the quantities and/or the menu items, foods, or food items offered each time any way they wish.</P> <P>(3) <E T="03">Adequate lunch periods.</E> FNS encourages schools to provide sufficient lunch periods that are long enough to give all students enough time to be served and to eat their lunches.</P> <P>(g) <E T="03">What exceptions and variations are allowed in meals?</E> </P> <P>(1) <E T="03">Exceptions for medical or special dietary needs.</E> Schools must make substitutions in lunches and afterschool snacks for students who are considered to have a disability under 7 CFR part 15b and whose disability restricts their diet. Schools may also make substitutions for students who do not have a disability but who cannot consume the regular lunch or afterschool snack because of medical or other special dietary needs. Substitutions must be made on a case by case basis only when supported by a statement of the need for substitutions that includes recommended alternate foods, unless otherwise exempted by FNS. Such statement must, in the case of a student with a disability, be signed by a physician or, in the case of a student who is not disabled, by a recognized medical authority.</P> <P>(2) <E T="03">Variations for ethnic, religious, or economic reasons.</E> Schools should consider ethnic and religious preferences when planning and preparing meals. Variations on an experimental or continuing basis in the food components for the food-based menu planning approaches in paragraphs (k) or (n) of this section may be allowed by FNS. Any variations must be nutritionally <PRTPAGE P="25"/>sound and needed to meet ethnic, religious, or economic needs.</P> <P>(3) <E T="03">Exceptions for natural disasters.</E> If there is a natural disaster or other catastrophe, FNS may temporarily allow schools to serve meals for reimbursement that do not meet the requirements in this section.</P> <P>(h) <E T="03">What must schools do about nutrition disclosure?</E> To the extent that school food authorities identify foods in a menu, or on the serving line or through other available means of communicating with program participants, school food authorities must identify products or dishes containing more than 30 parts fully hydrated alternate protein products (as specified in appendix A of this part) to less than 70 parts beef, pork, poultry or seafood on an uncooked basis, in a manner which does not characterize the product or dish solely as beef, pork, poultry or seafood. Additionally, FNS encourages schools to inform the students, parents, and the public about efforts they are making to meet the nutrition standards (see paragraph (b) of this section) for school lunches.</P> <P>(i) <E T="03">What are the requirements for lunches under the nutrient standard menu planning approach?</E> </P> <P>(1) <E T="03">Nutrient levels.</E> </P> <P>(i) <E T="03">Adjusting nutrient levels for young children.</E> Schools with children who are age 2 must at least meet the nutrition standards in paragraph (b) of this section and the preschool nutrient and calorie levels in paragraph (c)(1) of this section over a school week. Schools may also use the preschool nutrient and calorie levels in paragraph (c)(2) of this section or may calculate nutrient and calorie levels for two year olds. FNS has a method for calculating these levels in guidance materials for menu planning.</P> <P>(ii) <E T="03">Minimum levels for nutrients.</E> Lunches must at least offer the nutrient and calorie levels for the required grade groups in the table in paragraph (c)(1) of this section. Schools may also offer lunches meeting the nutrient and calorie levels for the age groups in paragraph (c)(2) of this section. If only one grade or age group is outside either of these established levels, schools may follow the levels for the majority of the children. Schools may also customize the nutrient and calorie levels for the children they serve. FNS has a method for calculating these levels in guidance materials for menu planning.</P> <P>(2) <E T="03">Reimbursable lunches.</E> </P> <P>(i) <E T="03">Contents of a reimbursable lunch.</E> A reimbursable lunch must include at least three menu items. One of those menu items must be an entree, and one must be fluid milk as a beverage. An entree is a combination of foods or is a single food item offered as the main course. All menu items or foods offered in a reimbursable lunch contribute to the nutrition standards in paragraph (b) of this section and to the levels of nutrients and calories that must be met in paragraphs (c) or (i)(1) of this section. Unless offered as part of a menu item in a reimbursable lunch, foods of minimal nutritional value (see appendix B to part 210) are not included in the nutrient analysis. Reimbursable lunches planned under the nutrient standard menu planning approach must meet the nutrition standards in paragraph (b) of this section and the appropriate nutrient and calorie levels in either paragraph (c) or paragraph (i)(1) of this section.</P> <P>(ii) <E T="03">Offer versus serve.</E> Schools must offer at least three menu items for lunches. Senior high (as defined by the State educational agency) school students must select at least two menu items and are allowed to decline a maximum of two menu items. The student must always take the entree. The price of a reimbursable lunch does not change if the student does not take a menu item or requests smaller portions. At the discretion of the school food authority, students below the senior high level may also participate in offer versus serve.</P> <P>(3) <E T="03">Doing the analysis.</E> Schools using nutrient standard menu planning must conduct the analysis on all menu items and foods offered in a reimbursable lunch. The analysis is conducted over a school week. Unless offered as part of a menu item in a reimbursable lunch, foods of minimal nutritional value (see appendix B to part 210) are not included in the nutrient analysis.</P> <P>(4) <E T="03">Software elements.</E> </P> <P>(i) <E T="03">The Child Nutrition Database.</E> The nutrient analysis is based on the Child Nutrition Database. This database is <PRTPAGE P="26"/>part of the software used to do a nutrient analysis. Software companies or others developing systems for schools may contact FNS for more information about the database.</P> <P>(ii) <E T="03">Software evaluation.</E> FNS or an FNS designee evaluates any nutrient analysis software before it may be used in schools. FNS or its designee determines if the software, as submitted, meets the minimum requirements. The approval of software does not mean that FNS or USDA endorses it. The software must be able to do all functions after the basic data is entered. The required functions include weighted averages and the optional combined analysis of the lunch and breakfast programs.</P> <P>(5) <E T="03">Nutrient analysis procedures.</E> </P> <P>(i) <E T="03">Weighted averages.</E> Schools must include all menu items and foods offered in reimbursable lunches in the nutrient analysis. Menu items and foods are included based on the portion sizes and projected serving amounts. They are also weighted based on their proportionate contribution to the lunches offered. This means that menu items or foods more frequently offered are weighted more heavily than those not offered as frequently. Schools calculate weighting as indicated by FNS guidance and by the guidance provided by the software. Through September 30, 2003, schools are not required to conduct a weighted analysis.</P> <P>(ii) <E T="03">Analyzed nutrients.</E> The analysis includes all menu items and foods offered over a school week. The analysis must determine the levels of: Calories, protein, vitamin A, vitamin C, iron, calcium, total fat, saturated fat, sodium, cholesterol and dietary fiber.</P> <P>(iii) <E T="03">Combining the analysis of the lunch and breakfast programs.</E> At their option, schools may combine the analysis of lunches offered under this part and breakfasts offered under part 220 of this Chapter. The analysis is done proportionately to the levels of participation in each program based on FNS guidance.</P> <P>(6) <E T="03">Comparing the results of the nutrient analysis.</E> Once the procedures in paragraph (i)(5) of this section are completed, schools must compare the results of the analysis to the appropriate nutrient and calorie levels, by age/grade groups, in paragraph (c) of this section or those developed under paragraph (i)(1) of this section. This comparison determines the school week's average. Schools must also make comparisons to the nutrition standards in paragraph (b) of this section to determine how well they are meeting the nutrition standards over the school week.</P> <P>(7) <E T="03">Adjustments to the menus.</E> Once schools know the results of the nutrient analysis based on the procedures in paragraphs (i)(5) and (i)(6) of this section, they must adjust future menu cycles to reflect production and how often the menu items and foods are offered. Schools may need to reanalyze menus when the students' selections change and, consequently, production levels change. Schools may need to change the menu items and foods offered given the students' selections and may need to modify the recipes and other specifications to make sure that the nutrition standards in paragraph (b) and either paragraphs (c) or (i)(1) of this section are met.</P> <P>(8) <E T="03">Standardized recipes.</E> If a school follows the nutrient standard menu planning approach, it must develop and follow standardized recipes. A standardized recipe is a recipe that was tested to provide an established yield and quantity using the same ingredients for both measurement and preparation methods. Any standardized recipes developed by USDA/FNS are in the Child Nutrition Database. If a school has its own recipes, they must be standardized and analyzed to determine the levels of calories, nutrients, and dietary components listed in paragraph (i)(5)(ii) of this section. Schools must add any local recipes to their local database as outlined in FNS guidance.</P> <P>(9) <E T="03">Processed foods.</E> The Child Nutrition Database includes a number of processed foods. Schools may use purchased processed foods and menu items that are not in the Child Nutrition Database. Schools or the State agency must add any locally purchased processed foods and menu items to their local database as outlined in FNS guidance. Schools or the State agency must obtain the levels of calories, nutrients, and dietary components listed in paragraph (i)(5)(ii) of this section.<PRTPAGE P="27"/> </P> <P>(10) <E T="03">Menu substitutions.</E> Schools may need to substitute foods or menu items in a menu that was already analyzed. If the substitution(s) occurs more than two weeks before the planned menu is served, the school must reanalyze the revised menu. If the substitution(s) occurs two weeks or less before the planned menu is served, the school does not need to do a reanalysis. However, schools should always try to substitute similar foods.</P> <P>(11) <E T="03">Meeting the nutrition standards.</E> The school's analysis shows whether their menus are meeting the nutrition standards in paragraph (b) of this section and the appropriate levels of nutrients and calories in paragraph (c) of this section or customized levels developed under paragraph (i)(1) of this section. If the analysis shows that the menu(s) are not meeting these standards, the school needs to take action to make sure that the lunches meet the nutrition standards and the calorie, nutrient, and dietary component levels. Actions may include technical assistance and training and may be taken by the State agency, the school food authority or by the school as needed.</P> <P>(12) <E T="03">Other Child Nutrition Programs and nutrient standard menu planning.</E> School food authorities that operate the Summer Food Service Program (part 225 of this chapter) and/or the Child and Adult Care Food Program (part 226 of this chapter) may, with State agency approval, prepare lunches for these programs using the nutrient standard menu planning approach for children age two and over. FNS has guidance on the levels of nutrients and calories for adult lunches under the Child and Adult Care Food Program. However, afterschool snacks continue to use the appropriate program's meal pattern.</P> <P>(j) <E T="03">What are the requirements for lunches under the assisted nutrient standard menu planning approach?</E> (1) <E T="03">Definition of assisted nutrient standard menu planning.</E> Some school food authorities may not be able to do all of the procedures necessary for nutrient standard menu planning. The assisted nutrient standard menu planning approach provides schools with menu cycles developed and analyzed by other sources. These sources include the State agency, other school food authorities, consultants, or food service management companies.</P> <P>(2) <E T="03">Elements of assisted nutrient standard menu planning.</E> School food authorities using menu cycles developed under assisted nutrient standard menu planning must follow the procedures in paragraphs (i)(1) through (i)(10) of this section. The menu cycles must also incorporate local food preferences and accommodate local food service operations. The menus cycles must meet the nutrition standards in paragraph (b) of this section and meet the nutrient and calorie levels for nutrient standard menu planning in paragraph (c) or paragraph (i)(1) of this section. The supplier of the assisted nutrient standard menu planning approach must also develop and provide recipes, food product specifications, and preparation techniques. All of these components support the nutrient analysis results of the menus cycles used by the receiving school food authorities.</P> <P>(3) <E T="03">State agency approval.</E> Prior to its use, the State agency must approve the initial menu cycle, recipes and other specifications of the assisted nutrient standard menu planning approach. The State agency needs to ensure that all the steps required for nutrient analysis were followed. School food authorities may also ask the State agency for assistance with implementation of their assisted nutrient standard menu planning approach.</P> <P>(4) <E T="03">Required adjustments.</E> After the initial service of the menu cycle developed under the assisted nutrient standard menu planning approach, the nutrient analysis must be reassessed and appropriate adjustments made as discussed in paragraph (i)(7) of this section.</P> <P>(5) <E T="03">Final responsibility for meeting the nutrition standards.</E> The school food authority using the assisted nutrient standard menu planning approach retains responsibility for meeting the nutrition standards in paragraph (b) of this section and the calorie and nutrient levels in paragraph (c) or paragraph (i)(1) of this section.</P> <P>(6) <E T="03">Adjustments to the menus.</E> If the nutrient analysis shows that the lunches offered are not meeting the nutrition <PRTPAGE P="28"/>standards in paragraph (b) of this section and the calorie and nutrient levels in paragraph (c) or paragraph (i)(1) of this section, the State agency, school food authority or school must take action to make sure the lunches offered meet these requirements. Actions needed include technical assistance and training.</P> <P>(7) <E T="03">Other Child Nutrition Programs and assisted nutrient standard menu planning.</E> School food authorities that operate the Summer Food Service Program (part 225 of this chapter) and/or the Child and Adult Care Food Program (part 226 of this chapter) may, with State agency approval, prepare lunches for these programs using the assisted nutrient standard menu planning approach for children age two and over. FNS has guidance on the levels of nutrients and calories for adult lunches under the Child and Adult Care Food Program. However, afterschool snacks continue to use the appropriate program's meal pattern.</P> <P>(k) <E T="03">What are the requirements for lunches under the food-based menu planning approaches?</E> There are two menu planning approaches based on meal patterns, not nutrient analysis. These approaches are the traditional food-based menu planning approach and the enhanced food-based menu planning approach. Schools using one of these approaches offer food components in at least the minimum quantities required for the various grade groups.</P> <P>(1) <E T="03">Quantities for the traditional food-based menu planning approach</E>—(i) <E T="03">Minimum quantities.</E> At a minimum, schools must offer five food items in the quantities in the following table:</P> <GPH DEEP="269" SPAN="2"> <GID>ER09MY00.004</GID> </GPH> <P>(ii) <E T="03">Use of Group IV quantities.</E> Schools that are able to provide quantities of food to children solely on the basis of their ages or grade level should do so. <PRTPAGE P="29"/>Schools that cannot serve children on the basis of age or grade level must provide all school age children Group IV portions as specified in the table in paragraph (k)(1)(i) of this section. Schools serving children on the basis of age or grade level must plan and produce sufficient quantities of food to provide Groups I-IV no less than the amounts specified for those children in the table in paragraph (k)(1)(i) of this section, and sufficient quantities of food to provide Group V no less than the specified amounts for Group IV. FNS recommends that schools plan and produce sufficient quantities of food to provide Group V children the larger amounts specified in the table in paragraph (k)(1)(i) of this section. Schools that provide increased portion sizes for Group V may comply with children's requests for smaller portion sizes of the food items; however, schools must plan and produce sufficient quantities of food to at least provide the serving sizes required for Group IV. Schools must ensure that lunches are served with the objective of providing the per lunch minimums for each age and grade level as specified in the table in paragraph (k)(1)(i) of this section.</P> <P>(2) <E T="03">Quantities for the enhanced food-based menu planning approach.</E> Schools must at least offer five food items in the quantities in the following table:</P> <GPH DEEP="275" SPAN="2"> <GID>ER09MY00.005</GID> </GPH> <P>(3) <E T="03">Requirements for the meat/meat alternate component.</E> The quantity of the meat/meat alternate component must be the edible portion as served. If the portion size of a food item for this component is excessive, the school must reduce that portion and supplement it with another meat/meat alternate to meet the full requirement. This component must be served in a main dish or in a main dish and only one other food item. Schools without daily choices in <PRTPAGE P="30"/>this component should not serve any one meat alternate or form of meat (for example, ground, diced, pieces) more than three times in the same week.</P> <P>(i) <E T="03">Enriched macaroni.</E> Enriched macaroni with fortified protein as defined in appendix A to this part may be used to meet part of the meat/meat alternate requirement when used as specified in appendix A to this part. An enriched macaroni product with fortified protein as defined in appendix A to this part may be used to meet part of the meat/meat alternate component or the grains/breads component but not as both food components in the same lunch.</P> <P>(ii) <E T="03">Nuts and seeds.</E> Nuts and seeds and their butters are allowed as meat alternates in accordance with program guidance. Acorns, chestnuts, and coconuts must not be used because of their low protein and iron content. Nut and seed meals or flours may be used only as allowed under appendix A to this part. Nuts or seeds may be used to meet no more than one-half of the meat/meat alternate component with another meat/meat alternate to meet the full requirement.</P> <P>(iii) <E T="03">Yogurt.</E> Yogurt may be used to meet all or part of the meat/meat alternate requirement. Yogurt may be either plain or flavored, unsweetened or sweetened. Noncommercial and/or nonstandardized yogurt products, such as frozen yogurt, homemade yogurt, yogurt flavored products, yogurt bars, yogurt covered fruit and/or nuts or similar products are not creditable. Four ounces (weight) or <FR>1/2</FR> cup (volume) of yogurt equals one ounce of the meat/meat alternate requirement.</P> <P>(4) <E T="03">Requirements for the vegetable/fruit component.</E> </P> <P>(i) <E T="03">General.</E> Full strength vegetable or fruit juice may be used to meet no more than one-half of the vegetable/fruit requirement. Cooked dry beans or peas may be counted as either a vegetable or as a meat alternate but not as both in the same meal.</P> <P>(ii) <E T="03">Minimum quantities for the enhanced food-based menu planning.</E> Under the enhanced food-based menu planning approach, children in kindergarten through grade six are offered vegetables/fruits in minimum daily servings plus an additional one-half cup in any combination over a five day period.</P> <P>(5) <E T="03">Requirements for the grains/breads component.</E> </P> <P>(i) <E T="03">Enriched or whole grains.</E> All grains/breads must be enriched or whole grain or made with enriched or whole grain meal or flour.</P> <P>(ii) <E T="03">Daily and weekly servings.</E> The requirement for the grain/bread component is based on minimum daily servings plus total servings over a five day period. Schools serving lunch 6 or 7 days per week should increase the weekly quantity by approximately 20 percent (<FR>1/5</FR>th) for each additional day. When schools operate less than 5 days per week, they may decrease the weekly quantity by approximately 20 percent (<FR>1/5</FR>th) for each day less than five. The servings for biscuits, rolls, muffins, and other grain/bread varieties are specified in the Food Buying Guide for Child Nutrition Programs (PA 1331), an FNS publication.</P> <P>(iii) <E T="03">Minimums under the traditional food-based menu planning approach.</E> Schools must offer at least one-half serving of the grain/bread component to children in Group I and at least one serving to children in Groups II-V daily. Schools which serve lunch at least 5 days a week shall serve a total of at least five servings of grains/breads to children in Group I and eight servings per week to children in Groups II-V.</P> <P>(iv) <E T="03">Desserts under the enhanced food-based menu planning approach.</E> Under the enhanced food-based menu planning approach, schools may count up to one grain-based dessert per day for children in grades K-12 towards meeting the grains/breads component.</P> <P>(6) <E T="03">Offer versus serve.</E> Schools must offer all five required food items. Senior high (as defined by the State educational agency) school students may decline up to two of the five food items. At the school food authority's option, students below senior high may decline one or two of the five food items. The price of a reimbursable lunch does not change if the student does not take a menu item or requests smaller portions.</P> <P>(7) <E T="03">Meal pattern exceptions for outlying areas.</E> Schools in American Samoa, Puerto Rico and the Virgin Islands <PRTPAGE P="31"/>may serve a starchy vegetable such as yams, plantains, or sweet potatoes to meet the grain/bread requirement.</P> <P>(l) <E T="03">What are the requirements for lunches planned using an alternate menu planning approach?</E> </P> <P>(1) <E T="03">Definition.</E> Alternate menu planning approaches are those adopted or developed by school food authorities or State agencies that differ from the standard approaches established in paragraphs (i) through (k) of this section. There are two types of alternate approaches. First, there are specific modifications provided in paragraph (l)(2) of this section. Second, there are major changes to the standard menu planning approaches or new menu planning approaches developed by school food authorities or State agencies (see paragraph (l)(3) of this section).</P> <P>(2) <E T="03">Use of modifications.</E> There are three modifications available to schools using one of the food-based menu planning approaches for lunches. State agencies may or may not require prior approval or may establish guidelines for using these modifications.</P> <P>(i) <E T="03">Modification to the meat/meat alternate component.</E> The required minimum quantities of the meat/meat alternate component in the food-based menu planning approaches may be offered as a weekly total with a one ounce (or its equivalent for certain meat alternates) minimum daily serving size. This modification does not apply if the minimum serving of meat/meat alternate is less than one ounce.</P> <P>(ii) <E T="03">Modification to age/grade groups under the traditional food-based menu planning approach.</E> Schools using the traditional food-based menu planning approach may:</P> <P>(A) For children in grades K-6, use the portion sizes in Group IV in the table in paragraph (k)(1) of this section and follow the nutrient levels for children in grades K-6 in paragraphs (c)(1) and (d)(2) of this section; and/or</P> <P>(B) For children in grades 7-12, use the portion sizes in Group IV in the table in paragraph (k)(1) of this section and follow the nutrient levels for children in grades 7-12 in paragraphs (c)(1) and (d)(2) of this section.</P> <P>(iii) <E T="03">Modification for the majority of children.</E> Under the traditional or enhanced food-based menu planning approaches, if only one age or grade is outside the established levels, schools may follow the levels for the majority of children for both quantities (see paragraph (k)) and the nutrition standards in paragraphs (b) and (d) of this section.</P> <P>(3) <E T="03">Use and approval of major changes or new alternate approaches.</E> Within the guidelines established for developing alternate menu planning approaches, school food authorities or State agencies may modify one of the established menu planning approaches in paragraphs (i) through (k) of this section or may develop their own menu planning approach. The alternate menu planning approach must be available in writing for review and monitoring purposes. No formal plan is required; guidance material, a handbook or protocol is sufficient. As appropriate, the material must address how the guidelines in paragraph (l)(4) of this section are met. A State agency that develops an alternate approach that is exempt from FNS approval under paragraph (l)(3)(iii) of this section must notify FNS in writing when implementing the alternate approach.</P> <P>(i) <E T="03">Approval of local level approaches.</E> Any school food authority-developed menu planning approach must have prior State agency review and approval.</P> <P>(ii) <E T="03">Approval of State agency approaches.</E> Unless exempt under paragraph (l)(3)(iii) of this section, any State agency-developed menu planning approach must have prior FNS approval.</P> <P>(iii) <E T="03">State agency approaches not subject to approval.</E> A State agency-developed menu planning approach does not need FNS approval if:</P> <P>(A) Five or more school food authorities in the State use it; and</P> <P>(B) The State agency maintains on-going oversight of the operation and evaluation of the approach and makes any needed adjustments to its policies and procedures to ensure that the appropriate guidelines of paragraph (l)(4) of this section are met.</P> <P>(4) <E T="03">Elements for major changes or new approaches.</E> Any alternate menu planning approach must:</P> <P>(i) Offer fluid milk, as provided in paragraph (m) of this section;<PRTPAGE P="32"/> </P> <P>(ii) Include offer versus serve for senior high students. Alternate menu planning approaches should follow the offer versus serve procedures in paragraphs (i)(2)(ii) and (k)(6) of this section, as appropriate. If these requirements are not followed, the plan must indicate:</P> <P>(A) The affected age/grade groups;</P> <P>(B) The number and type of items (and, if applicable, the quantities for the items) that constitute a reimbursable lunch under offer versus serve;</P> <P>(C) How such procedures will reduce plate waste; and</P> <P>(D) How a reasonable level of calories and nutrients for the lunch as taken is provided;</P> <P>(iii) Meet the Recommended Dietary Allowances and lunchtime energy allowances (nutrient levels) and indicate the age/grade groups served and how the nutrient levels are met for those age/grade groups;</P> <P>(iv) Follow the requirements for competitive foods in § 210.11 and appendix B to this part;</P> <P>(v) Follow the requirements for counting food items and products towards the meal patterns. These requirements are found in paragraphs (k)(3) through (k)(5) and paragraph (m) of this section, in appendices A through C to this part, and in instructions and guidance issued by FNS. This only applies if the alternate approach is a food-based menu planning approach;</P> <P>(vi) Identify a reimbursable lunch at the point of service;</P> <P>(A) To the extent possible, the procedures provided in paragraph (i)(2)(i) of this section for the nutrient standard or assisted nutrient standard menu planning approaches or for food-based menu planning approaches provided in paragraph (k) of this section must be followed. Any instructions or guidance issued by FNS that further defines the elements of a reimbursable lunch must be followed when using the existing regulatory provisions.</P> <P>(B) Any alternate approach that deviates from the provisions in paragraph (i)(2)(i) or paragraph (k) of this section must indicate what constitutes a reimbursable lunch, including the number and type of items (and, if applicable, the quantities for the items) which comprise the lunch, and how a reimbursable lunch is to be identified at the point of service;</P> <P>(vii) Explain how the alternate menu planning approach can be monitored under the applicable provisions of § 210.18 and § 210.19, including a description of the records that will be maintained to document compliance with the program's administrative and nutrition requirements. However, if the procedures under § 210.19 cannot be used to monitor the alternate approach, a description of procedures which will enable the State agency to assess compliance with the nutrition standards in paragraphs (b)(1) through (b)(4) of this section must be included; and</P> <P>(viii) Follow the requirements for weighted analysis and for approved software for nutrient standard menu planning approaches as required by paragraphs (i)(4) and (i)(5) of this section unless a State agency-developed approach meets the criteria in paragraph (l)(3)(iii) of this section. Through September 30, 2003, schools are not required to conduct a weighted analysis.</P> <P>(m) <E T="03">What are the requirements for offering milk?</E> </P> <P>(1) <E T="03">Types of milk.</E> (i) Under all menu planning approaches for lunches, schools must offer students fluid milk. The types of milk offered must be consistent with the types of milk consumed in the previous year. However, if a particular type of milk constituted less than one percent (1%) of the total amount of milk consumed in the previous year, a school does not need to offer this type of milk. This does not preclude schools from offering additional types of milk.</P> <P>(ii) All milk served in the Program must be pasteurized fluid milk which meets State and local standards for such milk. However, infants under 1 year of age must be served breast milk or iron-fortified infant formula. All milk must have vitamins A and D at levels specified by the Food and Drug Administration and must be consistent with State and local standards for such milk.</P> <P>(2) <E T="03">Inadequate milk supply.</E> If a school cannot get a supply of milk, it can still participate in the Program under the following conditions:<PRTPAGE P="33"/> </P> <P>(i) If emergency conditions temporarily prevent a school that normally has a supply of fluid milk from obtaining delivery of such milk, the State agency may allow the school to serve meals during the emergency period with an alternate form of milk or without milk.</P> <P>(ii) If a school is unable to obtain a supply of any type of fluid milk on a continuing basis, the State agency may approve the service of meals without fluid milk if the school uses an equivalent amount of canned milk or dry milk in the preparation of the meals. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, and the Virgin Islands, if a sufficient supply of fluid milk cannot be obtained, “milk” includes reconstituted or recombined milk, or as otherwise allowed by FNS through a written exception.</P> <P>(n) <E T="03">Supplemental food.</E> Eligible schools operating afterschool care programs may be reimbursed for one meal supplement served to an eligible child (as defined in § 210.2) per day.</P> <P>(1) Eligible schools mean schools that:</P> <P>(i) Operate school lunch programs under the National School Lunch Act;</P> <P>(ii) Sponsor afterschool care programs as defined in § 210.2; and</P> <P>(iii) Were participating in the Child and Adult Care Food Program as of May 15, 1989.</P> <P>(2) Meal supplements shall contain two different components from the following four:</P> <P>(i) A serving of fluid milk as a beverage, or on cereal, or used in part for each purpose;</P> <P>(ii) A serving of meat or meat alternate. Nuts and seeds and their butters listed in program guidance are nutritionally comparable to meat or other meat alternates based on available nutritional data. Acorns, chestnuts, and coconuts are excluded and shall not be used as meat alternates due to their low protein content. Nut or seed meals or flours shall not be used as a meat alternate except as defined under appendix A: Alternate Foods for Meals of this part;</P> <P>(iii) A serving of vegetable(s) or fruit(s) or full-strength vegetable or fruit juice, or an equivalent quantity of any combination of these foods. Juice may not be served when milk is served as the only other component;</P> <P>(iv) A serving of whole-grain or enriched bread; or an equivalent serving of cornbread, biscuits, rolls, muffins, etc., made with whole-grain or enriched meal or flour; or a serving of cooked whole-grain or enriched pasta or noodle products such as macaroni, or cereal grains such as rice, bulgur, or corn grits; or an equivalent quantity of any combination of these foods.</P> <P>(3) Snacks served to infants ages birth through 11 months must meet the requirements described in paragraph (n)(3)(iv) of this section. Foods included in the snack must be of a texture and a consistency that are appropriate for the age of the infant being served. The foods must be served during a span of time consistent with the infant's eating habits. For those infants whose dietary needs are more individualized, exceptions to the meal pattern must be made in accordance with the requirements found in paragraph (g)(1) of this section.</P> <P>(i) <E T="03">Breastmilk and iron-fortified formula.</E> Either breastmilk or iron-fortified infant formula, or portions of both, must be served for the entire first year. Snacks containing breastmilk and snacks containing iron-fortified infant formula supplied by the school are eligible for reimbursement. However, infant formula provided by a parent (or guardian) and breastmilk fed directly by the infant's mother, during a visit to the school, contribute to a reimbursable snack only when the school supplies at least one component of the infant's snack.</P> <P>(ii) <E T="03">Fruit juice.</E> Juice should not be offered to infants until they are 6 months of age and ready to drink from a cup. Feeding fruit juice only from a cup will help develop behaviors that may prevent early childhood caries. Fruit juice served as part of the meal pattern for infants 8 through 11 months must be full-strength.</P> <P>(iii) <E T="03">Solid foods.</E> Solid foods of an appropriate texture and consistency are required only when the infant is developmentally ready to accept them. The school should consult with the infant's parent (or guardian) in making the decision to introduce solid foods. Solid foods should be introduced one at a <PRTPAGE P="34"/>time, on a gradual basis, with the intent of ensuring the infant's health and nutritional well-being.</P> <P>(iv) <E T="03">Infant meal pattern.</E> Infant snacks must have, at a minimum, breastmilk or iron-fortified infant formula, or portions of both, in the appropriate amount indicated for the infant's age. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered. In these situations, additional breastmilk must be offered if the infant is still hungry. Some infants may be developmentally ready to accept an additional food component. Snacks are reimbursable when schools provide all of the components in the meal pattern that the infant is developmentally ready to accept.</P> <P>(A) <E T="03">Birth through 3 months.</E> 4 to 6 fluid ounces of breastmilk or iron-fortified infant formula—only breastmilk or iron-fortified formula is required to meet the infant's nutritional needs.</P> <P>(B) <E T="03">4 through 7 months.</E> 4 to 6 fluid ounces of breastmilk or iron-fortified infant formula—only breastmilk or iron-fortified formula is required to meet the infant's nutritional needs.</P> <P>(C) <E T="03">8 through 11 months.</E> 2 to 4 fluid ounces of breastmilk, iron-fortified infant formula, or full strength fruit juice; and 0 to <FR>1/2</FR> slice of crusty bread (if developmentally ready) or 0 to 2 cracker type products (if developmentally ready), which are made from whole-grain or enriched meal or flour, and suitable as a finger food for an infant.</P> <P>(4) The minimum amounts of food components to be served as meal supplements as set forth in paragraphs (n)(2) and (n)(3) of this section are as follows. Select two different components from the four listed. (Juice may not be served when milk is served as the only other component.)</P> <GPOTABLE CDEF="s50,r50,r50" COLS="3" OPTS="L2,i1"> <TTITLE>Snack Pattern for Infants</TTITLE> <BOXHD> <CHED H="1">Birth through 3 months</CHED> <CHED H="1">4 through through 7 months</CHED> <CHED H="1">8 through 11 months</CHED> </BOXHD> <ROW> <ENT I="01">4-6 fluid ounces of formula <SU>1</SU> or breastmilk <SU>2</SU> <SU>3</SU> </ENT> <ENT>4-6 fluid ounces of formula <SU>1</SU> or breastmilk <SU>2</SU> <SU>3</SU> </ENT> <ENT>2-4 fluid ounces of formula <SU>1</SU>, breastmilk <SU>2</SU> <SU>3</SU>, or fruit juice <SU>4</SU>; and<LI>0-<FR>1/2</FR> slice of bread <SU>5</SU> or 0-2 crackers <SU>5</SU>.</LI> </ENT> </ROW> <TNOTE> <SU>1</SU> Infant formula must be iron-fortified.</TNOTE> <TNOTE> <SU>2</SU> Breastmilk or iron-fortified formula, or portions of both, may be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months.</TNOTE> <TNOTE> <SU>3</SU> For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered if the infant is still hungry.</TNOTE> <TNOTE> <SU>4</SU> Fruit juice must be full-strength.</TNOTE> <TNOTE> <SU>5</SU> A serving of this component must be made from whole-grain or enriched meal or flour. It is required only when the infant is developmentally ready to accept it.</TNOTE> </GPOTABLE> <PRTPAGE P="35"/> <GPOTABLE CDEF="s50,xl100,xl100,xl100" COLS="4" OPTS="L2,i1"> <TTITLE>Supplements for Infants</TTITLE> <BOXHD> <CHED H="1"/> <CHED H="1">Birth through 3 months</CHED> <CHED H="1">4 through 7 months</CHED> <CHED H="1">8 through 11 months</CHED> </BOXHD> <ROW> <ENT I="01">Supplement (snack)</ENT> <ENT>4-6 fl. oz. breast milk <E T="51">2, 3</E> or formula <SU>1</SU> </ENT> <ENT>4-6 fl. oz. breast milk <E T="51">2, 3</E> or formula <SU>1</SU> </ENT> <ENT>2-4 fl. oz breast milk <E T="51">2, 3</E>, formula <E T="51">1</E>, or fruit juice <SU>4</SU>;</ENT> </ROW> <ROW> <ENT I="22"/> <ENT/> <ENT/> <ENT>0-<FR>1/2</FR> bread <SU>5</SU> or</ENT> </ROW> <ROW> <ENT I="22"/> <ENT/> <ENT/> <ENT>0-2 crackers <SU>5</SU>.</ENT> </ROW> <TNOTE> <SU>1</SU> Infant formula shall be iron-fortified.</TNOTE> <TNOTE> <SU>2</SU> It is recommended that breast milk be served in place of formula from birth through 11 months.</TNOTE> <TNOTE> <SU>3</SU> For some breastfed infants who regularly consume less than the minimum amount of breast milk per feeding, a serving of less than the minimum amount of breast milk may be offered with additional breast milk offered if the infant is still hungry.</TNOTE> <TNOTE> <SU>4</SU> Fruit juice shall be full-strength.</TNOTE> <TNOTE> <SU>5</SU> Bread and bread alternates shall be made from whole-grain or enriched meal or flour. A serving of this component shall be optional.</TNOTE> </GPOTABLE> <PRTPAGE P="36"/> <P>(o) <E T="03">What are the requirements for the infant lunch pattern?</E> </P> <P>(1) <E T="03">Definitions.</E> (i) Infant cereal means any iron-fortified dry cereal especially formulated and generally recognized as cereal for infants which is routinely mixed with breast milk or iron-fortified infant formula prior to consumption.</P> <P>(ii) Infant formula means any iron-fortified formula intended for dietary use solely as a food for normal, healthy infants. Formulas specifically formulated for infants with inborn errors of metabolism or digestive or absorptive problems are not included in this definition. Infant formula, when served, must be in liquid state at recommended dilution.</P> <P>(2) <E T="03">Feeding lunches to infants.</E> Lunches served to infants ages birth through 11 months must meet the requirements described in paragraph (o)(5) of this section. Foods included in the lunch must be of a texture and a consistency that are appropriate for the age of the infant being served. The foods must be served during a span of time consistent with the infant's eating habits. For those infants whose dietary needs are more individualized, exceptions to the meal pattern must be made in accordance with the requirements found in paragraph (g)(1) of this section.</P> <P>(3) <E T="03">Breastmilk and iron-fortified formula.</E> Either breastmilk or iron-fortified infant formula, or portions of both, must be served for the entire first year. Meals containing breastmilk and meals containing iron-fortified infant formula supplied by the school are eligible for reimbursement. However, infant formula provided by a parent (or guardian) and breastmilk fed directly by the infant's mother, during a visit to the school, contribute to a reimbursable lunch only when the school supplies at least one component of the infant's meal.</P> <P>(4) <E T="03">Solid foods.</E> For infants ages 4 through 7 months, solid foods of an appropriate texture and consistency are required only when the infant is developmentally ready to accept them. The school should consult with the infant's parent (or guardian) in making the decision to introduce solid foods. Solid foods should be introduced one at a time, on a gradual basis, with the intent of ensuring the infant's health and nutritional well-being.</P> <P>(5) <E T="03">Infant meal pattern.</E> Infant lunches must have, at a minimum, each of the food components indicated, in the amount that is appropriate for the infant's age. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered. In these situations, additional breastmilk must be offered if the infant is still hungry. Lunches may include portions of breastmilk and iron-fortified infant formula as long as the total number of ounces meets, or exceeds, the minimum amount required of this food component. Similarly, to meet the component requirements for vegetables and fruit, portions of both may be served.</P> <P>(i) <E T="03">Birth through 3 months.</E> 4 to 6 fluid ounces of breastmilk or iron-fortified infant formula—only breastmilk or iron-fortified formula is required to meet the infant's nutritional needs.</P> <P>(ii) <E T="03">4 through 7 months.</E> Breastmilk or iron-fortified formula is required. Some infants may be developmentally ready for solid foods of an appropriate texture and consistency. Lunches are reimbursable when schools provide all of the components in the meal pattern that the infant is developmentally ready to accept.</P> <P>(A) 4 to 8 fluid ounces of breastmilk or iron-fortified infant formula; and</P> <P>(B) 0 to 3 tablespoons of iron-fortified dry infant cereal; and</P> <P>(C) 0 to 3 tablespoons of fruit or vegetable.</P> <P>(iii) <E T="03">8 through 11 months.</E> Breastmilk or iron-fortified formula and solid foods of an appropriate texture and consistency are required.</P> <P>(A) 6 to 8 fluid ounces of breastmilk or iron-fortified infant formula; and</P> <P>(B) 2 to 4 tablespoons of iron-fortified dry infant cereal; and/or 1 to 4 tablespoons of meat, fish, poultry, egg yolk, or cooked dry beans or peas; or <FR>1/2</FR> to 2 ounces (weight) of cheese; or 1 to 4 ounces (volume) of cottage cheese; or 1 to 4 ounces (weight) of cheese food or cheese spread; and</P> <P>(C) 1 to 4 tablespoons of fruit or vegetable.<PRTPAGE P="37"/> </P> <P>(6) <E T="03">Infant meal pattern table.</E> The minimum amounts of food components to serve to infants, as described in paragraph (o)(5) of this section, are:</P> <GPOTABLE CDEF="s100,r100,r100" COLS="3" OPTS="L1,i1"> <TTITLE>Lunch Pattern for Infants</TTITLE> <BOXHD> <CHED H="1">Birth through 3 months</CHED> <CHED H="1">4 through 7 months</CHED> <CHED H="1">8 through 11 months</CHED> </BOXHD> <ROW> <ENT I="01">4-6 fluid ounces of formula<E T="51">1</E> or breastmilk <E T="51">2 3</E> </ENT> <ENT O="xl">4-8 fluid ounces of formula<E T="51">1</E> or breastmilk<E T="51">2 3</E>; and<LI>0-3 tablespoons of infant cereal <E T="51">1 4</E>; and</LI> <LI>0-3 tablespoons of fruit or vegetable or both <E T="51">4</E> </LI> </ENT> <ENT O="xl">6-8 fluid ounces of formula <E T="51">1</E> or breastmilk <E T="51">2 3</E>; and<LI>2-4 tablespoons of infant cereal<E T="51">1</E>; and/or</LI> <LI>1-4 tablespoons of meat, fish, poultry, egg yolk, cooked dry beans or peas; or</LI> <LI> <FR>1/2</FR>-2 ounces of cheese; or</LI> <LI>1-4 ounces (volume) of cottage cheese; or</LI> <LI>1-4 ounces (weight) of cheese food or cheese spread; and</LI> <LI>1-4 tablespoons of fruit or vegetable or both.</LI> </ENT> </ROW> <TNOTE> <E T="51">1</E> Infant formula and dry infant cereal must be iron-fortified.</TNOTE> <TNOTE> <E T="51">2</E> Breastmilk or formula, or portions of both, may be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months.</TNOTE> <TNOTE> <E T="51">3</E> For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered if the infant is still hungry.</TNOTE> <TNOTE> <E T="51">4</E> A serving of this component is required only when the infant is developmentally ready to accept it.</TNOTE> </GPOTABLE> <CITA>[60 FR 31208, June 13, 1995, 60 FR 57146, Nov. 14, 1995, as amended at; 62 FR 10189, Mar. 6, 1997; 64 FR 61773, Nov. 15, 1999; 65 FR 26913, May 9, 2000; 65 FR 31371, May 17, 2000; 65 FR 36317, June 8, 2000; 67 FR 36783, May 28, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.11</SECTNO> <SUBJECT>Competitive food services.</SUBJECT> <P>(a) <E T="03">Definitions.</E> For the purpose of this section:</P> <P>(1) <E T="03">Competitive foods</E> means any foods sold in competition with the Program to children in food service areas during the lunch periods.</P> <P>(2) <E T="03">Food of minimal nutritional value</E> means: (i) In the case of artificially sweetened foods, a food which provides less than five percent of the Reference Daily Intakes (RDI) for each of eight specified nutrients per serving; and (ii) in the case of all other foods, a food which provides less than five percent of the RDI for each of eight specified nutrients per 100 calories and less than five percent of the RDI for each of eight specified nutrients per serving. The eight nutrients to be assessed for this purpose are—protein, vitamin A, vitamin C, niacin, riboflavin, thiamine, calcium, and iron. All categories of food of minimal nutritional value and petitioning requirements for changing the categories are listed in appendix B of this part.</P> <P>(b) <E T="03">General.</E> State agencies and school food authorities shall establish such rules or regulations as are necessary to control the sale of foods in competition with lunches served under the Program. Such rules or regulations shall prohibit the sale of foods of minimal nutritional value, as listed in appendix B of this part, in the food service areas during the lunch periods. The sale of other competitive foods may, at the discretion of the State agency and school food authority, be allowed in the food service area during the lunch period only if all income from the sale of such foods accrues to the benefit of the nonprofit school food service or the school or student organizations approved by the school. State agencies and school food authorities may impose additional restrictions on the sale of and income from all foods sold at any time throughout schools participating in the Program.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 59 FR 23614, May 6, 1994]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.12</SECTNO> <SUBJECT>Student, parent and community involvement.</SUBJECT> <P>(a) <E T="03">General.</E> School food authorities shall promote activities to involve students and parents in the Program. Such activities may include menu planning, enhancement of the eating environment, Program promotion, and related student-community support activities. School food authorities are encouraged to use the school food service program to teach students about good nutrition practices and to involve the <PRTPAGE P="38"/>school faculty and the general community in activities to enhance the Program.</P> <P>(b) <E T="03">Food service management companies.</E> School food authorities contracting with a food service management company shall comply with the provisions of § 210.16(a) regarding the establishment of an advisory board of parents, teachers and students.</P> <P>(c) <E T="03">Residential child care institutions.</E> Residential child care institutions shall comply with the provisions of this section, to the extent possible.</P> </SECTION> <SECTION> <SECTNO>§ 210.13</SECTNO> <SUBJECT>Facilities management.</SUBJECT> <P>(a) <E T="03">Health standards.</E> The school food authority shall ensure that food storage, preparation and service is in accordance with the sanitation and health standards established under State and local law and regulations.</P> <P>(b) <E T="03">Food safety inspections.</E>—(1) <E T="03">In general.</E> Except as provided in paragraph (b)(2) of this section, schools shall, at least once during each school year, obtain a food safety inspection conducted by a State or local governmental agency responsible for food safety inspections.</P> <P>(2) <E T="03">Exception.</E> Paragraph (b)(1) of this section shall not apply to a school if a food safety inspection of the school is required by a State or local governmental agency responsible for food safety inspections.</P> <P>(c) <E T="03">Storage.</E> The school food authority shall ensure that the necessary facilities for storage, preparation and service of food are maintained. Facilities for the handling, storage, and distribution of purchased and donated foods shall be such as to properly safeguard against theft, spoilage and other loss.</P> <CITA>[54 FR 29147, Aug. 2, 1988, as amended at 64 FR 50740, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.14</SECTNO> <SUBJECT>Resource management.</SUBJECT> <P>(a) <E T="03">Nonprofit school food service.</E> School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, <E T="03">except that,</E> such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. Expenditures of nonprofit school food service revenues shall be in accordance with the financial management system established by the State agency under § 210.19(a) of this part. School food authorities may use facilities, equipment, and personnel supported with nonprofit school food revenues to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 <E T="03">et seq.</E>).</P> <P>(b) <E T="03">Net cash resources.</E> The school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service or such other amount as may be approved by the State agency in accordance with § 210.19(a).</P> <P>(c) <E T="03">Financial assurances.</E> The school food authority shall meet the requirements of the State agency for compliance with § 210.19(a) including any separation of records of nonprofit school food service from records of any other food service which may be operated by the school food authority as provided in paragraph (a) of this section.</P> <P>(d) <E T="03">Use of donated foods.</E> The school food authority shall enter into an agreement with the distributing agency to receive donated foods as required by part 250 of this chapter. In addition, the school food authority shall accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 60 FR 31215, June 13, 1995]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.15</SECTNO> <SUBJECT>Reporting and recordkeeping.</SUBJECT> <P>(a) <E T="03">Reporting summary.</E> Participating school food authorities are required to submit forms and reports to the State agency or the distributing agency, as appropriate, to demonstrate compliance with Program requirements. These reports include, but are not limited to:</P> <P>(1) A Claim for Reimbursement and, for the month of October and as otherwise specified by the State agency, supporting data as specified in accordance with § 210.8 of this part;</P> <P>(2) An application and agreement for Program operations between the school food authority and the State agency, <PRTPAGE P="39"/>and a Free and Reduced Price Policy Statement as required under § 210.9;</P> <P>(3) A written response to reviews pertaining to corrective action taken for Program deficiencies;</P> <P>(4) A commodity school's preference whether to receive part of its donated food allocation in cash for processing and handling of donated foods as required under § 210.19(b);</P> <P>(5) A written response to audit findings pertaining to the school food authority's operation as required under § 210.22; and</P> <P>(6) Information on civil rights complaints, if any, and their resolution as required under § 210.23.</P> <P>(b) <E T="03">Recordkeeping summary.</E> In order to participate in the Program, a school food authority shall maintain records to demonstrate compliance with Program requirements. These records include but are not limited to:</P> <P>(1) Documentation of participation data by school in support of the Claim for Reimbursement and data used in the claims review process, as required under § 210.8(a), (b), and (c) of this part;</P> <P>(2) Production and menu records and, if appropriate, nutrition analysis records as required under § 210.10, whichever is applicable.</P> <P>(3) Participation records to demonstrate positive action toward providing one lunch per child per day as required under § 210.10(a)(2), whichever is applicable;</P> <P>(4) Currently approved and denied applications for free and reduced price lunches and a description of the verification activities, including verified applications, and any accompanying source documentation in accordance with 7 CFR 245.6a of this Title.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12582, Mar. 28, 1989; 56 FR 32941, July 17, 1991; 60 FR 31215, June 13, 1995; 65 FR 26912, 26922, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.16</SECTNO> <SUBJECT>Food service management companies.</SUBJECT> <P>(a) <E T="03">General.</E> Any school food authority (including a State agency acting in the capacity of a school food authority) may contract with a food service management company to manage its food service operation in one or more of its schools. However, no school or school food authority may contract with a food service management company to operate an a la carte food service unless the company agrees to offer free, reduced price and paid reimbursable lunches to all eligible children. Any school food authority that employs a food service management company in the operation of its nonprofit school food service shall:</P> <P>(1) Adhere to the procurement standards specified in § 210.21 when contracting with the food service management company;</P> <P>(2) Ensure that the food service operation is in conformance with the school food authority's agreement under the Program;</P> <P>(3) Monitor the food service operation through periodic on-site visits;</P> <P>(4) Retain control of the quality, extent, and general nature of its food service, and the prices to be charged the children for meals;</P> <P>(5) Retain signature authority on the State agency-school food authority agreement, free and reduced price policy statement and claims;</P> <P>(6) Ensure that all federally donated foods received by the school food authority and made available to the food service management company accrue only to the benefit of the school food authority's nonprofit school food service and are fully utilized therein;</P> <P>(7) Maintain applicable health certification and assure that all State and local regulations are being met by a food service management company preparing or serving meals at a school food authority facility; and</P> <P>(8) Establish an advisory board composed of parents, teachers, and students to assist in menu planning.</P> <P>(b) <E T="03">Invitation to bid.</E> In addition to adhering to the procurement standards under § 210.21, school food authorities contracting with food service management companies shall ensure that:</P> <P>(1) The invitation to bid or request for proposal contains a 21-day cycle menu developed in accordance with the provisions of § 210.10, to be used as a standard for the purpose of basing bids or estimating average cost per meal. If a school food authority has no capability to prepare a cycle menu, it may, with State agency approval, request that a 21-day cycle menu developed in <PRTPAGE P="40"/>accordance with the provisions of § 210.10, be developed and submitted by each food service management company which intends to submit a bid or proposal to the school food authority. The food service management company must adhere to the cycle for the first 21 days of meal service. Changes thereafter may be made with the approval of the school food authority.</P> <P>(2) Any invitation to bid or request for proposal indicate that nonperformance subjects the food service management company to specified sanctions in instances where the food service management company violates or breaches contract terms. The school food authority shall indicate these sanctions in accordance with the procurement provisions stated in § 210.21.</P> <P>(c) <E T="03">Contracts.</E> Contracts that permit all income and expenses to accrue to the food service management company and “cost--plus--a--percentage--of--cost” and “cost--plus--a--percentage--of--income” contracts are prohibited. Contracts that provide for fixed fees such as those that provide for management fees established on a per meal basis are allowed. Contractual agreements with food service management companies shall include provisions which ensure that the requirements of this section are met. Such agreements shall also include the following:</P> <P>(1) The food service management company shall maintain such records as the school food authority will need to support its Claim for Reimbursement under this part, and shall, at a minimum, report claim information to the school food authority promptly at the end of each month. Such records shall be made available to the school food authority, upon request, and shall be retained in accordance with § 210.23(c).</P> <P>(2) The food service management company shall have State or local health certification for any facility outside the school in which it proposes to prepare meals and the food service management company shall maintain this health certification for the duration of the contract.</P> <P>(3) No payment is to be made for meals that are spoiled or unwholesome at time of delivery, do not meet detailed specifications as developed by the school food authority for each food component specified in § 210.10, or do not otherwise meet the requirements of the contract. Specifications shall cover items such a grade, purchase units, style, condition, weight, ingredients, formulations, and delivery time.</P> <P>(d) <E T="03">Duration of contract</E>. The contract between a school food authority and food service management company shall be a of a duration of no longer than 1 year; and options for the yearly renewal of a contract signed after February 16, 1988, may not exceed 4 additional years. All contracts shall include a termination clause whereby either party may cancel for cause with 60-day notification.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 60 FR 31215, June 13, 1995; 65 FR 26912, May 9, 2000]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Requirements for State Agency Participation</HD> <SECTION> <SECTNO>§ 210.17</SECTNO> <SUBJECT>Matching Federal funds.</SUBJECT> <P>(a) <E T="03">State revenue matching.</E> For each school year, the amount of State revenues appropriated or used specifically by the State for program purposes shall not be less than 30 percent of the funds received by such State under section 4 of the National School Lunch Act during the school year beginning July 1, 1980; <E T="03">provided that,</E> the State revenues derived from the operation of such programs and State revenues expended for salaries and administrative expenses of such programs at the State level are not considered in this computation. However, if the per capita income of any State is less than the per capita income of the United States, the matching requirements so computed shall be decreased by the percentage by which the State per capita income is below the per capita income of the United States.</P> <P>(b) <E T="03">Private school exemption</E>. No State in which the State agency is prohibited by law from disbursing State appropriated funds to nonpublic schools shall be required to match general cash assistance funds expended for meals served in such schools, or to disburse to such schools any of the State revenues required to meet the requirements <PRTPAGE P="41"/>of paragraph (a) of this section. Furthermore, the requirements of this section do not apply to schools in which the Program is administered by a FNSRO.</P> <P>(c) <E T="03">Territorial waiver.</E> American Samoa and the Commonwealth of the Northern Mariana Islands shall be exempted from the matching requirements of paragraph (a) of this section if their respective matching requirements are under $100,000.</P> <P>(d) <E T="03">Applicable revenues</E>. The following State revenues, appropriated or used specifically for program purposes which are expended for any school year shall be eligible for meeting the applicable percentage of the matching requirements prescribed in paragraph (a) of this section for that school year:</P> <P>(1) State revenues disbursed by the State agency to school food authorities for program purposes, including revenue disbursed to nonprofit private schools where the State administers the program in such schools;</P> <P>(2) State revenues made available to school food authorities and transferred by the school food authorities to the nonprofit school food service accounts or otherwise expended by the school food authorities in connection with the nonprofit school food service program; and</P> <P>(3) State revenues used to finance the costs (other than State salaries or other State level administrative costs) of the nonprofit school food service program, i.e.:</P> <P>(i) Local program supervision;</P> <P>(ii) Operating the program in participating schools; and</P> <P>(iii) The intrastate distribution of foods donated under part 250 of this chapter to schools participating in the program.</P> <P>(e) <E T="03">Distribution of matching revenues</E>. All State revenues made available under paragraph (a) of this section are to be disbursed to school food authorities participating in the Program, <E T="03">except as</E> provided for under paragraph (b) of this section. Distribution of matching revenues may be made with respect to a class of school food authorities as well as with respect to individual school food authorities.</P> <P>(f) <E T="03">Failure to match</E>. If, in any school year, a State fails to meet the State revenue matching requirement, as prescribed in paragraph (a) of this section, the general cash assistance funds utilized by the State during that school year shall be subject to recall by and repayment to FNS.</P> <P>(g) <E T="03">Reports.</E> Within 120 days after the end of each school year, each State agency shall submit an Annual Report of Revenues (FNS-13) to FNS. This report identifies the State revenues to be counted toward the State revenue matching requirements specified in paragraph (a) of this section.</P> <P>(h) <E T="03">Accounting system.</E> The State agency shall establish or cause to be established a system whereby all expended State revenues counted in meeting the matching requirements prescribed in paragraph (a) of this section are properly documented and accounted for.</P> </SECTION> <SECTION> <SECTNO>§ 210.18</SECTNO> <SUBJECT>Administrative reviews.</SUBJECT> <P>(a) <E T="03">Implementation dates.</E> For the school year beginning July 1, 1992, each State agency shall conduct administrative reviews as prescribed under this section. However, FNS will approve a State agency's written request if FNS determines that the State agency has demonstrated good cause to delay implementation of the provisions specified under this section to January 1, 1993. At State agency discretion, State agencies may begin implementation of the provisions of this section on August 16, 1991. FNS review responsibilities are specified under § 210.29 of this part.</P> <P>(b) <E T="03">Definitions.</E> The following definitions are provided in order to clarify State agency administrative review requirements:</P> <P>(1) <E T="03">Administrative reviews</E> means the initial comprehensive on-site evaluation of all school food authorities participating in the Program in accordance with the provisions of this section. The term “administrative review” is used to reflect a review of both critical and general areas in accordance with paragraphs (g) and (h) of this section, and includes other areas of Program operations determined by the State agency to be important to Program performance.</P> <P>(2) <E T="03">Critical areas</E> means the following two performance standards described in <PRTPAGE P="42"/>detail in paragraph (g) of this section which serve as measures of compliance with Program regulations:</P> <P>(i) Performance Standard 1—Certification/Counting/Claiming—All free, reduced price and paid lunches claimed for reimbursement are served only to children eligible for free, reduced price and paid lunches, respectively; and counted, recorded, consolidated and reported through a system which consistently yields correct claims.</P> <P>(ii) <E T="03">Performance Standard 2—Meal Elements.</E> Lunches claimed for reimbursement within the school food authority contain meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10.</P> <P>(3) <E T="03">Documented corrective action</E> means written notification required of the school food authority to certify that the corrective action required for each violation has been completed and to notify the State agency of the dates of completion. Documented corrective action may be provided at the time of the review or may be submitted to the State agency within specified timeframes.</P> <P>(4) <E T="03">Follow-up reviews</E> means any visit(s) to the school food authority subsequent to the administrative review to ensure corrective actions are taken.</P> <P>(5) <E T="03">General areas</E> means the areas of review specified in paragraph (h) of this section.</P> <P>(6) <E T="03">Large school food authority</E> means, in any State:</P> <P>(i) All school food authorities that participate in the Program and have enrollments of 40,000 children or more each; or</P> <P>(ii) If there are less than two school food authorities with enrollments of 40,000 or more, the two largest school food authorities that participate in the Program and have enrollments of 2,000 children or more each.</P> <P>(7) <E T="03">Participation factor</E> means the percentages of children approved by the school for free lunches, reduced price lunches, and paid lunches, respectively, who are participating in the Program. The free participation factor is derived by dividing the number of free lunches claimed for any given period by the product of the number of children approved for free lunches for the same period times the operating days in that period. A similar computation is used to determine the reduced price and paid participation factors. The number of children approved for paid lunches is derived by subtracting the number of children approved for free and reduced price lunches for any given period from the total number of children enrolled in the reviewed school for the same period of time, if available. If such enrollment figures are not available, the most recent total number of children enrolled shall be used. If school food authority participation factors are unavailable or unreliable, State-wide data shall be employed.</P> <P>(8) <E T="03">Review period</E> means the period of time covered by the administrative review or follow-up review. The review period is specified in paragraph (f)(2) of this section.</P> <P>(9) <E T="03">Review threshold</E> means the degree of error in a critical area of review which, if exceeded during an administrative review or follow-up review of a school food authority, may trigger a follow-up review of that school food authority.</P> <P>(10) <E T="03">Small school food authority</E> means, in any State, a school food authority that participates in the Program and is not a large school food authority, as defined in this section.</P> <P>(c) <E T="03">Timing of reviews.</E> The first year of the first 5-year review cycle began on July 1, 1992, or as otherwise authorized under paragraph (a) of this section and shall end on June 30, 1994. For each State agency, the first 5-year review cycle shall end on June 30, 1998. Administrative reviews and follow-up reviews shall be conducted as follows:</P> <P>(1) <E T="03">Administrative reviews.</E> At a minimum, State agencies shall conduct administrative reviews of all school food authorities at least once during each 5-year review cycle; provided that each school food authority is reviewed at least once every 6 years. The on-site portion of the administrative review shall be completed during the school year in which the review was begun.</P> <P>(2) <E T="03">Expanded review cycle.</E> State agencies are encouraged to conduct administrative reviews of large school food authorities and of any school food authorities which may benefit from a <PRTPAGE P="43"/>more frequent interval than the minimum 5-year cycle required in paragraph (c)(1) of this section.</P> <P>(3) <E T="03">Exceptions.</E> FNS may, on an individual school food authority basis, approve written requests for 1-year extensions to the 6-year review interval specified in paragraph (c)(1) of this section if FNS determines this requirement conflicts with efficient State agency management of the Program.</P> <P>(4) <E T="03">Follow-up reviews.</E> The State agency is encouraged to conduct first follow-up reviews in the same school year as the administrative review; but in no event shall first follow-up reviews be conducted later than December 31 of the school year following the administrative review. Subsequent follow-up reviews shall be scheduled in accordance with paragraph (i)(5) of this section.</P> <P>(d) <E T="03">Scheduling school food authorities.</E> The State agency shall use its own criteria to schedule school food authorities for administrative reviews; provided that the requirements of paragraph (c) of this section are met. State agencies are encouraged to take into consideration the findings of the claims review process required under § 210.8(b)(2) of this part in the selection of school food authorities.</P> <P>(1) <E T="03">Schedule of reviews.</E> To ensure no unintended overlap occurs, the State agency shall inform FNS of the anticipated schedule of school food authority reviews upon request.</P> <P>(2) <E T="03">Reporting follow-up review activity.</E> At such time as the State agency determines that a follow-up review is needed, the State agency shall notify FNS of the names of those large school food authorities exceeding any one of the critical area review thresholds specified in paragraph (i) of this section.</P> <P>(3) <E T="03">Exceptions.</E> In any school year in which FNS or OIG conducts a review or investigation of a school food authority in accordance with § 210.19(a)(5) of this part, the State agency shall, unless otherwise authorized by FNS, delay conduct of a scheduled administrative review until the following school year. The State agency shall document any exception authorized under this paragraph.</P> <P>(e) <E T="03">Number of schools to review.</E> The State agency is encouraged to review all schools meeting the school selection criteria specified in paragraph (e)(1) of this section. At a minimum, the State agency shall review the number of schools specified in paragraph (e)(1) of this section and shall select the schools to be reviewed on the basis of the school selection criteria specified in paragraph (e)(2) of this section.</P> <P>(1) <E T="03">Minimum number of schools.</E> Except for residential child care institutions, the State agency shall review all schools with a free average daily participation of 100 or more and a free participation factor of 100 percent or more. In no event shall the State agency review less than the minimum number of schools illustrated in table A:</P> <GPOTABLE CDEF="s10,15" COLS="2" OPTS="L2,i1"> <TTITLE>Table A</TTITLE> <BOXHD> <CHED H="1">No. of schools in the school food authority</CHED> <CHED H="1">Minimum no. of schools to be reviewed</CHED> </BOXHD> <ROW> <ENT I="01">1 to 5</ENT> <ENT>1</ENT> </ROW> <ROW> <ENT I="01">6 to 10</ENT> <ENT>2</ENT> </ROW> <ROW> <ENT I="01"> 11 to 20</ENT> <ENT>3</ENT> </ROW> <ROW> <ENT I="01"> 21 to 40</ENT> <ENT>4</ENT> </ROW> <ROW> <ENT I="01"> 41 to 60</ENT> <ENT>6</ENT> </ROW> <ROW> <ENT I="01"> 61 to 80</ENT> <ENT>8</ENT> </ROW> <ROW> <ENT I="01"> 81 to 100</ENT> <ENT>10</ENT> </ROW> <ROW> <ENT I="01">101 or more</ENT> <ENT> <SU>1</SU> 12</ENT> </ROW> <TNOTE> <SU>1</SU> Twelve plus 5 percent of the number of schools over 100. Fractions shall be rounded to the nearest whole number.</TNOTE> </GPOTABLE> <P>(2) <E T="03">School selection criteria.</E> </P> <P>(i) Selection of additional schools to meet the minimum number of schools required under paragraph (e)(1) of this section, shall be based on the following criteria:</P> <P>(A) Elementary schools with a free average daily participation of 100 or more and a free participation factor of 97 percent or more;</P> <P>(B) Secondary schools with a free average daily participation of 100 or more and a free participation factor of 77 percent or more; and</P> <P>(C) Combination schools with a free average daily participation of 100 or more and a free participation factor of 87 percent or more. A combination school means a school with a mixture of elementary and secondary grades.</P> <P>(ii) When the number of schools selected on the basis of the criteria established in paragraph (A) through paragraph (C) of this paragraph are not <PRTPAGE P="44"/>sufficient to meet the minimum number of schools required under paragraph (e)(1) of this section, the schools selected for review shall be selected on the basis of State agency criteria which may include low participation schools, recommendations from a food service director based on findings from the on-site visits or the claims review process required under § 210.8(a) of this part; or any school in which the daily lunch counts appear questionable, e.g., identical or very similar claiming patterns, and/or large changes in free lunch counts.</P> <P>(3) <E T="03">Pervasive problems.</E> If the State agency review finds pervasive problems in a school food authority, FNS may authorize the State agency to cease review activities prior to reviewing the required number of schools under paragraph (e)(1) of this section. Where FNS authorizes the State agency to cease review activity, FNS may either conduct the review activity itself or refer the school food authority to OIG.</P> <P>(f) <E T="03">Scope of review.</E> During the course of an administrative review, each State agency shall monitor compliance with the critical and general areas identified in paragraphs (g) and (h) of this section.</P> <P>(1) <E T="03">Review form.</E> State agencies shall use the administrative review form prescribed by FNS for the critical areas of review specified in paragraph (g) of this section. State agencies may use their own administrative review form for the general areas of review specified in paragraph (h) of this section.</P> <P>(2) <E T="03">Review period.</E> </P> <P>(i) The review period for administrative reviews and follow-up reviews shall cover, at a minimum, the most recent month for which a Claim for Reimbursement was submitted; provided that such Claim for Reimbursement covers at least 10 operating days.</P> <P>(ii) Subject to FNS approval, the State agency may conduct a review early in the school year, prior to the submission of a Claim for Reimbursement. In such cases, the review period shall be the prior month of operation in the current school year, provided that such month includes at least 10 operating days.</P> <P>(3) <E T="03">Audit findings.</E> To prevent duplication of effort, the State agency may use any recent and currently applicable findings from Federally-required audit activity or from any State-imposed audit requirements. Such findings may be used only insofar as they pertain to the reviewed school(s) or the overall operation of the school food authority and they are relevant to the review period. The State agency shall document the source and the date of the audit.</P> <P>(g) <E T="03">Critical areas of review.</E> The performance standards listed in this paragraph are deemed critical since compliance in these areas is directly linked to the service of a reimbursable lunch.</P> <P>(1) <E T="03">Performance Standard 1 (All free, reduced price and paid lunches claimed for reimbursement are served only to children eligible for free, reduced price and paid lunches, respectively; and are counted, recorded, consolidated and reported through a system which consistently yields correct claims.)</E> The State agency shall determine that the free and reduced price eligibility determinations are correct. In addition, the State agency shall determine that for each day of operation for the review period, the number of free, reduced price and paid lunches claimed for each reviewed school is not more than the number of lunches served to children eligible for free, reduced price and paid lunches, respectively, in those schools for the review period. The State agency shall also determine that a lunch counting system is being used which accurately counts, records, consolidates and reports the reimbursable lunches served, by type.</P> <P>(i) For each school reviewed, the State agency shall:</P> <P>(A) Determine the number of children eligible for free, reduced price and paid lunches, by type, for the review period. To make this determination:</P> <P>(<E T="03">1</E>) The State agency shall:</P> <P>(<E T="03">i</E>) Review all approved free and reduced price applications for children in the reviewed schools back to the beginning of the school year to determine whether each child's application is complete and correctly approved in accordance with all applicable provisions of 7 CFR part 245; or</P> <P>(<E T="03">ii</E>) Review all approved free and reduced price applications effective for the review period for children in the reviewed schools; or<PRTPAGE P="45"/> </P> <P>(<E T="03">iii</E>) Review all approved free and reduced price applications effective on the day(s) the review is conducted for children in the reviewed schools.</P> <P>(<E T="03">2</E>) In lieu of reviewing all of the free and reduced price applications as required under paragraph (g)(1)(i)(A)(<E T="03">1</E>) of this section, the State agency may review a statistically valid sample of those applications. If the State agency chooses to review a statistically valid sample of applications, the State agency shall ensure that the sample size is large enough so that there is a 95 percent chance that the actual error rate for all applications is not less than 2 percentage points less than the error rate found in the sample (i.e., the lower bound of the one-sided 95 percent confidence interval is no more than 2 percentage points less than the point estimate). In addition, the State agency shall determine the need for follow-up reviews and base fiscal action upon the error rate found in the sample.</P> <P>(<E T="03">3</E>) Evaluate whether the previous year's eligibility determinations are used after 30 operating days following the first day of school, or as otherwise established by the State agency; provided that the State agency-developed timeframe does not exceed the 30 operating day limit.</P> <P>(<E T="03">4</E>) In the case where children are determined eligible for free lunches based on documentation from the local food stamp, Food Distribution Program on Indian Reservations (FDPIR) or Temporary Assistance for Needy Families (TANF) office which certifies that the children are currently members of households receiving benefits under the Food Stamp Program, FDPIR or TANF, determine that the certification from the Food Stamp Program, FDPIR or TANF is official; all the information required under § 245.6 of this part is complete; and such children were enrolled in the school under review during the review period.</P> <P>(B) Evaluate the system for issuing benefits and updating eligibility status by validating the mechanism(s) the reviewed school uses to provide benefits to eligible children, e.g., master list. The State agency shall determine whether the system is adequate and, within the timeframes established in § 210.7(c)(1)(ii)(B), reflects changes due to verification findings, transfers, reported changes in household size or income, or from a household's decision to decline school lunch benefits or any notification from the household that it is no longer certified to receive food stamp, Food Distribution Program for Households on Indian Reservations (FDPIR) or Temporary Assistance for Needy Families (TANF) benefits.</P> <P>(C) Determine whether the lunch counting system yields correct claims. At a minimum, the State agency shall determine whether:</P> <P>(<E T="03">1</E>) The daily lunch counts, by type, for the review period are more than the product of the number of children determined by the school/school food authority to be eligible for free, reduced price, and paid lunches for the review period times an attendance factor. If the lunch count, for any type, appears questionable or significantly exceeds the product of the number of eligibles, for that type, times an attendance factor, documentation showing good cause must be available for review by the State agency.</P> <P>(<E T="03">2</E>) Each type of food service line provides accurate point of service lunch counts, by type, and those lunch counts are correctly counted and recorded. If an alternative counting system is employed (in accordance with § 210.7(c)(2)), the State agency shall ensure that it provides accurate counts of reimbursable lunches, by type, and is correctly implemented as approved by the State agency.</P> <P>(<E T="03">3</E>) All lunches are correctly counted, recorded, consolidated and reported for the day they are served.</P> <P>(ii) For each school food authority reviewed, the State agency shall review lunch count records to ensure that the lunch counts submitted by each reviewed school are correctly consolidated, recorded, and reported by the school food authority on the Claim for Reimbursement.</P> <P>(2) <E T="03">Performance Standard 2 (Lunches claimed for reimbursement within the school food authority contain meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10.</E> For each school reviewed, the State agency must:<PRTPAGE P="46"/> </P> <P>(i) For the day of the review, observe the serving line(s) to determine whether all required meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10 are offered.</P> <P>(ii) For the day of the review, observe a significant number of the Program lunches counted at the point of service for each type of serving line, to determine whether those lunches contain the required number of meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10.</P> <P>(iii) Review menu records for the review period to determine whether all required meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10 have been offered.</P> <P>(h) <E T="03">General areas of review.</E> The general areas listed in this paragraph reflect major Program requirements. The general areas of review shall include, but are not limited to, the following areas:</P> <P>(1) <E T="03">Free and reduced price process.</E> In the course of the review of each school food authority, the State agency shall:</P> <P>(i) Review the implementation of the free and reduced price policy statement to ensure it is implemented as approved.</P> <P>(ii) Evaluate whether the required minimum number of applications are verified with respect to the selection method used.</P> <P>(iii) Determine that applications for verification are selected through random or focused sampling in accordance with the provisions of § 245.6a of this title and FNS Instructions, and that no discrimination exists in the selection process.</P> <P>(iv) Establish that verification is completed by December 15. If the administrative review occurs prior to the December 15 deadline, the State agency shall evaluate the verification activities that have occurred to date and assess whether these activities represent a good faith effort that will result in compliance with the requirements of § 245.6a of this title.</P> <P>(v) Confirm that the verification process is complete for each application verified by or on behalf of the reviewed schools. Verification is considered complete either when a child's eligibility for the level of benefits for which he or she was approved is confirmed, changed to a higher level of benefit, or a letter of adverse action has been sent.</P> <P>(vi) Ensure that verification records are maintained as required by § 245.6a(c) of this title.</P> <P>(vii) Determine that, for each reviewed school, the lunch count system does not overtly identify children eligible for free and reduced price lunches.</P> <P>(viii) Review a representative sample of denied applications to evaluate whether the determining official correctly denied applicants for free and reduced price lunches.</P> <P>(2) <E T="03">Food quantities.</E> For each school reviewed, the State agency must observe a significant number of Program lunches counted at the point of service for each type of serving line to determine whether those lunches appear to provide meal elements (food items/components, menu items or other items, as applicable) in the quantities required under § 210.10. If visual observation suggests that quantities are insufficient, the State agency shall require the reviewed schools to provide documentation demonstrating that the required amounts of food were available for service for each day of the review period.</P> <P>(3) <E T="03">Civil rights.</E> The State agency shall examine the school food authority's compliance with the civil rights provisions specified in § 210.23(b) of this part.</P> <P>(4) <E T="03">Monitoring responsibilities.</E> The State agency shall ensure that the school food authority conducts on-site reviews in accordance with § 210.8(a)(1) of this part and monitors claims in accordance with § 210.8(a)(2) and (a)(3) of this part.</P> <P>(5) <E T="03">Reporting and recordkeeping.</E> The State agency shall determine that the school food authority submits reports and maintains records as required under 7 CFR parts 210 and 245.</P> <P>(i) <E T="03">Follow-up reviews.</E> All school food authorities found to have a critical area violation in excess of any one of the review thresholds specified in this paragraph are subject to follow-up reviews. State agencies shall notify FNS of the names of large school food authorities exceeding critical area review <PRTPAGE P="47"/>thresholds in accordance with paragraph (d)(2) of this section. The State agency shall conduct a first follow-up review of any large school food authority found on an administrative review to have critical area violations in excess of any one of the review thresholds. State agencies shall also conduct a first follow-up review of at least 25 percent of the small school food authorities found on a review to have critical area violations in excess of any one of the review thresholds. State agencies shall conduct additional follow-up reviews of any school food authority which has a critical area violation exceeding a review threshold on the first follow-up or any subsequent follow-up review regardless of whether such review is conducted by FNS or the State agency.</P> <P>(1) <E T="03">Selection of small school food authorities.</E> In determining which small school food authorities to include in the follow-up review sample, State agencies shall select those school food authorities which have the most serious problems, including, but not limited to, systemic accountability problems, large overclaims, significant lunch pattern violations, etc.</P> <P>(2) <E T="03">Selection of schools.</E> </P> <P>(i) If the critical area violation(s) responsible for follow-up review activity are limited to school food authority level problems (e.g. centralized application processing or centralized kitchen), the State agency may limit the follow-up review to the school food authority level.</P> <P>(ii) If the critical area violation(s) responsible for follow-up review activity were identified in the review of a school(s), then State agencies shall review at least the minimum number of schools required under paragraph (e)(1) of this section. State agencies shall meet the minimum number of schools requirement by selecting those schools found, on a previous review, to have significant critical area violations. If any additional schools must be selected to meet the minimum required number, the State agency shall select from those schools which meet State agency-developed criteria identified under paragraph (e)(2)(ii) of this section.</P> <P>(3) <E T="03">Review thresholds.</E> The review thresholds apply only to the critical areas of review and are designed to limit follow-up reviews to those school food authorities with serious problems. The provisions of paragraph (i) of this section apply when:</P> <P>(i) For Performance Standard 1—</P> <P>(A) A number of the reviewed schools in a school food authority, as specified in Table B, have an inadequate system for certification, issuing benefits or updating eligibility status; or for counting, recording, consolidating or reporting lunches, by type; or</P> <P>(B) The school food authority has an inadequate system for consolidating lunch counts, by type, or for reporting claims; or, if applicable, for certification, issuing benefits or updating eligibility status.</P> <P>(C) At the school and school food authority level, a system for certification, issuing benefits or updating eligibility status is inadequate if 10 percent or more (but not less than 100 lunches) of the free and reduced price lunches claimed for the review period (for any school reviewed) are claimed incorrectly due to errors of certification, benefit issuance or updating of eligibility status.</P> <GPOTABLE CDEF="s25,10*" COLS="2" OPTS="L2,i1"> <TTITLE>Table B</TTITLE> <BOXHD> <CHED H="1">Number of schools reviewed</CHED> <CHED H="1">Number of schools violating performance standard 1</CHED> </BOXHD> <ROW> <ENT I="01">1 to 5</ENT> <ENT>1</ENT> </ROW> <ROW> <ENT I="01">6 to 10</ENT> <ENT>2</ENT> </ROW> <ROW> <ENT I="01">11 to 20</ENT> <ENT>3</ENT> </ROW> <ROW> <ENT I="01">21 to 30</ENT> <ENT>4</ENT> </ROW> <ROW> <ENT I="01">31 to 40</ENT> <ENT>5</ENT> </ROW> <ROW> <ENT I="01">41 to 50</ENT> <ENT>6</ENT> </ROW> <ROW> <ENT I="01">51 to 60</ENT> <ENT>7</ENT> </ROW> <ROW> <ENT I="01">61 to 70</ENT> <ENT>8</ENT> </ROW> <ROW> <ENT I="01">71 to 80</ENT> <ENT>9</ENT> </ROW> <ROW> <ENT I="01">81 to 90</ENT> <ENT>10</ENT> </ROW> <ROW> <ENT I="01">91 to 100</ENT> <ENT>11</ENT> </ROW> <ROW> <ENT I="01">101 or more</ENT> <ENT>11*</ENT> </ROW> <TNOTE>* 11 plus the number identified above for the appropriate increment.</TNOTE> </GPOTABLE> <P>(ii) For Performance Standard 2—10 percent or more of the total number of Program lunches observed in a school food authority are missing one or more of the required meal elements (food items/components, menu items or other items, as applicable) as required under § 210.10.</P> <P>(4) <E T="03">Scope of follow-up reviews.</E> On any follow-up review, the State agency is encouraged to review all of the critical <PRTPAGE P="48"/>and general areas of review specified in paragraph (g) and (h) of this section for those schools which were not reviewed during the administrative review. At a minimum, the State agency shall:</P> <P>(i) For each school selected for review (or for the school food authority, as applicable,) review the critical areas for which the review thresholds were exceeded by the school food authority on a previous review;</P> <P>(ii) Determine whether the school food authority has satisfactorily completed the corrective actions in accordance with paragraph (k) of this section required for both critical and general areas within the timeframes established by the State agency;</P> <P>(iii) Evaluate whether these corrective actions resolved the problem(s); and</P> <P>(iv) If the State agency did not evaluate the certification, count and milk/meal service procedures for the School Breakfast Program (7 CFR part 220) and/or the Special Milk Program for Children (7 CFR part 215) or offering meal supplements in after hour care programs (7 CFR part 210) in those schools selected for the administrative review and participating in those Programs, the State agency shall do so for those schools selected for the first follow-up review.</P> <P>(5) <E T="03">Critical area violations identified in a follow-up review.</E> Critical area violations identified on a follow-up review shall be addressed as follows:</P> <P>(i) If, during a follow-up review, the State agency determines, that corrective actions have not been satisfactorily completed in accordance with the documented corrective action, the State agency shall: require the school food authority to resolve the problems and to submit documented corrective action to the State agency ; take fiscal action for critical area violations as specified in paragraph (m) of this section; and withhold Program payments in accordance with paragraph (l) of this section, until such time as a follow-up review, requested by the school food authority, indicates the problem has been corrected. If the State agency determines that the corrective actions have been completed as specified in the documented corrective action, but those corrective actions do not effectively resolve the problem, the State agency shall follow the requirements for new critical area violations specified in paragraphs (i)(5)(ii) and (iii) of this section.</P> <P>(ii) If new critical area violations are observed that exceed a review threshold, the State agency shall: Require the school food authority to resolve the problems and to submit documented corrective action to the State agency; take fiscal action as specified in paragraph (m) of this section; and conduct a follow-up review within 6 operating months of the first follow-up review.</P> <P>(iii) If new critical area violations are observed which do not exceed review thresholds, the State agency shall: Require the school food authority to resolve the problem and to submit documented corrective action to the State agency within specified timeframes; and take fiscal action in accordance with paragraph (m) of this section. If adequate documented corrective action is not received within those timeframes, the State agency shall withhold Program payments in accordance with paragraph (l) of this section, until such time as adequate documented corrective action is received.</P> <P>(6) <E T="03">General area violations identified in a follow-up review.</E> General area violations identified in a follow-up review shall be addressed as follows:</P> <P>(i) If, during a follow-up review, the State agency determines that corrective actions have not been taken in accordance with the documented corrective action, the State agency shall withhold Program payments in accordance with paragraph (l) of this section, until such time as the State agency receives adequate documented corrective action.</P> <P>(ii) If the State agency determines that the corrective actions taken did not effectively resolve the problem, or if new general area violations are observed on a follow-up review, the State agency shall require the school food authority to resolve the problem and to submit documented corrective action to the State agency within specified timeframes. If adequate documented corrective action is not received within those timeframes, the <PRTPAGE P="49"/>State agency shall withhold Program payments in accordance with paragraph (l) of this section, until such time as adequate documented corrective action is received.</P> <P>(7) <E T="03">Exceptions.</E> FNS may, on an individual school food authority basis, approve written requests for exceptions to the follow-up review requirement specified in paragraph (i)(1) of this section if FNS determines that the requirement conflicts with efficient State agency management of the program.</P> <P>(j) <E T="03">Exit conference and notification.</E> The State agency shall hold an exit conference at the close of the administrative review and of any subsequent follow-up review to discuss the violations observed, the extent of the violations and a preliminary assessment of the actions needed to correct the violations. The State agency shall discuss an appropriate deadline(s) for completion of corrective action, provided that the deadline(s) results in the completion of corrective action on a timely basis. After every review, the State agency shall provide written notification of the review findings to the school food authority's Superintendent (or equivalent in a non-public school food authority) or authorized representative. The written notification shall include the review findings, the needed corrective actions, the deadlines for completion of the corrective action, and the potential fiscal action. As a part of the denial of all or a part of a Claim for Reimbursement or withholding payment in accordance with the provisions of this section, the State agency shall provide the school food authority a written notice which details the grounds on which the denial of all or a part of the Claim for Reimbursement or withholding payment is based. This notice, which shall be sent by certified mail, return receipt requested, shall also include a statement indicating that the school food authority may appeal the denial of all or a part of a Claim for Reimbursement or withholding payment and the entity (i.e., FNS or State agency) to which the appeal should be directed. The State agency shall notify the school food authority, in writing, of the appeal procedures as specified in § 210.18(q) for appeals of State agency findings, and for appeals of FNS findings, provide a copy of § 210.29(d)(3) of the regulations.</P> <P>(k) <E T="03">Corrective action.</E> Corrective action is required for any violation under either the critical or general areas of the review. Corrective action shall be applied to all schools in the school food authority, as appropriate, to ensure that previously deficient practices and procedures are revised system-wide.</P> <P>Corrective actions may include training, technical assistance, recalculation of data to ensure the correctness of any claim that the school food authority is preparing at the time of the review, or other actions. Fiscal action shall be taken in accordance with paragraph (m) of this section.</P> <P>(1) <E T="03">Extensions of the timeframes.</E> If extraordinary circumstances arise where a school food authority is unable to complete the required corrective action within the timeframes specified by the State agency, the State agency may extend the timeframes upon written request of the school food authority.</P> <P>(2) <E T="03">Documented corrective action.</E> Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review or on any follow-up review. Documented corrective action may be provided at the time of the review; however, it shall be postmarked or submitted to the State agency no later than 30 days from the deadline for completion of each required corrective action, as specified under paragraph (j) of this section or as otherwise extended by the State agency under paragraph (k)(1) of this section. The State agency shall maintain any documented corrective action on file for review by FNS.</P> <P>(l) <E T="03">Withholding payment</E>. At a minimum, the State agency shall withhold Program payments to a school food authority as follows:</P> <P>(1) <E T="03">Cause.</E> (i) The State agency shall withhold all Program payments to a school food authority if documented corrective action for critical area violation(s) which exceed the review threshold(s) is not provided within the deadlines specified in paragraph (k)(2) of this section; and/or<PRTPAGE P="50"/> </P> <P>(ii) The State agency shall withhold all Program payments to a school food authority if, in the event that a follow-up review is not conducted, the State agency finds that corrective action for a critical area violation which exceeded the review threshold was not completed within the deadlines specified in paragraph (j) of this section or as otherwise extended by the State agency under paragraph (k)(1) of this section; and/or</P> <P>(iii) The State agency shall withhold all Program payments to a school food authority if, on a follow-up review, the State agency finds a critical area violation which exceeded the review threshold on a previous review and continues to exceed the review threshold on a follow-up review.</P> <P>(iv) The State agency may withhold payments at its discretion, if the State agency finds that documented corrective action is not provided within the deadlines specified in paragraph (k)(2) of this section, that corrective action is not complete or that corrective action was not taken as specified in the documented corrective action for a general area violation or for a critical area violation which did not exceed the review threshold.</P> <P>(2) <E T="03">Duration.</E> In all cases, Program payments shall be withheld until such time as corrective action is completed, and documented corrective action is received and deemed acceptable by the State agency or as otherwise specified in paragraph (i)(5) of this section. Subsequent to the State agency's acceptance of the corrective actions (and a follow-up review, when required), payments will be released for all lunches served in accordance with the provisions of this part during the period the payments were withheld. In very serious cases, the State agency will evaluate whether the degree of non-compliance warrants termination in accordance with § 210.25 of this part.</P> <P>(3) <E T="03">Exceptions.</E> The State agency may, at its discretion, reduce the amount required to be withheld from a school food authority pursuant to paragraph (l)(1)(i) through (iii) of this section by as much as 60 percent of the total Program payments when it is determined to be in the best interest of the Program. FNS may authorize a State agency to limit withholding of funds to an amount less than 40 percent of the total Program payments, if FNS determines such action to be in the best interest of the Program.</P> <P>(4) <E T="03">Failure to withhold payments.</E> FNS may suspend or withhold Program payments, in whole or in part, to those State agencies failing to withhold Program payments in accordance with paragraph (l)(1) of this section and may withhold administrative funds in accordance with § 235.11(b) of this title. The withholding of Program payments will remain in effect until such time as the State agency documents compliance with paragraph (l)(1) of this section to FNS. Subsequent to the documentation of compliance, any withheld administrative funds will be released and payment will be released for any lunches served in accordance with the provisions of this part during the period the payments were withheld.</P> <P>(m) <E T="03">Fiscal action.</E> For purposes of the critical areas of the administrative review and any follow-up reviews, fiscal action is required for all violations of Performance Standards 1 and 2. Except that, on an administrative review, the State agency may limit fiscal action from the point corrective action occurs back through the beginning of the review period for errors identified under paragraphs (g)(1)(i)(A) and (g)(1)(i)(B) of this section, provided corrective action occurs. Fiscal action shall be taken in accordance with the provisions identified under § 210.19(c) of this part.</P> <P>(n) <E T="03">Miscellaneous reporting requirement.</E> Each State agency shall report to FNS the results of reviews by March 1 of each school year, on a form designated by FNS. In such annual reports, the State agency shall include the results of all administrative reviews and follow-up reviews conducted in the preceding school year.</P> <P>(o) <E T="03">Summary of reporting requirements.</E> Each State agency shall report to FNS:</P> <P>(1) The names of those large school food authorities exceeding any one of the critical area review thresholds as described in paragraph (d)(2) of this section.<PRTPAGE P="51"/> </P> <P>(2) The results of reviews by March 1 of each school year on a form designated by FNS, as specified under paragraph (n) of this section.</P> <P>(p) <E T="03">Recordkeeping.</E> Each State agency shall keep records which document the details of all reviews and demonstrate the degree of compliance with the critical and general areas of review. Records shall be retained by the State agency as specified in § 210.23(c) of this part. Such records shall include documentation of administrative reviews and follow-up reviews. As appropriate, the records shall include documented corrective action, and documentation of withholding of payments and fiscal action, including recoveries made. Additionally, the State agency must have on file:</P> <P>(1) Criteria for selecting schools on first and follow-up reviews in accordance with paragraphs (e)(2)(ii) and (i)(2)(ii) of this section.</P> <P>(2) Its system for selecting small school food authorities for follow-up reviews in accordance with paragraph (i)(1) of this section.</P> <P>(3) Documentation demonstrating compliance with the statistical sampling requirements in accordance with paragraph (g)(1)(i)(A)(1) of this section, if applicable.</P> <P>(q) <E T="03">School food authority appeal of State agency findings.</E> Except for FNS-conducted reviews authorized under § 210.29(d)(2), each State agency shall establish an appeal procedure to be followed by a school food authority requesting a review of a denial of all or a part of the Claim for Reimbursement or withholding payment arising from administrative or follow-up review activity conducted by the State agency under § 210.18 of this part. State agencies may use their own appeal procedures provided the same procedures are applied to all appellants in the State and the procedures meet the following requirements: appellants are assured of a fair and impartial hearing before an independent official at which they may be represented by legal counsel; decisions are rendered in a timely manner not to exceed 120 days from the date of the receipt of the request for review; appellants are afforded the right to either a review of the record with the right to file written information, or a hearing which they may attend in person; and adequate notice is given of the time, date, place and procedures of the hearing. If the State agency has not established its own appeal procedures or the procedures do not meet the above listed criteria, the State agency shall observe the following procedures at a minimum:</P> <P>(1) The written request for a review shall be postmarked within 15 calendar days of the date the appellant received the notice of the denial of all or a part of the Claim for Reimbursement or withholding of payment, and the State agency shall acknowledge the receipt of the request for appeal within 10 calendar days;</P> <P>(2) The appellant may refute the action specified in the notice in person and by written documentation to the review official. In order to be considered, written documentation must be filed with the review official not later than 30 calendar days after the appellant received the notice. The appellant may retain legal counsel, or may be represented by another person. A hearing shall be held by the review official in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter of request for review. Failure of the appellant school food authority's representative to appear at a scheduled hearing shall constitute the appellant school food authority's waiver of the right to a personal appearance before the review official, unless the review official agrees to reschedule the hearing. A representative of the State agency shall be allowed to attend the hearing to respond to the appellant's testimony and to answer questions posed by the review official;</P> <P>(3) If the appellant has requested a hearing, the appellant and the State agency shall be provided with at least 10 calendar days advance written notice, sent by certified mail, return receipt requested, of the time, date and place of the hearing;</P> <P>(4) Any information on which the State agency's action was based shall be available to the appellant for inspection from the date of receipt of the request for review;</P> <P>(5) The review official shall be an independent and impartial official <PRTPAGE P="52"/>other than, and not accountable to, any person authorized to make decisions that are subject to appeal under the provisions of this section;</P> <P>(6) The review official shall make a determination based on information provided by the State agency and the appellant, and on Program regulations;</P> <P>(7) Within 60 calendar days of the State agency's receipt of the request for review, by written notice, sent by certified mail, return receipt requested, the review official shall inform the State agency and the appellant of the determination of the review official. The final determination shall take effect upon receipt of the written notice of the final decision by the school food authority;</P> <P>(8) The State agency's action shall remain in effect during the appeal process;</P> <P>(9) The determination by the State review official is the final administrative determination to be afforded to the appellant.</P> <P>(r) <E T="03">FNS review activity.</E> The term “State agency” and all the provisions specified in paragraphs (a)-(h) of this section refer to FNS when FNS conducts administrative reviews or follow-up reviews in accordance with § 210.29(d)(2). FNS will notify the State agency of the review findings and the need for corrective action and fiscal action. The State agency shall pursue any needed follow-up activity.</P> <CITA>[56 FR 32942, July 17, 1991; 56 FR 55527, Oct. 28, 1991, as amended at 57 FR 38584, Aug. 26, 1992; 57 FR 40729, Sept. 4, 1992; 59 FR 1894, Jan. 13, 1994; 60 FR 31215, June 13, 1995; 60 FR 57147, Nov. 14, 1995; 64 FR 50740, 50741, Sept. 20, 1999; 64 FR 72471, Dec. 28, 1999; 65 FR 26922, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.19</SECTNO> <SUBJECT>Additional responsibilities.</SUBJECT> <P>(a) <E T="03">General Program management.</E> Each State agency shall provide an adequate number of consultative, technical and managerial personnel to administer programs and monitor performance in complying with all Program requirements.</P> <P>(1) <E T="03">Compliance with nutrition standards.</E> (i) Beginning with School Year 1996-1997, State agencies shall evaluate compliance, over the school week, with the nutrition standards for lunches and, as applicable, for breakfasts. Review activity may be confined to lunches served under the Program unless a menu planning approach is used exclusively in the School Breakfast Program or unless the school food authority only offers breakfasts under the School Breakfast Program. For lunches, compliance with the requirements in § 210.10(b) and § 210.10(c), (d), or (i)(1) or the procedures developed under § 210.10(l), as applicable, is assessed. For breakfasts, see § 220.13(f)(3) of this chapter.</P> <P>(A) These evaluations may be conducted at the same time a school food authority is scheduled for an administrative review in accordance with § 210.18. State agencies may also conduct these evaluations in conjunction with technical assistance visits, other reviews, or separately.</P> <P>(B) The type of evaluation conducted by the State agency shall be determined by the menu planning approach chosen by the school food authority. At a minimum, the State agency shall review at least one school for each type of menu planning approach used in the school food authority.</P> <P>(C) In addition, State agencies are encouraged to review breakfasts offered under the School Breakfast Program as well if the school food authority requires technical assistance from the State agency to meet the nutrition standards or if corrective action is needed. Such review shall determine compliance with the appropriate requirements in § 220.13(f)(3) of this chapter and may be done at the time of the initial review or as part of a follow-up to assess compliance with the nutrition standards.</P> <P>(ii) At a minimum, State agencies shall conduct evaluations of compliance with the nutrition standards in § 210.10 and § 220.8 of this Chapter at least once during each 5-year review cycle provided that each school food authority is evaluated at least once every 6 years, <E T="03">except that</E> the first cycle shall begin July 1, 1996, and shall end on June 30, 2003. The compliance evaluation for the nutrition standards shall be conducted on the menu for any week of the current school year in which such evaluation is conducted. The week selected must continue to represent <PRTPAGE P="53"/>the current menu planning approach(es).</P> <P>(iii) For school food authorities choosing the nutrient standard or assisted nutrient standard menu planning approaches provided in § 210.10(i), § 210.10(j), § 220.8(e) or § 220.8(f) of this chapter, or developed under the procedures in § 210.10(l) or § 220.8(h) of this chapter, the State agency shall assess the nutrient analysis to determine if the school food authority is properly applying the methodology in these paragraphs, as applicable.Part of this assessment shall be an independent review of menus and production records to determine if they correspond to the analysis conducted by the school food authority and if the menu, as offered, over a school week, corresponds to the nutrition standards set forth in § 210.10(b) and the appropriate calorie and nutrient levels in § 210.10(c) or § 210.10(i)(1), whichever is applicable.</P> <P>(iv) For school food authorities choosing the food-based menu planning approaches provided in § 210.10(k) or § 220.8(g) of this chapter or developed under the procedures in § 210.10(l) or § 220.8(h) of this chapter, the State agency must determine if the nutrition standards in § 210.10 and § 220.8 of this chapter are met. The State agency shall conduct a nutrient analysis in accordance with the procedures in § 210.10(i) or § 220.8(e) of this chapter, as appropriate, except that the State agency may:</P> <P>(A) Use the nutrient analysis of any school or school food authority that offers lunches or breakfasts using the food-based menu planning approaches provided in § 210.10(k) and § 220.8(g) of this chapter and that conducts its own nutrient analysis under the criteria for such analysis established in § 210.10 and § 220.8 of this chapter for the nutrient standard and assisted nutrient standard menu planning approaches; or</P> <P>(B) Develop its own method for compliance reviews, subject to USDA approval.</P> <P>(v) If the menu for the school week fails to comply with the nutrition standards specified in § 210.10(b) and/or § 220.8(a) and the appropriate nutrient levels in either § 210.10(c), § 210.10(d), or § 210.10(i)(1) whichever is applicable, and/or § 220.8(b), § 220.8(c) or § 220.8(e)(1) of this chapter, whichever is applicable, the school food authority shall develop, with the assistance and concurrence of the State agency, a corrective action plan designed to rectify those deficiencies. The State agency shall monitor the school food authority's execution of the plan to ensure that the terms of the corrective action plan are met.</P> <P>(vi) For school food authorities following an alternate approach as provided under § 210.10(l) or § 220.8(h) of this chapter that does not allow for use of the monitoring procedures in paragraphs (a)(1)(ii) or (a)(1)(iii) of this section, the State agency shall monitor compliance following the procedures developed in accordance with § 210.10(l) or § 220.8(h) of this chapter, whichever is appropriate.</P> <P>(vii) If a school food authority fails to meet the terms of the corrective action plan, the State agency shall determine if the school food authority is working in good faith towards compliance and, if so, may renegotiate the corrective action plan, if warranted. However, if the school food authority has not been acting in good faith to meet the terms of the corrective action plan and refuses to renegotiate the plan, the State agency shall determine if a disallowance of reimbursement funds as authorized under paragraph (c) of this section is warranted.</P> <P>(2) <E T="03">Assurance of compliance for finances.</E> Each State agency shall ensure that school food authorities comply with the requirements to account for all revenues and expenditures of their nonprofit school food service. School food authorities shall meet the requirements for the allowability of nonprofit school food service expenditures in accordance with this part and, as applicable, 7 CFR part 3015. The State agency shall ensure compliance with the requirements to limit net cash resources and shall provide for approval of net cash resources in excess of three months’ average expenditures. Each State agency shall monitor, through review or audit or by other means, the net cash resources of the nonprofit school food service in each school food <PRTPAGE P="54"/>authority participating in the Program. In the event that net cash resources exceed 3 months’ average expenditures for the school food authority's nonprofit school food service or such other amount as may be approved in accordance with this paragraph, the State agency may require the school food authority to reduce the price children are charged for lunches, improve food quality or take other action designed to improve the nonprofit school food service. In the absence of any such action, the State agency shall make adjustments in the rate of reimbursement under the Program.</P> <P>(3) <E T="03">Improved management practices.</E> The State agency shall work with the school food authority toward improving the school food authority's management practices where the State agency has found poor food service management practices leading to decreasing or low child participation and/or poor child acceptance of the Program or of foods served. If a substantial number of children who routinely and over a period of time do not favorably accept a particular item that is offered; return foods; or choose less than all food items/components or foods and menu items, as authorized under § 210.10, poor acceptance of certain menus may be indicated.</P> <P>(4) <E T="03">Program compliance.</E> Each State agency shall require that school food authorities comply with the applicable provisions of this part. The State agency shall ensure compliance through audits, administrative reviews, technical assistance, training guidance materials or by other means.</P> <P>(5) <E T="03">Investigations.</E> Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. State agencies shall maintain on file, evidence of such investigations and actions. FNS and OIG may make reviews or investigations at the request of the State agency or where FNS or OIG determines reviews or investigations are appropriate.</P> <P>(6) <E T="03">Food service management companies.</E> Each State agency shall annually review each contract between any school food authority and food service management company to ensure compliance with all the provisions and standards set forth in § 210.16 of this part. Each State agency shall perform an on-site review of each school food authority contracting with a food service management company, at least once during each 5-year period. The State agency is encouraged to conduct such a review when performing reviews in accordance with § 210.18. Such reviews shall include an assessment of the school food authority's compliance with § 210.16 of this part. The State agency may require that all food service management companies that wish to contract for food service with any school food authority in the State register with the State agency. State agencies shall provide assistance upon request of a school food authority to assure compliance with Program requirements.</P> <P>(b) <E T="03">Donated food distribution information.</E> Information on schools eligible to receive donated foods available under section 6 of the National School Lunch Act (42 U.S.C. 1755) shall be prepared each year by the State agency with accompanying information on the average daily number of lunches to be served in such schools. This information shall be prepared as early as practicable each school year and forwarded no later than September 1 to the Distributing agency. The State agency shall be responsible for promptly revising the information to reflect additions or deletions of eligible schools, and for providing such adjustments in participation as are determined necessary by the State agency. Schools shall be consulted by the Distributing agency with respect to the needs of such schools relating to the manner of selection and distribution of commodity assistance.</P> <P>(c) <E T="03">Fiscal action.</E> State agencies are responsible for ensuring Program integrity at the school food authority level. State agencies shall take fiscal action against school food authorities for Claims for Reimbursement that are not properly payable under this part including, if warranted, the disallowance of funds for failure to take corrective action in accordance with paragraph (a)(1) of this section. In taking fiscal action, State agencies shall use <PRTPAGE P="55"/>their own procedures within the constraints of this part and shall maintain all records pertaining to action taken under this section. The State agency may refer to FNS for assistance in making a claims determination under this part.</P> <P>(1) <E T="03">Definition.</E> Fiscal action includes, but is not limited to, the recovery of overpayment through direct assessment or offset of future claims, disallowance of overclaims as reflected in unpaid Claims for Reimbursement, submission of a revised Claim for Reimbursement, and correction of records to ensure that unfiled Claims for Reimbursement are corrected when filed. Fiscal action also includes disallowance of funds for failure to take corrective action in accordance with paragraph (a)(1) of this section.</P> <P>(2) <E T="03">General principles.</E> When taking fiscal action, State agencies shall consider the following:</P> <P>(i) The State agency shall identify the school food authority's correct entitlement and take fiscal action when any school food authority claims or receives more Federal funds than earned under § 210.7 of this part. In order to take fiscal action, the State agency shall identify accurate counts of reimbursable lunches through available data, if possible. In the absence of reliable data, the State agency shall reconstruct the lunch accounts in accordance with procedures established by FNS. Such procedures will be based on the best available information including, participation factors for the review period, data from similar schools in the school food authority, etc.</P> <P>(ii) Unless otherwise specified under § 210.18(m) of this part, fiscal action shall be extended back to the beginning of the school year or that point in time during the current school year when the infraction first occurred, as applicable. Based on the severity and longevity of the problem, the State agency may extend fiscal action back to previous school years, as applicable. The State agency shall ensure that any Claim for Reimbursement, filed subsequent to the reviews conducted under § 210.18 and prior to the implementation of corrective action, is limited to lunches eligible for reimbursement under this part.</P> <P>(iii) In taking fiscal action, State agencies shall assume that children determined by the reviewer to be incorrectly approved for free and reduced price lunches participated at the same rate as correctly approved children in the corresponding lunch category.</P> <P>(3) <E T="03">Failure to collect.</E> If a State agency fails to disallow a claim or recover an overpayment from a school food authority, as described in this section, FNS will notify the State agency that a claim may be assessed against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning overpayment. If after considering all available information, FNS determines that a claim is warranted, FNS will assess a claim in the amount of such overpayment against the State agency. If the State agency fails to pay any such demand for funds promptly, FNS will reduce the State agency's Letter of Credit by the sum due in accordance with FNS’ existing offset procedures for Letter of Credit. In such event, the State agency shall provide the funds necessary to maintain Program operations at the level of earnings from a source other than the Program.</P> <P>(4) <E T="03">Interest charge.</E> If an agreement cannot be reached with the State agency for payment of its debts or for offset of debts on its current Letter of Credit, interest will be charged against the State agency from the date the demand leter was sent, at the rate established by the Secretary of Treasury.</P> <P>(5) <E T="03">Use of recovered payment.</E> The amounts recovered by the State agency from school food authorities may be utilized during the fiscal year for which the funds were initially available, first, to make payments to school food authorities for the purposes of the Program; and second, to repay any State funds expended in the reimbursement of claims under the Program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.</P> <P>(6) <E T="03">Exceptions</E>. The State agency need not disallow payment or collect an overpayment arising out of the situations described in paragraphs (c)(6) (i) <PRTPAGE P="56"/>and (ii) of this section; provided that the school food authority corrects the problem(s) to the satisfaction of the State agency:</P> <P>(i) When any review or audit reveals that a school food authority is failing to meet the quantities for each meal element (food item/component, menu item or other items, as applicable) as required under § 210.10.</P> <P>(ii) when any review or audit reveals that a school food authority is approving applications which indicate that the households’ incomes are within the Income Eligibility Guidelines issued by the Department or the applications contain a food stamp or AFDC case number but the applications are missing the documentation specified under 7 CFR 245.2 (a-4) (3) and/or (4); or</P> <P>(iii) when any review or audit reveals that a school food authority's failure to meet the nutrition standards of § 210.10 is unintentional and the school food authority is meeting the requirements of a corrective plan developed and agreed to under paragraph (a)(1)(iii) of this section.</P> <P>(7) <E T="03">Claims adjustment.</E> FNS will have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. FNS will also have the authority to waive such claims if FNS determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of title 28, U.S. Code, to conduct litigation on behalf of the United States.</P> <P>(d) <E T="03">Management evaluations.</E> Each State agency shall provide FNS with full opportunity to conduct management evaluations of all State agency Program operations and shall provide OIG with full opportunity to conduct audits of all State agency Program operations. Each State agency shall make available its records, including records of the receipt and disbursement of funds under the Program and records of any claim compromised in accordance with this paragraph, upon a reasonable request by FNS, OIG, or the Comptroller General of the United States. FNS and OIG retain the right to visit schools and OIG also has the right to make audits of the records and operations of any school. In conducting management evaluations, reviews or audits for any fiscal year, the State agency, FNS, or OIG may disregard any overpayment if the total overpayment does not exceed $600 or, in the case of State agency claims in State administered Programs, it does not exceed the amount established under State law, regulations or procedure as a minimum amount for which claim will be made for State losses but not to exceed $600. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.</P> <P>(e) <E T="03">Additional requirements.</E> Nothing contained in this part shall prevent a State agency from imposing additional requirements for participation in the Program which are not inconsistent with the provisions of this part.</P> <P>(f) <E T="03">Cooperation with the Child and Adult Care Food Program.</E> On an annual basis, the State agency shall provide the State agency which administers the Child and Adult Care Food Program with a list of all elementary schools in the State participating in the National School Lunch Program in which 50 percent or more of enrolled children have been determined eligible for free or reduced price meals as of the last operating day of the previous October, or other month specified by the State agency. The first list shall be provided by March 15, 1997; subsequent lists shall be provided by February 1 of each year or, if data is based on a month other than October, within 90 calendar days following the end of the month designated by the State agency. The State agency may provide updated free and reduced price enrollment data on individual schools to the State agency which administers the Child and Adult Care Food Program only when unusual circumstances render the initial data obsolete. In addition, the State agency shall provide the current <PRTPAGE P="57"/>list, upon request, to sponsoring organizations of day care homes participating in the Child and Adult Care Food Program.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 12582, Mar. 28, 1989; 56 FR 32947, July 17, 1991; 57 FR 38586, Aug. 26, 1992; 59 FR 1894, Jan. 13, 1994; 60 FR 31215, June 13, 1995; 60 FR 57147, Nov. 14, 1995; 62 FR 901, Jan. 7, 1997; 63 FR 9104, Feb. 24, 1998; 64 FR 50741, Sept. 20, 1999; 65 FR 26912, 26922, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.20</SECTNO> <SUBJECT>Reporting and recordkeeping.</SUBJECT> <P>(a) <E T="03">Reporting summary.</E> Participating State agencies shall submit forms and reports to FNS to demonstrate compliance with Program requirements. The reports include but are not limited to:</P> <P>(1) Requests for cash to make reimbursement payments to school food authorities as required under § 210.5(a);</P> <P>(2) Information on the amounts of Federal Program funds expended and obligated to date (SF-269) as required under § 210.5(d);</P> <P>(3) Statewide totals on Program participation (FNS-10) as required under § 210.5(d);</P> <P>(4) Information on State funds provided by the State to meet the State matching requirements (FNS-13) specified under § 210.17(g);</P> <P>(5) The names of school food authorities in need of a follow-up review;</P> <P>(6) Results of reviews and audits; and</P> <P>(7) Results of the commodity preference survey and recommendations for commodity purchases as required under § 250.13(k) of this chapter.</P> <P>(b) <E T="03">Recordkeeping summary.</E> Participating State agencies are required to maintain records to demonstrate compliance with Program requirements. The records include but are not limited to:</P> <P>(1) Accounting records and source documents to control the receipt, custody and disbursement of Federal Program funds as required under § 210.5(a);</P> <P>(2) Documentation supporting all school food authority claims paid by the State agency as required under § 210.5(d);</P> <P>(3) Documentation to support the amount the State agency reported having used for State revenue matching as required under § 210.17(h);</P> <P>(4) Records supporting the State agency's review of net cash resources as required under § 210.19(a);</P> <P>(5) Reports on the results of investigations of complaints received or irregularities noted in connection with Program operations as required under § 210.19(a)</P> <P>(6) Records of all reviews and audits, including records of action taken to correct Program violations; and records of fiscal action taken, including documentation of recoveries made;</P> <P>(7) State agency criteria for selecting schools for reviews and small school food authorities for follow-up reviews;</P> <P>(8) Documentation of action taken to disallow improper claims submitted by school food authorities, as required by § 210.19(c) and as determined through claims processing, resulting from actions such as reviews, audits and USDA audits;</P> <P>(9) Records of USDA audit findings, State agency's and school food authorities’ responses to them and of corrective action taken as required by § 210.22(a);</P> <P>(10) Records pertaining to civil rights responsibilities as defined under § 210.23(b); and</P> <P>(11) Records pertaining to the annual food preference survey of school food authorities as required by § 250.13(k) of this chapter.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 56 FR 32948, July 17, 1991; 56 FR 55527, Oct. 28, 1991; 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—State Agency and School Food Authority Responsibilities</HD> <SECTION> <SECTNO>§ 210.21</SECTNO> <SUBJECT>Procurement.</SUBJECT> <P>(a) <E T="03">General.</E> State agencies and school food authorities shall comply with the requirements of 7 CFR part 3015 concerning the procurement of supplies, food, equipment and other services with Program funds. These requirements ensure that such materials and services are obtained for the Program efficiently and economically and in compliance with applicable laws and executive orders.</P> <P>(b) <E T="03">Contractual responsibilities.</E> The standards contained in 7 CFR part 3015 do not relieve the State agency or <PRTPAGE P="58"/>school food authority of any contractual responsibilities under its contracts. The State agency or school food authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes, but is not limited to source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State, or Federal authority that has proper jurisdiction.</P> <P>(c) <E T="03">Procurement procedure.</E> The State agency or school food authority may use its own procurement procedures which reflect applicable State and local laws and regulations, <E T="03">provided that</E> procurements made with Program funds adhere to the standards set forth in 7 CFR part 3015.</P> <P>(d) <E T="03">Buy American.</E>—(1) <E T="03">Definition of domestic commodity or product.</E> In this paragraph (d), the term ‘domestic commodity or product’ means—</P> <P>(i) An agricultural commodity that is produced in the United States; and</P> <P>(ii) A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States.</P> <P>(2) <E T="03">Requirement.</E> (i) <E T="03">In general.</E> Subject to paragraph (d)(2)(ii) of this section, the Department shall require that a school food authority purchase, to the maximum extent practicable, domestic commodities or products.</P> <P>(ii) <E T="03">Limitations.</E> Paragraph (d)(2)(i) of this section shall apply only to—</P> <P>(A) A school food authority located in the contiguous United States; and</P> <P>(B) A purchase of domestic commodity or product for the school lunch program under this part.</P> <P>(3) <E T="03">Applicability to Hawaii.</E> Paragraph (d)(2)(i) of this section shall apply to a school food authority in Hawaii with respect to domestic commodities or products that are produced in Hawaii in sufficient quantities to meet the needs of meals provided under the school lunch program under this part.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.22</SECTNO> <SUBJECT>Audits.</SUBJECT> <P>(a) <E T="03">General.</E> State agencies and school food authorities shall comply with the requirements of 7 CFR part 3015 concerning the audit requirements for recipients and subrecipients of the Department's financial assistance.</P> <P>(b) <E T="03">Audit procedure.</E> These requirements call for organization-wide financial and compliance audits to ascertain whether financial operations are conducted properly; financial statements are presented fairly; recipients and subrecipients comply with the laws and regulations that affect the expenditures of Federal funds; recipients and subrecipients have established procedures to meet the objectives of federally assisted programs; and recipients and subrecipients are providing accurate and reliable information concerning grant funds. States and school food authorities shall use their own procedures to arrange for and prescribe the scope of independent audits, provided that such audits comply with the requirements set forth in 7 CFR part 3015.</P> </SECTION> <SECTION> <SECTNO>§ 210.23</SECTNO> <SUBJECT>Other responsibilities.</SUBJECT> <P>(a) <E T="03">Free and reduced price lunches and meal supplements.</E> State agencies and school food authorities shall ensure that lunches and meal supplements are made available free or at a reduced price to all children who are determined by the school food authority to be eligible for such benefits. The determination of a child's eligibility for free or reduced price lunches and meal supplements is to be made in accordance with 7 CFR part 245.</P> <P>(b) <E T="03">Civil rights.</E> In the operation of the Program, no child shall be denied benefits or be otherwise discriminated against because of race, color, national origin, age, sex, or disability. State agencies and school food authorities shall comply with the requirements of: Title VI of the Civil Rights Act of 1964; title IX of the Education Amendments of 1972; section 504 of the Rehabilitation Act of 1973; the Age Discrimination Act of 1975; Department of Agriculture regulations on nondiscrimination (7 CFR parts 15, 15a, and 15b); and FNS Instruction 113-6.</P> <P>(c) <E T="03">Retention of records.</E> State agencies and school food authorities may <PRTPAGE P="59"/>retain necessary records in their original form or on microfilm. State agency records shall be retained for a period of 3 years after the date of submission of the final Financial Status Report for the fiscal year. School food authority records shall be retained for a period of 3 years after submission of the final Claim for Reimbursement for the fiscal year. In either case, if audit findings have not been resolved, the records shall be retained beyond the 3-year period as long as required for the resolution of the issues raised by the audit.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 58 FR 42489, Aug. 10, 1993; 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart F—Additional Provisions</HD> <SECTION> <SECTNO>§ 210.24</SECTNO> <SUBJECT>Withholding payments.</SUBJECT> <P>In accordance with § 3015.103 of this title, the State agency shall withhold Program payments, in whole or in part, to any school food authority which has failed to comply with the provisions of this part. Program payments shall be withheld until the school food authority takes corrective action satisfactory to the State agency, or gives evidence that such corrective action will be taken, or until the State agency terminates the grant in accordance with § 210.25 of this part. Subsequent to the State agency's acceptance of the corrective actions, payments will be released for any lunches served in accordance with the provisions of this part during the period the payments were withheld.</P> <CITA>[56 FR 32948, July 17, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.25</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <P>Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N concerning grant suspension, termination and closeout procedures. Furthermore, the State agency shall apply these provisions to suspension or termination of the Program in school food authorities.</P> <CITA>[53 FR 29147, Aug. 2, 1988. Redesignated at 56 FR 32948, July 17, 1991]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.26</SECTNO> <SUBJECT>Penalties.</SUBJECT> <P>Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part whether received directly or indirectly from the Department, shall if such funds, assets, or property are of a value of $100 or more, be fined no more than $25,000 or imprisoned not more than 5 years or both; or if such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than 1 year or both. Whoever receives, conceals, or retains for personal use or gain, funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties.</P> <CITA>[53 FR 29147, Aug. 2, 1988. Redesignated at 56 FR 32948, July 17, 1991, as amended at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.27</SECTNO> <SUBJECT>Educational prohibitions.</SUBJECT> <P>In carrying out the provisions of the Act, the Department shall not impose any requirements with respect to teaching personnel, curriculum, instructions, methods of instruction, or materials of instruction in any school as a condition for participation in the Program.</P> <CITA>[53 FR 29147, Aug. 2, 1988. Redesignated at 56 FR 32948, July 17, 1991, as amended at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.28</SECTNO> <SUBJECT>Pilot project exemptions.</SUBJECT> <P>Those State agencies or school food authorities selected for the pilot projects mandated under section 18(d) of the Act may be exempted by the Department from some or all of the counting and free and reduced price application requirements of this part and <PRTPAGE P="60"/>7 CFR part 245, as necessary, to conduct an approved pilot project. Additionally, those schools selected for pilot projects that also operate the School Breakfast Program (7 CFR part 220) and/or the Special Milk Program for Children (7 CFR part 215), may be exempted from the counting and free and reduced price application requirements mandated under these Programs. The Department shall notify the appropriate State agencies and school food authorities of its determination of which requirements are exempted after the Department's selection of pilot projects.</P> <CITA>[55 FR 41504, Oct. 12, 1990. Redesignated at 56 FR 32948, July 17, 1991. Further redesignated at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.29</SECTNO> <SUBJECT>Management evaluations.</SUBJECT> <P>(a) <E T="03">Management evaluations.</E> FNS will conduct a comprehensive management evaluation of each State agency's administration of the National School Lunch Program.</P> <P>(b) <E T="03">Basis for evaluations.</E> FNS will evaluate all aspects of State agency management of the Program using tools such as State agency reviews as required under § 210.18 or § 210.18a of this part; reviews conducted by FNS in accordance with § 210.18 of this part; FNS reviews of school food authorities and schools authorized under § 210.19(a)(4) of this part; follow-up reviews and actions taken by the State agency to correct violations found during reviews; FNS observations of State agency reviews; and audit reports.</P> <P>(c) <E T="03">Scope of management evaluations.</E> The management evaluation will determine whether the State agency has taken steps to ensure school food authority compliance with Program regulations, and whether the State agency is administering the Program in accordance with Program requirements and good management practices.</P> <P>(1) <E T="03">Local compliance.</E> FNS will evaluate whether the State agency has actively taken steps to ensure that school food authorities comply with the provisions of this part.</P> <P>(2) <E T="03">State agency compliance.</E> FNS will evaluate whether the State agency has fulfilled its State level responsibilities, including, but not limited to the following areas: use of Federal funds; reporting and recordkeeping; agreements with school food authorities; review of food service management company contracts; review of the claims payment process; implementation of the State agency's monitoring responsibilities; initiation and completion of corrective action; recovery of overpayments; disallowance of claims that are not properly payable; withholding of Program payments; oversight of school food authority procurement activities; training and guidance activities; civil rights; and compliance with the State Administrative Expense Funds requirements as specified in 7 CFR part 235.</P> <P>(d) <E T="03">School food authority reviews.</E> FNS will examine State agency administration of the Program by reviewing local Program operations. When conducting these reviews under paragraph (d)(2) of this section, FNS will follow all the administrative review requirements specified in § 210.18(a)-(h) of this part. When FNS conducts reviews, the findings will be sent to the State agency to ensure all the needed follow-up activity occurs. The State agency will, in all cases, be invited to accompany FNS reviewers.</P> <P>(1) <E T="03">Observation of State agency reviews.</E> FNS may observe the State agency conduct of any review and/or any follow-up review as required under this part. At State agency request, FNS may assist in the conduct of the review.</P> <P>(2) <E T="03">Section 210.18 reviews.</E> FNS will conduct administrative reviews or follow-up reviews in accordance with § 210.18(a)-(h) of this part which will count toward meeting the State agency responsibilities identified under § 210.18 of this part.</P> <P>(3) <E T="03">School food authority appeal of FNS findings.</E> When administrative or follow-up review activity conducted by FNS in accordance with the provisions of paragraph (d)(2) of this section results in the denial of all or part of a Claim for Reimbursement or withholding of payment, a school food authority may appeal the FNS findings by filing a written request with the Chief, Administrative Review Branch, U.S. Department of Agriculture, Food and Nutrition Service, 3101 Park Center Drive, Alexandria, Virginia, 22302, <PRTPAGE P="61"/>in accordance with the appeal procedures specified in this paragraph:</P> <P>(i) The written request for a review of the record shall be postmarked within 15 calendar days of the date the appellant received the notice of the denial of all or a part of the Claim for Reimbursement or withholding payment and the envelope containing the request shall be prominently marked “REQUEST FOR REVIEW”. FNS will acknowledge the receipt of the request for appeal within 10 calendar days. The acknowledgement will include the name and address of the FNS Administrative Review Officer (ARO) reviewing the case. FNS will also notify the State agency of the request for appeal.</P> <P>(ii) The appellant may refute the action specified in the notice in person and by written documentation to the ARO. In order to be considered, written documentation must be filed with the ARO not later than 30 calendar days after the appellant received the notice. The appellant may retain legal counsel, or may be represented by another person. A hearing shall be held by the ARO in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter of request for review. Failure of the appellant school food authority's representative to appear at a scheduled hearing shall constitute the appellant school food authority's waiver of the right to a personal appearance before the ARO, unless the ARO agrees to reschedule the hearing. A representative of FNS shall be allowed to attend the hearing to respond to the appellant's testimony and to answer questions posed by the ARO;</P> <P>(iii) If the appellant has requested a hearing, the appellant shall be provided with a least 10 calendar days advance written notice, sent by certified mail, return receipt requested, of the time, date, and place of the hearing;</P> <P>(iv) Any information on which FNS's action was based shall be available to the appellant for inspection from the date of receipt of the request for review;</P> <P>(v) The ARO shall be an independent and impartial official other than, and not accountable to, any person authorized to make decisions that are subject to appeal under the provisions of this section;</P> <P>(vi) The ARO shall make a determination based on information provided by FNS and the appellant, and on Program regulations;</P> <P>(vii) Within 60 calendar days of the receipt of the request for review, by written notice, sent by certified mail, return receipt requested, the ARO shall inform FNS, the State agency and the appellant of the determination of the ARO. The final determination shall take effect upon receipt of the written notice of the final decision by the school food authority;</P> <P>(viii) The action being appealed shall remain in effect during the appeal process;</P> <P>(ix) The determination by the ARO is the final administrative determination to be afforded to the appellant.</P> <P>(4) <E T="03">Coordination with State agency.</E> FNS will coordinate school food authority selection with the State agency to ensure that no unintended overlap exists and to ensure reviews are conducted in a consistent manner.</P> <P>(e) <E T="03">Management evaluation findings.</E> FNS will consider the results of all its review activity within each State, including school food authority reviews, in performing management evaluations and issuing management evaluation reports. FNS will communicate the findings of the management evaluation to appropriate State agency personnel in an exit conference. Subsequent to the exit conference, the State agency will be notified in writing of the management evaluation findings and any needed corrective actions or fiscal sanctions in accordance with the provisions § 210.25 of this part and/or 7 CFR part 235.</P> <CITA>[56 FR 32949, July 17, 1991, as amended at 57 FR 38586, Aug. 26, 1992. Redesignated at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.30</SECTNO> <SUBJECT>Regional office addresses.</SUBJECT> <P>School food authorities desiring information concerning the Program should write to their State educational agency or to the appropriate Regional Office of FNS as indicated below:</P> <P>(a) In the States of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont: Northeast Regional Office, FNS, U.S. <PRTPAGE P="62"/>Department of Agriculture, 10 Causeway Street, Room 501, Boston, Massachusetts 02222-1065.</P> <P>(b) In the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, FNS, U.S. Department of Agriculture, 61 Forsyth Street SW, Room 8T36, Atlanta, Georgia 30303.</P> <P>(c) In the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin: Midwest Regional Office, FNS, U.S. Department of Agriculture, 77 West Jackson Boulevard, 20th Floor, Chicago, Illinois 60604-3507.</P> <P>(d) In the States of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas: Southwest Regional Office, FNS, U.S. Department of Agriculture, 1100 Commerce Street, Room 5-C-30, Dallas, Texas 75242.</P> <P>(e) In the States of Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, the Commonwealth of the Northern Mariana Islands, and Washington: Western Regional Office, FNS, U.S. Department of Agriculture, 550 Kearny Street, Room 400, San Francisco, California 94108.</P> <P>(f) In the States of Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, and West Virginia: Mid-Atlantic Regional Office, FNS, U.S. Department of Agriculture, 300 Corporate Boulevard, Robbinsville, New Jersey 08691-1598.</P> <P>(g) In the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming: Mountain Plains Regional Office, FNS, U.S. Department of Agriculture, 1244 Speer Boulevard, Suite 903, Denver, Colorado 80204.</P> <CITA>[53 FR 29147, Aug. 2, 1988. Redesignated at 55 FR 41503, Oct. 12, 1990. Further redesignated at 56 FR 32948, July 17, 1991. Further redesignated at 64 FR 50741, Sept. 20, 1999; 65 FR 12434, Mar. 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 210.31</SECTNO> <SUBJECT>OMB control numbers.</SUBJECT> <P>The following control numbers have been assigned to the information collection requirements in 7 CFR part 210 by the Office of Management and Budget pursuant to the Paperwork Reduction Act of 1980, Pub. L. 96-511.</P> <GPOTABLE CDEF="s20,13" COLS="2" OPTS="L2,i1"> <BOXHD> <CHED H="1">7 CFR section where requirements are described</CHED> <CHED H="1">Current OMB control No.</CHED> </BOXHD> <ROW> <ENT I="01">210.3(b)</ENT> <ENT>0584-0327</ENT> </ROW> <ROW> <ENT I="01">210.5(d)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.5(d)(1)</ENT> <ENT>0584-0002</ENT> </ROW> <ROW> <ENT I="01">210.5(d)(2)</ENT> <ENT>0584-0341</ENT> </ROW> <ROW> <ENT I="01">210.5(d)(3)</ENT> <ENT>0584-0341</ENT> </ROW> <ROW> <ENT I="01">210.6(b)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.8</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0284</ENT> </ROW> <ROW> <ENT I="01">210.9</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0026</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0329</ENT> </ROW> <ROW> <ENT I="01">210.10(b)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.10(i)(1)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.14(c)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.16</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.17</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.17(g)</ENT> <ENT>0584-0075</ENT> </ROW> <ROW> <ENT I="01">210.18</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.19</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.22</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.23(c)</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.24</ENT> <ENT>0584-0006</ENT> </ROW> <ROW> <ENT I="01">210.27</ENT> <ENT>0584-0006</ENT> </ROW> </GPOTABLE> <CITA>[53 FR 29147, Aug. 2, 1990. Redesignated at 55 FR 41503, Oct. 12, 1990. Further redesignated at 56 FR 32948, July 17, 1991. Further redesignated at 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 210, App. A</EAR> <HD SOURCE="HED">Appendix A to Part 210—Alternate Foods for Meals</HD> <HD SOURCE="HD1">I. Enriched Macaroni Products with Fortified Protein</HD> <P>1. Schools may utilize the enriched macaroni products with fortified protein defined in paragraph 3 as a food item in meeting the meal requirements of this part under the following terms and conditions:</P> <P>(a) One ounce (28.35 grams) of a dry enriched macaroni product with fortified protein may be used to meet not more than one-half of the meat or meat alternate requirements specified in § 210.10, when served in combination with 1 or more ounces (28.35 grams) of cooked meat, poultry, fish, or cheese. The size of servings of the cooked combination may be adjusted for various age groups.</P> <P>(b) Only enriched macaroni products with fortified protein that bear a label containing substantially the following legend shall be so utilized: “One ounce (28.35 grams) dry weight of this product meets one-half of the meat or meat alternate requirements of lunch or supper of the USDA child nutrition programs when served in combination with 1 or more ounces (28.35 grams) of cooked meat, poultry, fish, or cheese. In those States where State or local law prohibits the wording specified, a legend acceptable to both the State or local authorities and FNS shall be substituted.”</P> <P>(c) Enriched macaroni product may not be used for infants under 1 year of age.<PRTPAGE P="63"/> </P> <P>2. Only enriched macaroni products with fortified protein that have been accepted by FNS for use in the USDA Child Nutrition Programs may be labeled as provided in paragraph 1(b) of this appendix. Manufacturers seeking acceptance of their product shall furnish FNS a chemical analysis, the Protein Digestibility-Corrected Amino Acid Score (PDCAAS), and such other pertinent data as may be requested by FNS, except that prior to November 7, 1994, manufacturers may submit protein efficiency ratio analysis in lieu of the PDCAAS. This information is to be forwarded to: Director, Nutrition and Technical Services Division, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, room 607, Alexandria, VA 22302. All laboratory analyses are to be performed by independent or other laboratories acceptable to FNS. (FNS prefers an independent laboratory.) All laboratories shall retain the “raw” laboratory data for a period of 1 year. Such information shall be made available to FNS upon request. Manufacturers must notify FNS if there is a change in the protein portion of their product after the original testing. Manufacturers who report such a change in protein in a previously approved product must submit protein data in accordance with the method specified in this paragraph.</P> <P>3. The product should not be designed in such a manner that would require it to be classified as a Dietary Supplement as described by the Food and Drug Administration (FDA) in 21 CFR part 105. To be accepted by FNS, enriched macaroni products with fortified protein must conform to the following requirements:</P> <P>(a)(1) Each of these foods is produced by drying formed units of dough made with one or more of the milled wheat ingredients designated in 21 CFR 139.110(a) and 139.138(a), and other ingredients to enable the finished food to meet the protein requirements set out in paragraph 3.(a)(2)(i) under Enriched Macaroni Products with Fortified Protein in this appendix. Edible protein sources, including food grade flours or meals made from nonwheat cereals or from oilseeds, may be used. Vitamin and mineral enrichment nutrients are added to bring the food into conformity with the requirements of paragraph (b) under Enriched Macaroni Products with Fortified Protein in this appendix. Safe and suitable ingredients, as provided for in paragraph (c) under Enriched Macaroni Products with Fortified Protein in this appendix, may be added. The proportion of the milled wheat ingredient is larger than the proportion of any other ingredient used.</P> <P>(2) Each such finished food, when tested by the methods described in the pertinent sections of “Official Methods of Analysis of the AOAC International,” (formerly the Association of Official Analytical Chemists), 15th Ed. (1990) meets the following specifications. This publication is incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from the AOAC International, 2200 Wilson Blvd., suite 400, Arlington, VA 22201-3301. This publication may be examined at the Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, room 607, Alexandria, Virginia 22302 or the Office of the Federal Register, 800 North Capital Street, NW., suite 700, Washington, DC.</P> <P>(i) The protein content (N×6.25) is not less than 20 percent by weight (on a 13 percent moisture basis) as determined by the appropriate method of analysis in the AOAC manual cited in (a)(2) under Enriched Macaroni Products with Fortified Protein in this appendix. The protein quality is not less than 95 percent that of casein as determined on a dry basis by the PDCAAS method as described below:</P> <P>(A) The PDCAAS shall be determined by the methods given in sections 5.4.1, 7.2.1. and 8.0 as described in “Protein Quality Evaluation, Report of the Joint FAO/WHO Expert Consultation on Protein Quality Evaluation,” Rome, 1990, as published by the Food and Agriculture Organization (FAO) of the United Nations/World Health Organization (WHO). This report is incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of this report may be obtained from the Nutrition and Technical Services Division, Food and Nutrition Service, 3101 Park Center Drive, room 607, Alexandria, Virginia 22302. This report may also be inspected at the Office of the Federal Register 800 North Capitol St., NW., suite 700, Washington, DC.</P> <P>(B) The standard used for assessing protein quality in the PDCAAS method is the amino acid scoring pattern established by FAO/WHO and United Nations University (UNU) in 1985 for preschool children 2 to 5 years of age which has been adopted by the National Academy of Sciences, Recommended Dietary Allowances (RDA), 1989.</P> <P>(C) To calculate the PDCAAS for an individual food, the test food must be analyzed for proximate analysis and amino acid composition according to AOAC methods.</P> <P>(D) The PDCAAS may be calculated using FDA's limited data base of published true digestibility values (determined using humans and rats). The true digestibility values contained in the WHO/FAO report referenced in paragraph 3.(a)(2)(i)(A) under Enriched Macaroni Products with Fortified Protein in this appendix may also be used. If the digestibility of the protein is not available from these sources it must be determined by a laboratory according to methods in the FAO/WHO report (sections 7.2.1 and 8.0).</P> <P>(E) The most limiting essential amino acid (that is, the amino acid that is present at the lowest level in the test food compared to the standard) is identified in the test food by <PRTPAGE P="64"/>comparing the levels of individual amino acids in the test food with the 1985 FAO/WHO/UNU pattern of essential amino acids established as a standard for children 2 to 5 years of age.</P> <P>(F) The value of the most limiting amino acid (the ratio of the amino acid in the test food over the amino acid value from the pattern) is multiplied by the percent of digestibility of the protein. The resulting number is the PDCAAS.</P> <P>(G) The PDCAAS of food mixtures must be calculated from data for the amino acid composition and digestibility of the individual components by means of a weighted average procedure. An example for calculating a PDCAAS for a food mixture of varying protein sources is shown in section 8.0 of the FAO/WHO report cited in paragraph 3.(a)(2)(i)(A) under Enriched Macaroni Products with Fortified Protein in this appendix.</P> <P>(H) For the purpose of this regulation, each 100 grams of the product (on a 13 percent moisture basis) must contain protein in amounts which is equivalent to that provided by 20 grams of protein with a quality of not less than 95 percent casein. The equivalent grams of protein required per 100 grams of product (on a 13 percent moisture basis) would be determined by the following equation:</P> <MATH DEEP="26" SPAN="1"> <MID>ER07OC94.022</MID> </MATH> <P>X=grams of protein required per 100 grams of product</P> <P>a=20 grams (amount of protein if casein)</P> <P>b=.95 [95% × 1 (PDCAAS of casein)</P> <P>c=PDCAAS for protein used in formulation</P> <P>(ii) The total solids content is not less than 87 percent by weight as determined by the methods described in the “Official Methods of Analysis of the AOAC International” cited in paragraph (a)(2) under Enriched Macaroni Products with Fortified Protein in this appendix.</P> <P>(b)(1) Each pound of food covered by this section shall contain 5 milligrams of thiamine, 2.2 milligrams of riboflavin, 34 milligrams of niacin or niacinamide, and 16.5 milligrams of iron.</P> <P>(2) Each pound of such food may also contain 625 milligrams of calcium.</P> <P>(3) Only harmless and assimilable forms of iron and calcium may be added. The enrichment nutrients may be added in a harmless carrier used only in a quantity necessary to effect a uniform distribution of the nutrients in the finished food. Reasonable overages, within the limits of good manufacturing practice, may be used to assure that the prescribed levels of the vitamins and mineral(s) in paragraphs (b)(1) and (2) under Enriched Macaroni Products with Fortified Protein in this appendix are maintained throughout the expected shelf life of the food under customary conditions of distribution.</P> <P>(c) Ingredients that serve a useful purpose such as to fortify the protein or facilitate production of the food are the safe and suitable ingredients referred to in paragraph (a) under Enriched Macaroni Products with Fortified Protein in this appendix. This does not include color additives, artificial flavorings, artificial sweeteners, chemical preservatives, or starches. Ingredients deemed suitable for use by this paragraph are added in amounts that are not in excess of those reasonably required to achieve their intended purposes. Ingredients are deemed to be safe if they are not food additives within the meaning of section 201(s) of the Federal Food, Drug and Cosmetic Act, or in case they are food additives if they are used in conformity with regulations established pursuant to section 409 of the act.</P> <P>(d)(1) The name of any food covered by this section is “Enriched Wheat ________ Macaroni Product with Fortified Protein”, the blank being filled in with appropriate word(s) such as “Soy” to show the source of any flours or meals used that were made from non-wheat cereals or from oilseeds. In lieu of the words “Macaroni Product” the words “Macaroni”, “Spaghetti”, or “Vermicelli” as appropriate, may be used if the units conform in shape and size to the requirements of 21 CFR 139.110 (b), (c), or (d).</P> <P>(2) When any ingredient not designated in the part of the name prescribed in paragraph (d)(1) under Enriched Macaroni Products with Fortified Protein in this appendix, is added in such proportion as to contribute 10 percent or more of the quantity of protein contained in the finished food, the name shall include the statement “Made with ________”, the blank being filled in with the name of each such ingredient, e.g. “Made with nonfat milk”.</P> <P>(3) When, in conformity with paragraph (d)(1) or (d)(2) under Enriched Macaroni Products with Fortified Protein in this appendix, two or more ingredients are listed in the name, their designations shall be arranged in descending order of predominance by weight.</P> <P>(4) If a food is made to comply with a section of 21 CFR part 139, but also meets the compositional requirements of the Enriched Macaroni with Fortified Protein Appendix, it may alternatively bear the name set out in the other section.</P> <P>(e) Each ingredient used shall declare its common name as required by the applicable section of 21 CFR part 101. In addition, the ingredients statement shall appear in letters not less than one half the size of that required by 21 CFR 101.105 for the declaration of net quantity of contents, and in no case less than one-sixteenth of an inch in height.<PRTPAGE P="65"/> </P> <HD SOURCE="HD1">II. Alternate Protein Products</HD> <HD SOURCE="HD2">A. What Are the Criteria for Alternate Protein Products Used in the National School Lunch Program?</HD> <P>1. An alternate protein product used in meals planned under the food-based menu planning approaches in § 210.10(k), must meet all of the criteria in this section.</P> <P>2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:</P> <P>a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.</P> <P>b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).</P> <P>c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).</P> <P>d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A2. a through c of this appendix.</P> <P>e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.</P> <P>f. For an alternate protein product mix, manufacturers should provide information on:</P> <P>(1) the amount by weight of dry alternate protein product in the package;</P> <P>(2) hydration instructions; and</P> <P>(3) instructions on how to combine the mix with meat or other meat alternates.</P> <HD SOURCE="HD2">B. How Are Alternate Protein Products Used in the National School Lunch Program?</HD> <P>1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 210.10.</P> <P>2. The following terms and conditions apply:</P> <P>a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.</P> <P>b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).</P> <HD SOURCE="HD2">C. How Are Commercially Prepared Products Used in the National School Lunch Program?</HD> <P>Schools, institutions, and service institutions may use a commercially prepared meat or meat alternate product combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.</P> <CITA>[51 FR 34874, Sept. 30, 1986; 51 FR 41295, Nov. 14, 1986, as amended at 53 FR 29164, Aug. 2, 1988; 59 FR 51086, Oct. 7, 1994; 60 FR 31216; June 13, 1995; 61 FR 37671, July 19, 1996; 65 FR 12434, Mar. 9, 2000; 65 FR 26912, May 9, 2000]</CITA> </APPENDIX> <APPENDIX> <EAR>Pt. 210, App. B</EAR> <HD SOURCE="HED">Appendix B to Part 210—Categories of Foods of Minimal Nutritional Value</HD> <P>(a) <E T="03">Foods of minimal nutritional value</E>—Foods of minimal nutritional value are:</P> <P>(1) Soda Water—A class of beverages made by absorbing carbon dioxide in potable water. The amount of carbon dioxide used is not less than that which will be absorbed by the beverage at a pressure of one atmosphere and at a temperature of 60° F. It either contains no alcohol or only such alcohol, not in excess of 0.5 percent by weight of the finished beverage, as is contributed by the flavoring ingredient used. No product shall be excluded from this definition because it contains artificial sweeteners or discrete nutrients added to the food such as vitamins, minerals and protein.</P> <P>(2) <E T="03">Water Ices</E>—As defined by 21 CFR 135.160 Food and Drug Administration Regulations except that water ices which contain fruit or fruit juices are not included in this definition.</P> <P>(3) <E T="03">Chewing Gum</E>—Flavored products from natural or synthetic gums and other ingredients which form an insoluble mass for chewing.</P> <P>(4) <E T="03">Certain Candies</E>—Processed foods made predominantly from sweeteners or artifical sweeteners with a variety of minor ingredients which characterize the following types:</P> <P>(i) <E T="03">Hard Candy</E>—A product made predominantly from sugar (sucrose) and corn syrup which may be flavored and colored, is characterized by a hard, brittle texture, and includes such items as sour balls, fruit balls, candy sticks, lollipops, starlight mints, after dinner mints, sugar wafers, rock candy, cinnamon candies, breath mints, jaw breakers and cough drops.<PRTPAGE P="66"/> </P> <P>(ii) <E T="03">Jellies and Gums</E>—A mixture of carbohydrates which are combined to form a stable gelatinous system of jelly-like character, and are generally flavored and colored, and include gum drops, jelly beans, jellied and fruit-flavored slices.</P> <P>(iii) <E T="03">Marshmallow Candies</E>—An aerated confection composed as sugar, corn syrup, invert sugar, 20 percent water and gelatin or egg white to which flavors and colors may be added.</P> <P>(iv) <E T="03">Fondant</E>—A product consisting of microscopic-sized sugar crystals which are separated by thin film of sugar and/or invert sugar in solution such as candy corn, soft mints.</P> <P>(v) <E T="03">Licorice</E>—A product made predominantly from sugar and corn syrup which is flavored with an extract made from the licorice root.</P> <P>(vi) <E T="03">Spun Candy</E>—A product that is made from sugar that has been boiled at high temperature and spun at a high speed in a special machine.</P> <P>(vii) <E T="03">Candy Coated Popcorn</E>—Popcorn which is coated with a mixture made predominantly from sugar and corn syrup.</P> <P>(b) <E T="03">Petitioning Procedures</E>—Reconsideration of the list of foods of minimal nutritional value identified in paragraph (a) of this section may be pursued as follows:</P> <P>(1) Any person may submit a petition to FNS requesting that an individual food be exempted from a category of foods of minimal nutritional value listed in paragraph (a). In the case of artificially sweetened foods, the petition must include a statement of the percent of Reference Daily Intake (RDI) for the eight nutrients listed in § 210.11(a)(2) “Foods of minimal nutritional value,” that the food provides per serving and the petitioner's source of this information. In the case of all other foods, the petition must include a statement of the percent of RDI for the eight nutrients listed in § 210.11(a)(2) “Foods of minimal nutritional value,” that the food provides per serving and per 100 calories and the petitioner's source of this information. The Department will determine whether or not the individual food is a food of minimal nutritional value as defined in § 210.11(a)(2) and will inform the petitioner in writing of such determination, and the public by notice in the <E T="04">Federal Register</E> as indicated below under paragraph (b)(3) of this section. In determining whether an individual food is a food of minimal nutritional value, discrete nutrients added to the food will not be taken into account.</P> <P>(2) Any person may submit a petition to FNS requesting that foods in a particular category of foods be classified as foods of minimal nutritional value as defined in § 210.11(a)(2). The petition must identify and define the food category in easily understood language, list examples of the food contained in the category and include a list of ingredients which the foods in that category usually contain. If, upon review of the petition, the Department determines that the foods in that category should not be classified as foods of minimal nutritional value, the petitioners will be so notified in writing. If, upon review of the petition, the Department determines that there is a substantial likelihood that the foods in that category should be classified as foods of minimal nutritional value as defined in § 210.11(a)(2), the Department shall at that time inform the petitioner. In addition, the Department shall publish a proposed rule restricting the sale of foods in that category, setting forth the reasons for this action, and soliciting public comments. On the basis of comments received within 60 days of publication of the proposed rule and other available information, the Department will determine whether the nutrient composition of the foods indicates that the category should be classified as a category of foods of minimal nutritional value. The petitioner shall be notified in writing and the public shall be notified of the Department's final determination upon publication in the <E T="04">Federal Register</E> as indicated under paragraph (b)(3) of this section.</P> <P>(3) By May 1 and November 1 of each year, the Department will amend appendix B to exclude those individual foods identified under paragraph (b)(1) of this section, and to include those categories of foods identified under paragraph (b)(2) of this section, <E T="03">provided,</E> that there are necessary changes. The schedule for amending appendix B is as follows:</P> <GPOTABLE CDEF="s50,r25,r25" COLS="3" OPTS="L2,i1"> <BOXHD> <CHED H="1">Actions for publication</CHED> <CHED H="1">Publication</CHED> <CHED H="2">May</CHED> <CHED H="2">November</CHED> </BOXHD> <ROW> <ENT I="01">Deadline for receipt of petitions by USDA</ENT> <ENT>Nov. 15</ENT> <ENT>May 15.</ENT> </ROW> <ROW> <ENT I="01">USDA to notify petitioners of results of Departmental review and publish proposed rule (if applicable)</ENT> <ENT>Feb. 1</ENT> <ENT>Aug. 1.</ENT> </ROW> <ROW> <ENT I="01">60 Day comment period</ENT> <ENT>Feb. 1 through Apr. 1</ENT> <ENT>Aug. 1 through Oct. 1.</ENT> </ROW> <ROW> <ENT I="01">Public notice of amendment of appendix B by</ENT> <ENT>May 1</ENT> <ENT>Nov. 1.</ENT> </ROW> </GPOTABLE> <P>(4) Written petitions should be sent to the Chief, Technical Assistance Branch, Nutrition and Technical Services Division, FNS, USDA, Alexandria, Virginia 22302, on or before November 15 or May 15 of each year. Petitions must include all information specified in paragraph (b) of this appendix and § 220.12(b) (1) or (2) as appropriate.</P> <CITA>[53 FR 29147, Aug. 2, 1988, as amended at 54 FR 18465, May 1, 1989; 59 FR 23614, May 6, 1994]</CITA> </APPENDIX> <APPENDIX> <PRTPAGE P="67"/> <EAR>Pt. 210, App. C</EAR> <HD SOURCE="HED">Appendix C to Part 210—Child Nutrition Labeling Program</HD> <P>1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service in conjunction with the Food Safety and Inspection Service (FSIS), and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture, and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer's recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.</P> <P>2. Products eligible for CN labels are as follows:</P> <P>(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10, 225.20, and 226.20 and are served in the main dish.</P> <P>(b) Juice drinks and juice drink products that contain a minimum of 50 percent full-strength juice by volume.</P> <P>3. For the purpose of this appendix the following definitions apply:</P> <P>(a) “CN label” is a food product label that contains a CN label statement and CN logo as defined in paragraph 3 (b) and (c) below.</P> <P>(b) The “CN logo” (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).</P> <GPH DEEP="84" SPAN="2"> <GID>EC17SE91.000</GID> </GPH> <P>(c) The “CN label statement” includes the following:</P> <P>(1) The product identification number (assigned by FNS),</P> <P>(2) The statement of the product's contribution toward meal pattern requirements of 7 CFR 210.10, § 220.8 or § 220.8a, whichever is applicable, §§ 225.20, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements,</P> <P>(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and</P> <P>(4) The approval date.</P> <P>For example:</P> <GPH DEEP="65" SPAN="2"> <GID>EC17SE91.001</GID> </GPH> <P>(d) <E T="03">Federal inspection</E> means inspection of food products by FSIS, AMS or USDC.</P> <P>4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:<PRTPAGE P="68"/> </P> <P>(a) The CN label must be reviewed and approved at the national level by FNS and appropriate USDA or USDC Federal agency responsible for the inspection of the product.</P> <P>(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.</P> <P>(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate, and the manufacturer's or distributor's name and address. The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:</P> <GPH DEEP="42" SPAN="1"> <GID>EC17SE91.002</GID> </GPH> <P>(d) Yields for determining the product's contribution toward meal pattern requirements must be calculated using the <E T="03">Food Buying Guide for Child Nutrition Programs</E> (Program AID Number 1331).</P> <P>5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.</P> <P>6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the Child Nutrition Programs purchases a CN labeled product and uses it in accordance with the manufacturer's directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10, § 220.8 or § 220.8a, whichever is applicable, §§ 225.20, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report of the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Services of the USDC, Food and Drug Administration, or the Department of Justice for action against the company. Any or all of the following courses of action may be taken:</P> <P>(a) The company's CN label may be revoked for a specific period of time;</P> <P>(b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product;</P> <P>(c) The company's name will be circulated to regional FNS offices;</P> <P>(d) FNS will require the food service program involved to notify the State agency of the labeling violation.</P> <P>7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program. To apply for a CN label and to obtain additional information on CN label application procedures write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.</P> <CITA>[51 FR 34874, Sept. 30, 1986, as amended at 53 FR 29164, Aug. 2, 1988; 60 FR 31216, June 13, 1995; 65 FR 26912, May 9, 2000]</CITA> </APPENDIX> </SUBPART> </PART> <PART> <EAR>Pt. 215</EAR> <HD SOURCE="HED">PART 215—SPECIAL MILK PROGRAM FOR CHILDREN</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>215.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <SECTNO>215.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>215.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>215.4</SECTNO> <SUBJECT>Payments of funds to States and FNSROs.</SUBJECT> <SECTNO>215.5</SECTNO> <SUBJECT>Method of payment to States.</SUBJECT> <SECTNO>215.6</SECTNO> <SUBJECT>Use of funds.</SUBJECT> <SECTNO>215.7</SECTNO> <SUBJECT>Requirements for participation.</SUBJECT> <SECTNO>215.8</SECTNO> <SUBJECT>Reimbursement payments.</SUBJECT> <SECTNO>215.9</SECTNO> <SUBJECT>Effective date for reimbursement.</SUBJECT> <SECTNO>215.10</SECTNO> <SUBJECT>Reimbursement procedures.</SUBJECT> <SECTNO>215.11</SECTNO> <SUBJECT>Special responsibilities of State agencies.</SUBJECT> <SECTNO>215.12</SECTNO> <SUBJECT>Claims against schools or child-care institutions.</SUBJECT> <SECTNO>215.13</SECTNO> <SUBJECT>Management evaluations and audits.</SUBJECT> <SECTNO>215.13a</SECTNO> <SUBJECT>Determining eligibility for free milk in child-care institutions.</SUBJECT> <SECTNO>215.14</SECTNO> <SUBJECT>Nondiscrimination.</SUBJECT> <SECTNO>215.14a</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <SECTNO>215.15</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <SECTNO>215.16</SECTNO> <SUBJECT>Program information.</SUBJECT> <SECTNO>215.17</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>42 U.S.C. 1772 and 1779.</P> </AUTH> <SECTION> <SECTNO>§ 215.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <P>This part announces the policies and prescribes the general regulations with respect to the Special Milk Program for Children, under the Child Nutrition Act of 1966, as amended, and sets forth the general requirements for participation in the program. The Act reads in pertinent part as follows: </P> <EXTRACT> <P>Section 3(a)(1) There is hereby authorized to be appropriated for the fiscal year ending <PRTPAGE P="69"/>June 30, 1970, and for each succeeding fiscal year such sums as may be necessary to enable the Secretary of Agriculture, under such rules and regulations as he may deem in the public interest, to encourage consumption of fluid milk by children in the United States in (A) nonprofit schools of high school grade and under, except as provided in paragraph (2), which do not participate in a meal service program authorized under this Act or the National School Lunch Act, and (B) nonprofit nursery schools, child care centers, settlement houses, summer camps, and similar nonprofit institutions devoted to the care and training of children, which do not participate in a meal service program authorized under this Act or the National School Lunch Act.</P> <P>(2) The limitation imposed under paragraph (1)(A) for participation of nonprofit schools in the special milk program shall not apply to split-session kindergarten programs conducted in schools in which children do not have access to the meal service program operating in schools the children attend as authorized under this Act or the National School Lunch Act (42 U.S.C. 1751 <E T="03">et seq</E>.).</P> <P>(3) For the purposes of this section “United States” means the fifty States, Guam, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and the District of Columbia.</P> <P>(4) The Secretary shall administer the special milk program provided for by this section to the maximum extent practicable in the same manner as he administered the special milk program provided for by Pub. L. 89-642, as amended, during the fiscal year ending June 30, 1969.</P> <P>(5) Any school or nonprofit child care institution which does not participate in a meal service program authorized under this Act or the National School Lunch Act shall receive the special milk program upon their request.</P> <P>(6) Children who qualify for free lunches under guidelines established by the Secretary shall, at the option of the school involved (or of the local educational agency involved in the case of a public school) be eligible for free milk upon their request.</P> <P>(7) For the fiscal year ending June 30, 1975, and for subsequent school years, the minimum rate of reimbursement for a half-pint of milk served in schools and other eligible institutions shall not be less than 5 cents per half-pint served to eligible children, and such minimum rate of reimbursement shall be adjusted on an annual basis each school year to reflect changes in the Producer Price Index for Fresh Processed Milk published by the Bureau of Labor Statistics of the Department of Labor.</P> <P>(8) Such adjustment shall be computed to the nearest one-fourth cent.</P> <P>(9) Notwithstanding any other provision of this section, in no event shall the minimum rate of reimbursement exceed the cost to the school or institution of milk served to children.</P> </EXTRACT> <CITA>[52 FR 7562, Mar. 12, 1987]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purpose of this part, the term:</P> <P>(a) <E T="03">Act</E> means the Child Nutrition Act of 1966.</P> <P>(b) <E T="03">Adults</E> means those persons not included under the definition of children.</P> <P>(c) [Reserved]</P> <P>(d) <E T="03">Child and Adult Care Food Program</E> means the program authorized by section 17 of the National School Lunch Act, as amended.</P> <P>(e) <E T="03">Child-care institution</E> means any nonprofit nursery school, child-care center, settlement house, summer camp, service institution participating in the Summer Food Program for Children pursuant to part 225 of this chapter, institution participating in the Child and Adult Care Food Program pursuant to part 226 of this chapter, or similar nonprofit institution devoted to the care and training of children. The term “child-care institution” also includes a nonprofit agency to which such institution has delegated authority for the operation of a milk program in the institution. It does not include any institution falling within the definition of “School” in paragraph (v) of this section.</P> <P>(e-1) <E T="03">Children</E> means persons under 19 chronological years of age in child-care institutions as defined in § 215.2(e); or persons under 21 chronological years of age attending schools as defined in § 215.2(v)(3) and (4) of this part; or students, including students who are mentally or physically disabled as defined by the State and who are participating in a school program established for the mentally or physically disabled, of high school grade or under as determined by the State educational agency in schools as defined in § 215.2(v)(1) and (2) of this part.</P> <P>(e-2) <E T="03">CND</E> means the Child Nutrition Division of the Food and Nutrition Service of the Department.</P> <P>(f) <E T="03">FNS</E> means the Food and Nutrition Service of the U.S. Department of Agriculture.<PRTPAGE P="70"/> </P> <P>(g) <E T="03">FNSRO</E> means Food and Nutrition Services Regional Offices, of the Food and Nutrition Service of the U.S. Department of Agriculture.</P> <P>(h) <E T="03">Cost of milk</E> means the net purchase price paid by the school or child-care institution to the milk supplier for milk delivered to the school or child-care institution. This shall not include any amount paid to the milk supplier for servicing, rental of or installment purchase of milk service equipment.</P> <P>(i) <E T="03">Department</E> means the U.S. Department of Agriculture.</P> <P>(i-1) <E T="03">Disclosure</E> means individual children's program eligibility information obtained through the free milk eligibility process that is revealed or used for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.</P> <P>(j) <E T="03">Family</E> means a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit.</P> <P>(j-1) <E T="03">Free milk</E> means milk for which neither the child nor any member of his family pays or is required to work in the school or child-care institution or in its food service.</P> <P>(k) <E T="03">Fiscal year</E> means the period of 12 calendar months beginning October 1, 1977, and each October 1 of any calendar year thereafter and ending September 30 of the following calendar year.</P> <P>(k-1) <E T="03">Medicaid</E> means the State medical assistance program under title XIX of the Social Security Act (42 U.S.C. 1396 <E T="03">et seq.</E>).</P> <P>(l) <E T="03">Milk</E> means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, and the Virgin Islands, if a sufficient supply of such types of fluid milk cannot be obtained, <E T="03">milk</E> shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and consistent with State and local standards for such milk.</P> <P>(m) <E T="03">National School Lunch Program</E> means the program under which general cash-for-food assistance and special cash assistance are made available to schools pursuant to part 210 of this chapter.</P> <P>(n) <E T="03">Needy children</E> means: (1) Children who attend schools participating in the Program and who meet the School Food Authority's eligibility standards for free milk approved by the State agency, or FNSRO where applicable, under part 245 of this chapter; and (2) children who attend child-care institutions participating in the Program and who meet the eligibility standards for free milk approved by the State agency, or FNSRO where applicable, under § 215.13a of this part.</P> <P>(o) [Reserved]</P> <P>(p) <E T="03">Nonpricing program</E> means a program which does not sell milk to children. This shall include any such program in which children are normally provided milk, along with food and other services, in a school or child-care institution financed by a tuition, boarding, camping or other fee, or by private donations or endowments.</P> <P>(q) <E T="03">Nonprofit milk service</E> means milk service maintained by or on behalf of the school or child-care institution for the benefit of the children, all of the income from which is used solely for the operation or improvement of such milk service.</P> <P>(r) <E T="03">Nonprofit</E> means exempt from income tax under the Internal Revenue Code, as amended.</P> <P>(s) <E T="03">OA</E> means the Office of Audit of the United States Department of Agriculture.</P> <P>(s-1) <E T="03">OIG</E> means the Office of the Inspector General of the Department.</P> <P>(t) <E T="03">Pricing program</E> means a program which sells milk to children. This shall include any such program in which maximum use is made of Program reimbursement payments in lowering, or reducing to “zero,” wherever possible, the price per half pint which children would normally pay for milk.</P> <P>(u) <E T="03">Program</E> means the Special Milk Program for Children.<PRTPAGE P="71"/> </P> <P>(u-1) <E T="03">Reimbursement</E> means financial assistance paid or payable to participating schools and child-care institutions for milk served to eligible children.</P> <P>(v) <E T="03">School</E> means: (1) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (2) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; (3) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, <E T="03">except for</E> residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term <E T="03">residential child care institutions</E> includes, but is not limited to: Homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is intended for the care of children confined for 30 days or more; or (4) with respect to the Commonwealth of Puerto Rico, nonprofit child care centers certified as such by the Governor of Puerto Rico.</P> <P>(w) <E T="03">School Breakfast Program</E> means the program authorized by section 4 of the Child Nutrition Act of 1966, as amended.</P> <P>(w-1) <E T="03">School Food Authority</E> means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a milk program therein. The term “School Food Authority” also includes a nonprofit agency to which such governing body has delegated authority for the operation of a milk program in a school.</P> <P>(x) <E T="03">School year</E> means the period of 12 calendar months beginning July 1, 1977, and each July 1 of any calendar year thereafter and ending June 30 of the following calendar year.</P> <P>(x-1) <E T="03">7 CFR part 3015</E> means the Uniform Federal Assistance Regulations published by the Department to implement OMB Circulars A-21, A-87, A-102, A-110, and A-122; and Executive Order 12372. (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P>(x-2) <E T="03">7 CFR part 3017</E> means the Department's regulation to implement Executive Order 12549, covering governmentwide rules on suspension and debarment as well as The Drug Free Workplace Act of 1988.</P> <P>(x-3) <E T="03">7 CFR part 3018</E> means the Department's Common Rule regarding Governmentwide New Restrictions on Lobbying. Part 3018 implements the requirements established by section 319 of the 1990 Appropriations Act for the Department of Interior and Related Agencies (Pub. L. 101-121).</P> <P>(x-4) <E T="03">7 CFR part 3052</E> means the Department's regulations implementing OMB Circular A-133, “Audits of State, Local Governments, and Non-Profit Organizations.” (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P>(x-5) <E T="03">Split-session</E> means an educational program operating for approximately one-half of the normal school day.</P> <P>(y) <E T="03">State</E> means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.</P> <P>(z) <E T="03">State agency</E> means the State educational agency or any other State agency that has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program.</P> <P>(aa) <E T="03">State Children's Health Insurance Program (SCHIP)</E> means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa <E T="03">et seq.</E>).<PRTPAGE P="72"/> </P> <P>(bb) <E T="03">Summer Food Service Program for Children</E> means the program authorized by section 13 of the National School Lunch Act, as amended.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766; sec. 10(a), Pub. L. 95-627, 92 Stat. 3623 (42 U.S.C. 1760; sec. 10(d)), Pub. L. 95-627, 92 Stat. 3624 (42 U.S.C. 1757); sec. 14, Pub. L. 95-627, 92 Stat. 3625-3626; sec. 205, Pub. L. 96-499, The Omnibus Reconciliation Act of 1980, 94 Stat. 2599; secs. 807 and 808, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1772, 1784, 1760))</SECAUTH> <CITA>[32 FR 12587, Aug. 31, 1967]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 215.2, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 215.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program. Within FNS, CND shall be responsible for Program administration.</P> <P>(b) Within the States, to the extent practicable and permissible under State law, responsibility for the administration of the Program in schools and child-care institutions shall be in the educational agency of the State: <E T="03">Provided, however,</E> That another State agency, upon request by the Governor or other appropriate State executive or legislative authority, may be approved to administer the Program in schools as defined in § 215.2(v)(3) or § 215.2(v)(4) or in child-care institutions.</P> <P>(c) FNSRO shall administer the Program in any school as defined in § 215.2(v)(1), § 215.2(v)(2) or § 215.2(v)(3) or in any child-care institution as defined in § 215.2(e) wherein the State agency is not permitted by law to disburse Federal funds paid to it under the Program; <E T="03">Provided, however,</E> That FNSRO shall also administer the Program in all other schools and child-care institutions which have been under continuous FNS administration since October 1, 1980 unless the administration of such schools and institutions is assumed by a State agency. References in this part to “FNSRO where applicable” are to FNSRO as the agency administering the Program to schools or child-care institutions within certain States.</P> <P>(d) Each State agency desiring to take part in the Program shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part. Such agreement shall cover the operation of the Program during the period specified therein and may be extended at the option of the Department.</P> <SECAUTH>(Secs. 804, 816 and 817, Pub. L. 97-35; 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771 and 1785))</SECAUTH> <CITA>[Amdt. 14, 41 FR 31174, July 27, 1976, as amended by Amdt. 24, 47 FR 14133 Apr. 2, 1982; Amdt. 36, 54 FR 2989, Jan. 23, 1989]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.4</SECTNO> <SUBJECT>Payments of funds to States and FNSROs.</SUBJECT> <P>(a) For each fiscal year, the Secretary shall make payments to each State agency at such times as he may determine from the funds appropriated for Program reimbursement. Subject to § 215.11(c)(2), the total of these payments for each State for any fiscal year shall be limited to the amount of reimbursement payable to School Food Authorities and child care institutions under § 215.8 of this part for the total number of half-pints of milk served under the Program to eligible children from October 1 to September 30.</P> <P>(b) Each State agency shall be responsible for controlling Program reimbursement payments so as to keep within the funds made available to it, and for the timely reporting to FNS of the number of half pints of milk actually served. The Secretary shall increase or decrease the available level of funding by adjusting the State agency's Letter of Credit when appropriate.</P> <SECAUTH>(Pub. L. 97-370, 96 Stat. 1806)</SECAUTH> <CITA>[Amdt. 14, 41 FR 31174, July 27, 1976, as amended by Amdt. 30, 49 FR 18986, May 4, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.5</SECTNO> <SUBJECT>Method of payment to States.</SUBJECT> <P>(a) Funds to be paid to any State shall be made available by means of Letters of Credit issued by FNS in favor of the State agency. The State agency shall:</P> <P>(1) Obtain funds needed to reimburse School Food Authorities and child-care institutions through presentation by designated State officials of a Payment <PRTPAGE P="73"/>Voucher on Letter of Credit (Treasury Form GFO 7578) in accordance with procedures prescribed by FNS and approved by the U.S. Treasury Department; (2) submit requests for funds only at such times and in such amounts as will permit prompt payment of claims; (3) use the funds received from such requests without delay for the purpose for which drawn. Notwithstanding the foregoing provisions, if funds are made available by Congress for the operation of the Program under a continuing resolution, Letters of Credit shall reflect only the amount available for the effective period of the resolution.</P> <P>(b) [Reserved]</P> <P>(c) The State agency shall release to FNS any Federal funds made available to it under the Program which are unobligated at the end of each fiscal year. Release of funds by the State agency shall be made as soon as practicable but in no event later than 30 days following demand by FNSRO, and shall be reflected by a related adjustment in the State agency's Letter of Credit.</P> <CITA>[Amdt. 13, 39 FR 28416, Aug. 7, 1974, as amended by Amdt. 14, 41 FR 31174, July 27, 1976]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.6</SECTNO> <SUBJECT>Use of funds.</SUBJECT> <P>(a) Federal funds made available under the Program shall be used to encourage the consumption of milk through reimbursement payments to schools and child-care institutions in connection with the purchase and service of milk to children in accordance with the provisions of this part: <E T="03">Provided, however,</E> That, with the approval of FNS, any State agency, or FNSRO where applicable, may reserve for use in carrying out special developmental projects an amount equal to not more than 1 per centum of the Federal funds so made available for any fiscal year.</P> <P>(b) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall: (1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than 5 years or both; or (2) if such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.</P> <P>(c) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (b) of this section.</P> <SECAUTH>(Sec. 10(a), Pub. L. 95-627, 92 Stat. 3623 (42 U.S.C. 1760; sec. 10(d)(3), Pub. L. 95-627, 92 Stat. 3624 (42 U.S.C. 1757); sec. 14, Pub. L. 95-627, 92 Stat. 3625-3626; 44 U.S.C. 3506))</SECAUTH> <CITA>[Amdt. 14, 41 FR 31174, July 27, 1976, as amended by Amdt. 18, 44 FR 37898, June 29, 1979; 47 FR 746, Jan. 7, 1982; 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.7</SECTNO> <SUBJECT>Requirements for participation.</SUBJECT> <P>(a) Any school or nonprofit child care institution shall receive the Special Milk Program upon request provided it does not participate in a meal service program authorized under the Child Nutrition Act of 1966 or the National School Lunch Act; except that schools with such meal service may receive the Special Milk Program upon request only for the children attending split-session kindergarten programs who do not have access to the meal service. Each School Food Authority or child-care institution shall make written application to the State agency, or FNSRO where applicable, for any school or child-care institution in which it desires to operate the Program, if such school or child-care institution did not participate in the Program in the prior fiscal year.</P> <P>(b) Any School Food Authority or child care institution participating in the Program may elect to serve free milk to children eligible for free meals. Upon application for the Program, each School Food Authority or child care institution:</P> <P>(1) Shall be required by the State agency, or FNSRO where applicable, to state whether or not it wishes to provide free milk in the schools or institutions participating under its jurisdiction and</P> <P>(2) If it so wishes to provide free milk, shall also submit for approval a free milk policy statement which, if for <PRTPAGE P="74"/>a school, shall be in accordance with part 245 of this chapter or, if for a child care institution, shall be in accordance with § 215.13a of this part.</P> <P>(c) The application shall include information in sufficient detail to enable the State agency, or FNSRO where applicable, to determine whether the School Food Authority or child-care institution is eligible to participate in the Program and extent of the need for Program payments.</P> <P>(d) Each school food authority or child care institution approved to participate in the program shall enter into a written agreement with the State agency or FNSRO, as applicable, that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency to suspend or terminate the agreement in accordance with § 215.15. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each SFA with a single agreement with respect to the operation of those programs. Such agreement shall provide that the School Food Authority or child-care institution shall, with respect to participating schools and child-care institutions under its jurisdiction:</P> <P>(1) Operate a nonprofit milk service. However, school food authorities may use facilities, equipment, and personnel supported with funds provided to a school food authority under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 <E T="03">et seq.</E>).</P> <P>(2) If electing to provide free milk (i) serve milk free to all eligible children, at times that milk is made available to nonneedy children under the Program; and (ii) make no discrimination against any needy child because of his inability to pay for the milk.</P> <P>(3) Comply with the requirements of the Department's regulations respecting nondiscrimination (7 CFR part 15);</P> <P>(4) Claim reimbursement only for milk as defined in this part and in accordance with the provisions of § 215.8 and § 215.10;</P> <P>(5) Submit Claims for Reimbursement in accordance with § 215.10 of this part and procedures established by the State agency or FNSRO where applicable;</P> <P>(6) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable;</P> <P>(7) Upon request, make all records pertaining to its milk program available to the State agency and to FNS or OA for audit and administrative review, at any reasonable time and place. Such records shall be retained for a period of three years after the end of the fiscal year to which they pertain, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit;</P> <P>(8) Retain the individual applications for free milk submitted by families for a period of three years after the end of the fiscal year to which they pertain, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.</P> <P>(e) <E T="03">State requirements.</E> Nothing contained in this part shall prevent a State agency from imposing additional requirements for participation in the Program which are not inconsistent with the provision of this part.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); sec. 5, Pub. L. 95-627, 92 Stat. 3619 (42 U.S.C. 1772); secs. 801, 803, 812; Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1759(a), 1773, 1758); 44 U.S.C. 3506)</SECAUTH> <CITA>[Amdt. 13, 39 FR 28416, Aug. 7, 1974, as amended by Amdt. 14, 41 FR 31174, July 27, 1976; Amdt. 16, 43 FR 1059, Jan. 6, 1978; 44 FR 10700, Feb. 23, 1979; Amdt. 17, 44 FR 33047, June 8, 1979; 46 FR 51635, Oct. 20, 1981; 47 FR 745, Jan. 7, 1982; Amdt. 30, 49 FR 18986, 18987, May 4, 1984; 52 FR 7562, Mar. 12, 1987; 52 FR 15298, Apr. 28, 1987; 64 FR 50741, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.8</SECTNO> <SUBJECT>Reimbursement payments.</SUBJECT> <P>(a) [Reserved]</P> <P>(b)(1) The rate of reimbursement per half-pint of milk purchased and (i) served in nonpricing programs to all children; (ii) served to all children in pricing programs by institutions and School Food Authorities not electing to provide free milk; and (iii) served to children other than needy children in pricing programs by institutions and School Food Authorities electing to <PRTPAGE P="75"/>provide free milk shall be the rate announced by the Secretary for the applicable school year. However, in no event shall the reimbursement for each half-pint (236 ml.) of milk served to children exceed the cost of the milk to the school or child care institution.</P> <P>(2) The rate of reimbursement for milk purchased and served free to needy children in pricing programs by institutions and School Food Authorities electing to provide free milk shall be the average cost of milk, i.e., the total cost of all milk purchased during the claim period, divided by the total number of purchased half-pints.</P> <P>(c) Schools and child-care institutions having pricing programs shall use the reimbursement payments received to reduce the price of milk to children.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); sec. 5, Pub. L. 95-627, 92 Stat. 3619 (42 U.S.C. 1772); Omnibus Reconciliation Act of 1980, sec. 209, Pub. L. 96-499, 94 Stat. 2599; secs. 807 and 808, Pub. L. 97-35, 95 Stat. 521-535, 42 U.S.C. 1772, 1784, 1760; secs. 805 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1773))</SECAUTH> <CITA>[Amdt. 13, 39 FR 28416, Aug. 7, 1974, as amended by Amdt. 16, 43 FR 1060, Jan. 6, 1978; 44 FR 10700, Feb. 23, 1979; Amdt. 17, 44 FR 33047, June 8, 1979; 46 FR 51365, Oct. 20, 1981; Amdt. 23, 47 FR 14134, Apr. 2, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.9</SECTNO> <SUBJECT>Effective date for reimbursement.</SUBJECT> <P>(a) A State Agency, or FNSRO where applicable, may grant written approval to begin operations under the Program prior to the receipt of the application from the School Food Authority or child-care institution. Such written approval shall be attached to the subsequently filed application, and the agreement executed by the School Food Authority or child-care institution shall be effective from the date upon which the School Food Authority or child-care institution was authorized to begin operations: <E T="03">Provided, however,</E> That such effective date shall not be earlier than the calendar month preceding the calendar month in which the agreement is executed by the State Agency or by the Department.</P> <P>(b) Reimbursement payments pursuant to § 215.8 shall be made for milk purchased and served to children at any time during the effective period of an agreement between a School Food Authority or child care institution and the State agency or the Department.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766))</SECAUTH> <CITA>[32 FR 12587, Aug. 31, 1967, as amended by Amdt. 5, 37 FR 14686, July 22, 1972; Amdt. 13, 39 FR 28417, Aug. 7, 1974; Amdt. 16, 43 FR 1060, Jan. 6, 1978; 44 FR 10700, Feb. 23, 1979]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.10</SECTNO> <SUBJECT>Reimbursement procedures.</SUBJECT> <P>(a) To be entitled to reimbursement under this part, each School Food Authority shall submit to the State agency, or FNSRO where applicable, a monthly Claim for Reimbursement.</P> <P>(b) Claims for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of School Program Operations required under § 215.11(c)(2). Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only milk served in that month except if the first or last month of Program operations for any year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, the SFA shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency, or FNSRO where applicable, not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency, or FNSRO where applicable, shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are <PRTPAGE P="76"/>completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month which is required under § 215.11(c)(2). Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.</P> <P>(c) [Reserved]</P> <P>(d) In submitting a Claim for Reimbursement, each School Food Authority or child-care institution shall certify that the claim is true and correct; that records are available to support the claim; that the claim is in accordance with the existing agreement; and that payment therefor has not been received.</P> <P>(e) Milk served to adults is not eligible for reimbursement.</P> <P>(f) Any School Food Authority or child care institution which operates both a nonpricing and pricing milk program in the same school or child care institution, may elect to claim reimbursement for:</P> <P>(1) All milk purchased and served to children under the Program at the nonpricing rate prescribed in § 215.8(b) (1), or (2) only milk purchased and served to children in the pricing program at the rates prescribed in § 215.8(b) (1) and (2) for pricing programs.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); Pub. L. 97-370, 96 Stat. 1806)</SECAUTH> <CITA>[Amdt. 13, 39 FR 28417, Aug. 7, 1974, as amended by Amdt. 14, 41 FR 31175, July 27, 1976; Amdt. 16, 43 FR 1060, Jan. 6, 1978; 44 FR 10700, Feb. 23, 1979; 45 FR 82622, Dec. 16, 1980; 48 FR 20896, May 10, 1983; Amdt. 30, 49 FR 18986, May 4, 1984; 64 FR 50742, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.11</SECTNO> <SUBJECT>Special responsibilities of State agencies.</SUBJECT> <P>(a) [Reserved]</P> <P>(b) <E T="03">Program assistance.</E> Each State agency, or FNSRO where applicable, shall provide Program assistance, as follows:</P> <P>(1) Consultive, technical, and managerial personnel to administer the Program and monitor performance of schools and child-care institutions and to measure progress toward achieving Program goals.</P> <P>(2) Visits to participating schools and child-care institutions to ensure compliance with Program regulations and with the Department's nondiscrimination regulations (part 15 of this title), issued under title VI of the Civil Rights Act of 1964. State agencies shall conduct reviews of schools participating in the Program for compliance with the provisions of this part when such schools are being reviewed under the provisions identified under § 210.18(i) of this title. Compliance reviews of participating schools shall focus on the reviewed school's compliance with the required certification, counting and milk service procedures. School food authorities may appeal a denial of all or a part of the Claim for Reimbursement or withholding of payment arising from review activity conducted by the State agency under § 210.18 of this title or by FNS under § 210.30(d)(2) of this title. Any such appeal shall be subject to the procedures set forth under § 210.18(q) of this title or § 210.30(d)(3) of this title, as appropriate.</P> <P>(3) Documentation of such Program assistance shall be maintained on file by the State agency, or FNSRO where applicable.</P> <P>(c) <E T="03">Records and reports.</E> (1) Each State agency shall maintain Program records as necessary to support the reimbursement payments made to child care institutions or School Food Authorities under § 215.8 and § 215.10 and the reports submitted to FNS under § 215.11(c)(2). The records may be kept in their original form or on microfilm, and shall be retained for a period of three years after the date of submission of the final Financial Status Report for the fiscal year, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.</P> <P>(2) Each State agency shall submit to FNS a final Report of School Program Operations (FNS-10) for each month which shall be limited to claims submitted in accordance with § 215.10(b) and which shall be postmarked and/or <PRTPAGE P="77"/>submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency's report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (SF-269) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.</P> <P>(d) <E T="03">Compliance.</E> State agencies, or FNSROs where applicable, shall require School Food Authorities and child-care institutions to comply with applicable provisions of this part.</P> <P>(e) <E T="03">Investigations.</E> Each State Agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program and shall take appropriate action to correct any irregularities. State Agencies shall maintain on file evidence of such investigations and actions. The Office of Investigation of the Department (OI) shall make investigations at the request of the State Agency or if CND or FNSRO determines investigations by OI are appropriate.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); 44 U.S.C. 3506; sec. 812, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1759a))</SECAUTH> <CITA>[32 FR 12587, Aug. 31, 1967, as amended by Amdt. 13, 39 FR 28417, Aug. 7, 1974; Amdt. 14, 41 FR 31175, July 27, 1976; 47 FR 745, Jan. 7, 1982; Amdt. 25, 47 FR 18564, Apr. 30, 1982; Amdt. 30, 49 FR 18987, May 4, 1984; 56 FR 32949, July 17, 1991; 57 FR 38586, Aug. 26, 1992]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.12</SECTNO> <SUBJECT>Claims against schools or child-care institutions.</SUBJECT> <P>(a) State agencies, or FNSROs where applicable, shall disallow any portion of a claim and recover any payment made to a School Food Authority or child-care institution that was not properly payable under this part. State agencies will use their own procedures to disallow claims and recover overpayments already made.</P> <P>(b) [Reserved]</P> <P>(c) The State Agency may refer any matter in connection with this section to FNSRO and CND for determination of the action to be taken.</P> <P>(d) Each State agency shall maintain all records pertaining to action taken under this section. Such records shall be retained for a period of three years after the date of the submission of the final Financial Status Report, except that, if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.</P> <P>(e) If CND does not concur with the State Agency action in paying a claim or a reclaim, or in failing to collect an overpayment FNSRO shall assert a claim against the State Agency for the amount of such claim, reclaim or overpayment. In all such cases, the State Agency shall have full opportunity to submit to CND evidence or information concerning the action taken. If in the determination of CND, the State Agency's action was unwarranted, the State Agency shall promptly pay to FNS the <PRTPAGE P="78"/>amount of the claim, reclaim, or overpayment.</P> <P>(f) The amounts recovered by the State Agency from schools and child-care institutions may be utilized, first, to make reimbursement payments for milk served during the fiscal year for which the funds were initially available, and second, to repay any State funds expended in the reimbursement of claims under the program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of § 215.5(c).</P> <P>(g) With respect to schools or child-care institutions in which FNSRO administers the Program, when FNSRO disallows a claim or a portion of a claim, or makes a demand for refund of an alleged overpayment, it shall notify the School Food Authority or child-care institutions of the reasons for such disallowance or demand and the School Food Authority or child-care institutions shall have full opportunity to submit evidence or to file reclaim for any amount disallowed or demanded in the same manner afforded in this section to schools or child-care institutions administered by State Agencies.</P> <P>(h) The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claims arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of Title 28, U.S. Code, to conduct litigation on behalf of the United States.</P> <SECAUTH>(47 FR 745, Jan. 7, 1982 (44 U.S.C. 3506; secs. 804, 816 and 817, Pub. L. 97-35; 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771 and 1785))</SECAUTH> <CITA>[32 FR 12587, Aug. 31, 1967, as amended by Amdt. 5, 37 FR 14686, July 22, 1972; Amdt. 13, 39 FR 28418, Aug. 7, 1974; Amdt. 14, 41 FR 31175, July 27, 1976; 47 FR 745, Jan. 7, 1982; Amdt. 24, 47 FR 14133, Apr. 2, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.13</SECTNO> <SUBJECT>Management evaluations and audits.</SUBJECT> <P>(a) State agencies and school food authorities shall comply with the requirements of part 3015 of this title concerning the audit requirements for recipients and subrecipients of the Department's financial assistance.</P> <P>(b) These requirements call for organization-wide financial and compliance audits to ascertain whether financial operations are conducted properly; financial statements are presented fairly; recipients and subrecipients comply with the laws and regulations that affect the expenditures of Federal funds; recipients and subrecipients have established procedures to meet the objectives of federally assisted programs; and recipients and subrecipients are providing accurate and reliable information concerning grant funds. States and school food authorities shall use their own procedures to arrange for and prescribe the scope of independent audits, provided that such audits comply with the requirements set forth in part 3015 of this title.</P> <P>(c) Each State agency shall provide FNS with full opportunity to conduct management evaluations (including visits to schools and child-care institutions) of any operations of the State agency under the Program and shall provide OA with full opportunity to conduct audits (including visits to schools and child-care institutions) of all operations of the State agency under the Program. Each State agency shall make available its records, including records of the receipt and expenditure of funds under the Program, upon a reasonable request by FNS or OA. OA shall also have the right to make audits of the records and operations of any school or child-care institution.</P> <P>(d) In conducting management evaluations, reviews or audits for any fiscal year, the State agency, FNS, or OIG may disregard any overpayment if the total overpayment does not exceed $600 or, in the case of State agency claims in State administered Programs, it does not exceed the amount established under State law, regulations or procedure as a minimum amount for which claim will be made for State losses but not to exceed $600. However, no overpayment is to be disregarded where <PRTPAGE P="79"/>there is substantial evidence of violations of criminal law or civil fraud statutes.</P> <SECAUTH>(Secs. 805 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1773); sec. 812, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1759a))</SECAUTH> <CITA>[Amdt. 14, 41 FR 31175, July 27, 1976, as amended at 43 FR 58925, Dec. 22, 1978; Amdt. 23, 47 FR 14135, Apr. 2, 1982; Amdt. 25, 47 FR 18564, Apr. 30, 1982; Amdt. 36, 54 FR 2990, Jan. 23, 1989; 57 FR 38586, Aug. 26, 1992; 59 FR 1894, Jan. 13, 1994; 64 FR 50742, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.13a</SECTNO> <SUBJECT>Determining eligibility for free milk in child-care institutions.</SUBJECT> <P>(a) <E T="03">General.</E> Child care institutions which operate pricing programs may elect to make free milk available, as set forth in § 215.7(d)(2), to children who meet the approved eligibility criteria. Such child care institutions shall determine the children who are eligible for free milk and assure that there is no physical segregation of, or other discrimination against, or overt identification of, children unable to pay the full price for milk.</P> <P>(b) <E T="03">Action by State agencies and FNSROs.</E> Each State agency, or FNSRO where applicable, upon application for the program by a child care institution operating a pricing program, and annually thereafter, shall require the institution to state whether or not it wishes to serve free milk to eligible children at times that milk is provided under the Program. It shall annually require each child care institution electing to provide free milk to submit a free milk policy statement and shall provide such institutions with a prototype free milk policy statement and a copy of the State's family-size income standards for determining eligibility for free meals and milk under the National School Lunch and School Breakfast Programs to assist the institutions in meeting its responsibilities.</P> <P>(c) <E T="03">Action by institutions.</E> Each child care institution which operates a pricing program shall inform the State agency, or FNSRO where applicable, at the time it applies for Program participation and at least annually thereafter, whether or not it wishes to provide free milk. Institutions electing to provide free milk shall annually submit a written free milk policy statement for determining free milk eligibility of children under their jurisdiction, which shall contain the items specified in paragraph (d) of this section. Such institutions shall not be approved for Program participation of their agreements renewed unless the free milk policy has been reviewed and approved. Pending approval or a revision of a policy statement, the existing policy shall remain in effect.</P> <P>(d) <E T="03">Policy statement.</E> A free milk policy statement as required in paragraph (c) of this section shall contain the following:</P> <P>(1) The specific criteria to be used in determining eligibility for free milk. These criteria shall give consideration to economic need as reflected by family size and income. The criteria used by the child-care institution may not result in the eligibility of children from families whose incomes exceed the State's family-size income standards for determining eligibility for free meals under the National School Lunch and School Breakfast Programs.</P> <P>(2) The method by which the child-care institution will collect information from families in order to determine a child's eligibility for free milk.</P> <P>(3) The method by which the child-care institution will collect milk payments so as to prevent the overt identification of children receiving free milk.</P> <P>(4) A hearing procedure substantially like that outlined in part 245 of this chapter.</P> <P>(5) An assurance that there will be no discrimination against free milk recipients and no discrimination against any child on the basis of race, color, or national origin.</P> <P>(e) <E T="03">Public announcement of eligibility criteria.</E> Each child care institution which elects to make free milk available under the Program shall annually make a public announcement of the availability of free milk to children who meet the approved eligibility criteria to the information media serving the area from which its attendance is drawn. The public announcement must also state that milk is available to all children in attendance without regard to race, color, or national origin.</P> <P>(f) <E T="03">Is a Privacy Act notice required on the free milk application?</E> Each free milk application must include substantially the following statement: “Unless you <PRTPAGE P="80"/>include your child's case number for the Food Stamp Program, the Food Distribution Program on Indian Reservations (or other identifier for the Food Distribution Program on Indian Reservations) or the Temporary Assistance for Needy Families Program, you must include the social security number of the adult household member signing the application or indicate that the household member does not have a social security number. This is required by section 9 of the National School Lunch Act. The social security number is not mandatory, but the application cannot be approved if a social security number is not given or an indication is not made that the signer does not have a social security number. The social security number will be used in the administration and enforcement of the program.”</P> <P>(g) <E T="03">Disclosure of program eligibility information to State Medicaid (Medicaid) and the State Children's Health Insurance Program (SCHIP)</E> Program eligibility information about children eligible for free milk may be disclosed to Medicaid and SCHIP as described in this section.</P> <P>(1) <E T="03">Who decides whether to disclose program eligibility information to Medicaid and/or SCHIP?</E> The State agency may elect to allow child care institutions to disclose children's free milk eligibility information to Medicaid and SCHIP. Child care institutions may then elect to do so. Children's program eligibility information may only be disclosed to Medicaid or SCHIP when both the State agency and the child care institution so elect, the parent/guardian does not decline to have their eligibility information disclosed as described in paragraph (g)(5), and the requirements in this paragraph (g) are met.</P> <P>(2) <E T="03">What information may we disclose for use by Medicaid and SCHIP?</E> The State agency or child care institution, as appropriate, may disclose children's names, eligibility status (whether they are eligible for free milk), and any other eligibility information obtained through the free milk application or obtained through direct certification to persons directly connected with the administration of Medicaid or SCHIP.</P> <P>(3) <E T="03">Who are persons “directly connected” with the administration of Medicaid and SCHIP?</E> State employees and persons authorized under Federal and State Medicaid and SCHIP requirements to carry out initial processing of Medicaid or SCHIP applications or to make eligibility determinations are persons directly connected with the administration of Medicaid and SCHIP for purposes of disclosure of children's free milk eligibility information.</P> <P>(4) <E T="03">What are the restrictions on how Medicaid and SCHIP use children's free milk eligibility information?</E> Medicaid and SCHIP agencies and health insurance program operators receiving children's free milk eligibility information may only use the information to seek to enroll children in Medicaid or SCHIP. The Medicaid and SCHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or SCHIP for the purpose of seeking to enroll them in Medicaid or SCHIP.</P> <P>(5) <E T="03">Must we notify households of potential disclosure to Medicaid or SCHIP?</E> The State agency or child care institution, as appropriate, must notify parents/guardians that their children's free milk eligibility information will be disclosed to Medicaid and/or SCHIP unless the parent/guardian elects not to have their information disclosed. Additionally, the State agency or sponsor, as appropriate, must give parents/guardians an opportunity to elect not to have their information disclosed to Medicaid or SCHIP. Only the parent or guardian who is a member of the household or family for purposes of the free and reduced price meal or free milk application may decline the disclosure of eligibility information. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify children eligible for and to seek to enroll children in a health insurance program, and that their decision will not affect their children's eligibility for free milk. The notification may be included in the letter/notice to parents/guardians that accompanies the free milk application, on the application itself or in a separate notice <PRTPAGE P="81"/>provided to parents/guardians. The notice must give parents/guardians adequate time to respond. For children determined eligible through direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children's eligibility for free milk through direct certification.</P> <P>(6) <E T="03">May social security numbers be disclosed?</E> The State agency or child care institution, as appropriate, may disclose social security numbers to any programs or persons authorized to receive all program eligibility information under this paragraph (g), provided parents/guardians have not declined to have their information disclosed. However State agencies and child care institutions that plan to disclose social security numbers must give notice of the planned use of the social security numbers. This notice must be in accordance with section 7(b) of the Privacy Act of 1974 (5 U.S.C. 552a note). The application must include substantially the following language for disclosures of social security numbers to Medicaid or SCHIP: “The social security number may also be disclosed to Medicaid and the State Children's Health Insurance Program for the purpose of identifying and seeking to enroll eligible children in one of these health insurance programs.” This language is in addition to the notice required in paragraph (f) of this section. State agencies and child care institutions are responsible for drafting the appropriate notice for disclosures of social security numbers.</P> <P>(7) <E T="03">Are agreements required before disclosing program eligibility information?</E> The State agency or child care institution, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or SCHIP prior to disclosing children's free milk eligibility information. At a minimum, the agreement must:</P> <P>(i) Identify the health insurance program or health agency receiving children's eligibility information;</P> <P>(ii) Describe the information that will be disclosed;</P> <P>(iii) Require that the Medicaid or SCHIP agency use the information obtained and specify that the information must only be used to seek to enroll children in Medicaid or SCHIP;</P> <P>(iv) Describe how the information will be protected from unauthorized uses and disclosures;</P> <P>(v) Describe the penalties for unauthorized disclosure; and</P> <P>(vi) Be signed by both the Medicaid or SCHIP program or agency and the State agency or child care institution, as appropriate.</P> <P>(8) <E T="03">What are the penalties for unauthorized disclosure or misuse of information?</E> In accordance with section 9(b)(2)(C)(v) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(C)(v)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this paragraph (g) will be fined not more than $1,000 or imprisoned for up to 1 year, or both.</P> <P>(9) <E T="03">What are the State agency's responsibilities regarding disclosures?</E> State agencies that elect to allow disclosure of children's free milk eligibility information to Medicaid or SCHIP, as provided in this paragraph (g), must ensure that any child care institution acting in accordance with that option:</P> <P>(i) Has a written agreement with the State or local agency or agencies administering health insurance programs for children under titles XIX and XXI of the Social Security Act (42 U.S.C. 1396 et seq. and 1397aa et seq.) that requires the health agencies to use children's free milk eligibility information to seek to enroll children in those health insurance programs; and</P> <P>(ii) Notifies each household of the information that will be disclosed, that the information disclosed will be used only to seek to enroll children in Medicaid or SCHIP and provides each parent/guardian with an opportunity to elect not to have the information disclosed.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); sec. 5, Pub. L. 95-627, 92 Stat. 3619 (42 U.S.C. 1772))</SECAUTH> <CITA>[Amdt. 14, 41 FR 31176, July 27, 1976, as amended by Amdt. 16, 43 FR 1060, Jan. 6, 1978; 44 FR 10700, Feb. 23, 1979; Amdt. 17, 44 FR 33047, June 8, 1979; 66 FR 2201, Jan. 11, 2001]</CITA> </SECTION> <SECTION> <PRTPAGE P="82"/> <SECTNO>§ 215.14</SECTNO> <SUBJECT>Nondiscrimination.</SUBJECT> <P>The Department's regulations on nondiscrimination in federally assisted programs are set forth in part 15 of this title. The Department's agreements with State agencies, the State agencies’ agreements with School Food Authorities and child-care institutions and the FNSRO agreements with School Food Authorities administering nonprofit private schools and with child-care institutions shall contain the assurances required by such regulations. When different types of milk are served to children, (a) a uniform price for each type of milk served shall be charged to all non-needy children in the school or child-care institution who purchase milk, and (b) needy children shall be given the opportunity to select any type of milk offered.</P> <SECAUTH>(44 U.S.C. 3506)</SECAUTH> <CITA>[Amdt. 13, 39 FR 28418, Aug. 7, 1974, as amended at 47 FR 745, Jan. 7, 1982]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.14a</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <P>(a) <E T="03">Requirements.</E> State agencies and School Food Authorities shall comply with the requirements of the Office of Management and Budget (OMB) Circular A-102 and the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart S (46 FR 55658) concerning the procurement of supplies, food, equipment and other services with Program funds. These requirements are adopted by FNS to ensure that such materials and services are obtained for the Program efficiently and economically and in compliance with applicable laws and executive orders.</P> <P>(b) <E T="03">Contractual responsibilities.</E> The standards contained in OMB Circular A-102 and 7 CFR part 3015, do not relieve the State agency or School Food Authority of any contractual responsibilities under its contract. The State agency or School Food Authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes but is not limited to: Source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State or Federal authority that has proper jurisdiction.</P> <P>(c) <E T="03">Procurement procedure.</E> The State agency or School Food Authority may use their own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with Program funds adhere to the standards set forth in OMB Circular A-102 and 7 CFR part 3015.</P> <SECAUTH>(Pub. L. 79-396, 60 Stat. 231 (42 U.S.C. 1751); Pub. L. 89-642, 80 Stat. 885-890 (42 U.S.C. 1773); Pub. L. 91-248, 84 Stat. 207 (42 U.S.C. 1759))</SECAUTH> <CITA>[Amdt. 27, 48 FR 19355, Apr. 29, 1983]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.15</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <P>Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N concerning grant suspension, termination and closeout procedures. Furthermore, the State agency, or FNSRO where applicable, shall apply these provisions to suspension or termination of the Program in School Food Authorities.</P> <SECAUTH>[Amdt. 30, 49 FR 18987, May 4, 1984]</SECAUTH> </SECTION> <SECTION> <SECTNO>§ 215.16</SECTNO> <SUBJECT>Program information.</SUBJECT> <P>School Food Authorities and child-care institutions desiring information concerning the Program should write to their State educational agency, or the appropriate Food and Nutrition Service Regional Office of FNS as indicated below:</P> <P>(a) In the States of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont: Northeast Regional Office, FNS, U.S. <PRTPAGE P="83"/>Department of Agriculture, 10 Causeway Street, Room 501, Boston, Massachusetts 02222-1065.</P> <P>(b) In the States of Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, and West Virginia: Mid-Atlantic Regional Office, FNS, U.S. Department of Agriculture, 300 Corporate Boulevard, Robbinsville, New Jersey 08691-1598.</P> <P>(c) In the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, FNS, U.S. Department of Agriculture, 61 Forsyth Street SW., Room 8T36, Atlanta, Georgia 30303.</P> <P>(d) In the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin: Midwest Regional Office, FNS, U.S. Department of Agriculture, 77 West Jackson Boulevard, 20th Floor, Chicago, Illinois 60604-3507.</P> <P>(e) In the States of Arkansas, Louisiana, New Mexico, Oklahoma, Texas: Southwest Regional Office, Food and Nutrition Service, U.S. Department of Agriculture, 1100 Commerce Street, Room 5-C-30, Dallas, Texas 75242.</P> <P>(f) In the States of Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, The Commonwealth of the Northern Mariana Islands, and Washington: Western Regional Office, FNS, U.S. Department of Agriculture, 550 Kearny Street, Room 400, San Francisco, California 94108.</P> <P>(g) In the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming: Mountain Plains Regional Office, FNS, U.S. Department of Agriculture, 1244 Speer Boulevard, Suite 903, Denver, Colorado 80204.</P> <SECAUTH>(Sec. 11, Pub. L. 95-166, 91 Stat. 1337 (42 U.S.C. 1772, 1753, 1766); sec. 10(a), Pub. L. 95-627, 92 Stat. 3623 (42 U.S.C. 1760); sec. 10(d)(3), Pub. L. 95-627, 92 Stat. 3624 (42 U.S.C. 1757); sec. 14, Pub. L. 95-627, 92 Stat. 3625-3626); secs. 804, 816, 817 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771, 1773 and 1785)</SECAUTH> <CITA>[Amdt. 14, 41 FR 31178, July 27, 1976, as amended by Amdt. 18, 44 FR 37898, June 29, 1979; Amdt. 27, 48 FR 195, Jan. 4, 1983; Amdt. 36, 54 FR 2990, Jan. 23, 1989; 65 FR 12435, Mar. 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 215.17</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <GPOTABLE CDEF="s50,10" COLS="2" OPTS="L1,i1"> <BOXHD> <CHED H="1">7 CFR section where requirements are described</CHED> <CHED H="1">Current OMB control number</CHED> </BOXHD> <ROW> <ENT I="01">215.3(d)</ENT> <ENT>0584-0327</ENT> </ROW> <ROW> <ENT I="01">215.5(a)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0002</ENT> </ROW> <ROW> <ENT I="01">215.5(c)</ENT> <ENT>0584-0341</ENT> </ROW> <ROW> <ENT I="01">215.7 (a), (c)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.7 (b)(2)</ENT> <ENT>0584-0026</ENT> </ROW> <ROW> <ENT I="01">215.7(d)</ENT> <ENT>0584-0329</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.10 (a), (b), (d)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0284</ENT> </ROW> <ROW> <ENT I="01">215.11 (b), (c)(1), (e)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.11(c)(2)</ENT> <ENT>0584-0002</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0584-0341</ENT> </ROW> <ROW> <ENT I="01">215.12 (a), (d), (e), (g)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.13(a)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.13a(a)-(e)</ENT> <ENT>0584-0026</ENT> </ROW> <ROW> <ENT I="01">215.14</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.14a(a)-(c)</ENT> <ENT>0584-0005</ENT> </ROW> <ROW> <ENT I="01">215.15</ENT> <ENT>0584-0005</ENT> </ROW> </GPOTABLE> <CITA>[50 FR 53258, Dec. 31, 1985]</CITA> </SECTION> </PART> <PART> <EAR>Pt. 220</EAR> <HD SOURCE="HED">PART 220—SCHOOL BREAKFAST PROGRAM</HD> <CONTENTS> <SECHD>Sec.</SECHD> <SECTNO>220.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <SECTNO>220.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>220.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <SECTNO>220.4</SECTNO> <SUBJECT>Payment of funds to States and FNSROs.</SUBJECT> <SECTNO>220.5</SECTNO> <SUBJECT>Method of payment to States.</SUBJECT> <SECTNO>220.6</SECTNO> <SUBJECT>Use of funds.</SUBJECT> <SECTNO>220.7</SECTNO> <SUBJECT>Requirements for participation.</SUBJECT> <SECTNO>220.8</SECTNO> <SUBJECT>What are the nutrition standards and menu planning approaches for breakfasts?</SUBJECT> <SECTNO>220.9</SECTNO> <SUBJECT>Reimbursement payments.</SUBJECT> <SECTNO>220.10</SECTNO> <SUBJECT>Effective date for reimbursement.</SUBJECT> <SECTNO>220.11</SECTNO> <SUBJECT>Reimbursement procedures.</SUBJECT> <SECTNO>220.12</SECTNO> <SUBJECT>Competitive food services.</SUBJECT> <SECTNO>220.13</SECTNO> <SUBJECT>Special responsibilities of State agencies.</SUBJECT> <SECTNO>220.14</SECTNO> <SUBJECT>Claims against school food authorities.</SUBJECT> <SECTNO>220.15</SECTNO> <SUBJECT>Management evaluations and audits.</SUBJECT> <SECTNO>220.16</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <SECTNO>220.17</SECTNO> <SUBJECT>Prohibitions.</SUBJECT> <SECTNO>220.18</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <SECTNO>220.19</SECTNO> <SUBJECT>Free and reduced price breakfasts.</SUBJECT> <SECTNO>220.20</SECTNO> <SUBJECT>Program information.</SUBJECT> <SECTNO>220.21</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <APP>Appendix A to Part 220—Alternate Foods for Meals</APP> <APP>Appendix B to Part 220—Categories of Foods of Minimal Nutritional Value</APP> <APP>Appendix C to Part 220—Child Nutrition (CN) Labeling Program</APP> </CONTENTS> <AUTH> <PRTPAGE P="84"/> <HD SOURCE="HED">Authority:</HD> <P>42 U.S.C. 1773, 1779, unless otherwise noted.</P> </AUTH> <SECTION> <SECTNO>§ 220.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <P>This part announces the policies and prescribes the regulations necessary to carry out the provisions of section 4 of the Child Nutrition Act of 1966, as amended, which authorizes payments to the States to assist them to initiate, maintain, or expand nonprofit breakfast programs in schools.</P> <CITA>[Amdt. 25, 41 FR 34758, Aug. 17, 1976]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P>For the purpose of this part the term:</P> <P>(a) <E T="03">Act</E> means the Child Nutrition Act of 1966, as amended.</P> <P>(b) <E T="03">Breakfast</E> means a meal which meets the nutritional requirements set out in § 220.8, and which is served to a child in the morning hours. The meal shall be served at or close to the beginning of the child's day at school.</P> <P>(c) <E T="03">Child</E> means: (1) A student of high school grade or under as determined by the State educational agency, who is enrolled in an educational unit of high school grade or under as described in paragraphs (1) and (2) of the definition of “School”, including students who are mentally or physically disabled as defined by the State and who are participating in a school program established for the mentally or physically disabled; or (2) a person under 21 chronological years of age who is enrolled in an institution or center as described in paragraphs (3) and (4) of the definition of “School”.</P> <P>(c-1) <E T="03">Competitive foods</E> means any foods sold in competition with the School Breakfast Program to children in food service areas during the breakfast period.</P> <P>(d) <E T="03">CND</E> means the Child Nutrition Division of the Food and Nutrition Service of the Department.</P> <P>(e) <E T="03">Department</E> means the U.S. Department of Agriculture.</P> <P>(f) <E T="03">Distributing agency</E> means a State, Federal, or private agency which enters into an agreement with the Department for the distribution of commodities pursuant to part 250 of this chapter.</P> <P>(g) <E T="03">Fiscal year</E> means the period of 15 calendar months beginning July 1, 1976, and ending September 30, 1977; and the period of 12 calendar months beginning October 1, 1977, and each October 1 of any calendar year thereafter and ending September 30 of the following calendar year.</P> <P>(h) <E T="03">FNS</E> means the Food and Nutrition Service of the Department.</P> <P>(i) <E T="03">FNSRO</E> means the appropriate Food and Nutrition Service Regional Office of the Food and Nutrition Service of the Department.</P> <P>(i-1) <E T="03">Foods of minimal nutritional value</E> means: (1) In the case of artificially sweetened foods, a food which provides less than five percent of the Reference Daily Intake (RDI) for each of eight specified nutrients per serving; (2) in the case of all other foods, a food that provides less than five percent of the RDI for each of eight specified nutrients per 100 calories and less than five percent of the RDI for each of eight specified nutrients per serving. The eight nutrients to be assessed for this purpose are: Protein, vitamin A, vitamin C, niacin, riboflavin, thiamin, calcium and iron. Categories of foods of minimal nutritional value are listed in appendix B of this part.</P> <P>(j) <E T="03">Free breakfast</E> means a breakfast for which neither the child nor any member of his family pays or is required to work in the school or in the school's food service.</P> <P>(k) <E T="03">Infant cereal</E> means any iron fortified dry cereal especially formulated and generally recognized as cereal for infants that is routinely mixed with breast milk or iron-fortified infant formula prior to consumption.</P> <P>(l) <E T="03">Infant formula</E> means any iron-fortified infant formula intended for dietary use solely as a food for normal healthy infants excluding those formulas specifically formulated for infants with inborn errors of metabolism or digestive or absorptive problems. Infant formula, as served, must be in liquid state at recommended dilution.</P> <P>(m) <E T="03">Menu item</E> means, under Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu Planning, any single food or combination of foods. All menu items or foods offered as part of the reimbursable meal may be considered as contributing towards meeting the nutrition standards provided in § 220.8, except for those foods that are <PRTPAGE P="85"/>considered as foods of minimal nutritional value as provided for in § 220.2(i-1) which are not offered as part of a menu item in a reimbursable meal. For the purposes of a reimbursable breakfast, a minimum of three menu items must be offered, one of which shall be fluid milk served as a beverage or on cereal or both; under offer versus serve, a student may decline only one menu item.</P> <P>(n) <E T="03">Milk</E> means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk except that, in the meal pattern for infants (0 to 1 year of age), milk means breast milk or iron-fortified infant formula. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, and the Virgin Islands, if a sufficient supply of such types of fluid milk cannot be obtained, “milk” shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and consistent with State and local standards for such milk.</P> <P>(o) <E T="03">National School Lunch Program</E> means the Program authorized by the National School Lunch Act.</P> <P>(o-1) <E T="03">Net cash resources</E> means all monies as determined in accordance with the State agency's established accounting system, that are available to or have accrued to a School Food Authority's nonprofit school food service at any given time, less cash payable. Such monies may include but are not limited to, cash on hand, cash receivable, earnings or investments, cash on deposit and the value of stocks, bonds or other negotiable securities.</P> <P>(o-2) <E T="03">Nonprofit school food service</E> means all food service operations conducted by the School Food Authority principally for the benefit of school children, all of the revenue from which is used solely for the operation or improvement of such food service.</P> <P>(p) <E T="03">Nonprofit</E> when applied to schools or institutions eligible for the Program means exempt from income tax under section 501(c)(3) of the Internal Revenue Code of 1954, as amended; or in the Commonwealth of Puerto Rico, certified by the Governor.</P> <P>(p-1) <E T="03">Nutrient Standard Menu Planning/Assisted Nutrient Standard Menu Planning</E> means ways to develop breakfast menus based on the analysis for nutrients in the menu items and foods offered over a school week to determine if specific levels for a set of key nutrients and calories were met in accordance with § 220.8(e)(5). However, for the purposes of Assisted Nutrient Standard Menu Planning, breakfast menu planning and analysis are completed by other entities and must incorporate the production quantities needed to accommodate the specific service requirements of a particular school or school food authority in accordance with § 220.8(f).</P> <P>(q) <E T="03">OA</E> means the Office of Audit of the Department.</P> <P>(q-1) <E T="03">OI</E> means the Office of Investigation of the Department.</P> <P>(q-2) OIG means the Office of the Inspector General of the Department.</P> <P>(r) <E T="03">Program</E> means the School Breakfast Program.</P> <P>(s) <E T="03">Reduced price breakfast</E> means a breakfast which meets all of the following criteria: (1) The price shall be less than the full price of the breakfast, (2) the price shall be 30 cents or lower, and (3) neither the child nor any member of his family shall be required to supply an equivalent value in work for the school or the school's food service.</P> <P>(t) <E T="03">Reimbursement</E> means financial assistance paid or payable to participating schools for breakfasts meeting the requirements of § 220.8 served to eligible children at rates assigned by the State agency, or FNSRO where applicable. The term “reimbursement” also includes financial assistance made available through advances to School Food Authorities.</P> <P>(t-1) <E T="03">Revenue</E> when applied to nonprofit school food service means all monies received by or accruing to the nonprofit school food service in accordance with the State agency's established accounting system including, but not limited to, children's payments, earnings on investments, other local revenues, State revenues, and Federal cash reimbursements.<PRTPAGE P="86"/> </P> <P>(u) <E T="03">School</E> means: (1) An educational unit of high school grade or under, recognized as part of the educational system in the State and operating under public or nonprofit private ownership in a single building or complex of buildings; (2) any public or nonprofit private classes of preprimary grade when they are conducted in the aforementioned schools; or (3) any public or nonprofit private residential child care institution, or distinct part of such institution, which operates principally for the care of children, and, if private, is licensed to provide residential child care services under the appropriate licensing code by the State or a subordinate level of government, <E T="03">except for</E> residential summer camps which participate in the Summer Food Service Program for Children, Job Corps centers funded by the Department of Labor, and private foster homes. The term “residential child care institutions” includes, but is not limited to: Homes for the mentally, emotionally or physically impaired, and unmarried mothers and their infants; group homes; halfway houses; orphanages; temporary shelters for abused children and for runaway children; long-term care facilities for chronically ill children; and juvenile detention centers. A long-term care facility is a hospital, skilled nursing facility, intermediate care facility, or distinct part thereof, which is entended for the care of children confined for 30 days or more.</P> <P>(v) <E T="03">School Breakfast Program</E> means the program authorized by section 4 of the Child Nutrition Act of 1966.</P> <P>(v-1) <E T="03">School in severe need</E> means a school determined to be eligible for rates of reimbursement in excess of the prescribed National Average Payment Factors, based upon the criteria set forth in § 220.9(e).</P> <P>(w) <E T="03">School Food Authority</E> means the governing body which is responsible for the administration of one or more schools and which has legal authority to operate a breakfast program therein.</P> <P>(w-1) <E T="03">School week</E> means the period of time used to determine compliance with the nutrition standards and the appropriate calorie and nutrient levels in § 220.8. Further, if applicable, school week is the basis for conducting Nutrient Standard Menu Planning or Assisted Nutrient Standard Menu Planning for breakfasts as provided in § 220.8(e) and § 220.8(f). The period shall be a normal school week of five consecutive days; however, to accommodate shortened weeks resulting from holidays and other scheduling needs, the period shall be a minimum of three consecutive days and a maximum of seven consecutive days. Weeks in which school breakfasts are offered less than three times shall be combined with either the previous or the coming week.</P> <P>(x) <E T="03">Secretary</E> means the Secretary of Agriculture.</P> <P>(x-1) <E T="03">7 CFR part 3015</E> means the Uniform Federal Assistance Regulations published by the Department to implement OMB Circulars A-21, A-87, A-102, A-110, and A-122; and Executive Order 12372. (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P>(x-2) <E T="03">7 CFR part 3017</E> means the Department's regulation to implement Executive Order 12549, covering governmentwide rules on suspension and debarment as well as The Drug Free Workplace Act of 1988.</P> <P>(x-3) <E T="03">7 CFR part 3018</E> means the Department's Common Rule regarding Governmentwide New Restrictions on Lobbying. Part 3018 implements the requirements established by section 319 of the 1990 Appropriations Act for the Department of Interior and Related Agencies (Pub. L. 101-121).</P> <P>(x-4) <E T="03">7 CFR part 3052</E> means the Department's regulations implementing A-133, “Audits of State, Local Governments, and Non-Profit Organizations.” (For availability of OMB Circulars referenced in this definition, see 5 CFR 1310.3.)</P> <P>(y) <E T="03">State</E> means any of the 50 States, District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and, as applicable, American Samoa and the Commonwealth of the Northern Marianas.</P> <P>(z) <E T="03">State agency</E> means: (1) The State educational agency or (2) such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by <PRTPAGE P="87"/>the Department to administer the Program in schools as defined in § 220.2(u)(3) of this part.</P> <P>(aa) <E T="03">State educational agency</E> means, as the State legislature may determine: (1) The chief State school officer (such as the State Superintendent of Public Instruction, Commissioner of Education, or similar officer), or (2) a board of education controlling the State department of education.</P> <P>(bb) <E T="03">Yogurt</E> means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration's Definition and Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, 21 CFR 131.200, 21 CFR 131.203, and 21 CFR 131.206, respectively.</P> <SECAUTH>(Sec. 6, Pub. L. 95-627, 92 Stat. 3620 (42 U.S.C. 1760); sec. 205, Pub. L. 96-499, The Omnibus Reconciliation Act of 1980, 94 Stat. 2599; secs. 801, 803, 812; Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1759(a), 1773, 1758; secs. 807 and 808, Pub. L. 97-35, 95 Stat. 521-535, 42 U.S.C. 1772, 1784, 1760; sec. 819, Pub. L. 97-35; 95 Stat. 533 (42 U.S.C. 1759a, 1773 and 1757))</SECAUTH> <CITA>[Amdt. 25, 41 FR 34758, Aug. 17, 1976]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 220.2, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 220.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program covered by this part. Within FNS, CND shall be responsible for administration of the Program.</P> <P>(b) Within the States, responsibility for the administration of the Program in schools as defined in § 220.2(u)(1), (u)(2) and (u)(4) shall be in the State educational agency, except that FNSRO shall administer the Program with respect to nonprofit private schools as defined in § 220.2(u)(1) of any State wherein the State educational agency is not permitted by law to disburse Federal funds paid to it under the Program; <E T="03">Provided, however,</E> That FNSRO shall also administer the Program in all other nonprofit private schools which have been under continuous FNS administration since October 1, 1980, unless the administration of such private schools is assumed by a State agency.</P> <P>(c) Within the States, responsibility for the administration of the Program in schools as defined in § 220.2(u)(3) shall be in the State educational agency, or if the State educational agency cannot administer the Program in such schools, such other agency of the State as has been designated by the Governor or other appropriate executive or legislative authority of the State and approved by the Department to administer the Program in such schools: <E T="03">Provided, however,</E> That FNSRO shall administer the Program in such schools if the State agency is not permitted by law to disburse Federal funds paid to it under the Program to such schools; and <E T="03">Provided, further,</E> That FNSRO shall also administer the Program in all other such schools which have been under continuous FNS administration since October 1, 1980, unless the administration of such schools is assumed by a State agency.</P> <P>(d) References in this part to “FNSRO where applicable” are to FNSRO as the agency administering the Program.</P> <P>(e) Each State agency desiring to take part in any of the programs shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part. Such agreement shall cover the operation of the Program during the period specified therein and may be extended at the option of the Department.</P> <SECAUTH>(Sec. 804, 816 and 817, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771 and 1785); 44 U.S.C. 3506)</SECAUTH> <CITA>[Amdt. 25, 41 FR 34759, Aug. 17, 1976, as amended at 47 FR 745, Jan. 7, 1982; Amdt. 42, 47 FR 14133, Apr. 2, 1982; Amdt. 56, 54 FR 2990, Jan. 23, 1989]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.4</SECTNO> <SUBJECT>Payment of funds to States and FNSROs.</SUBJECT> <P>(a) To the extent funds are available, the Secretary shall make breakfast assistance payments to each State agency for breakfasts served to children under the Program. Subject to <PRTPAGE P="88"/>§ 220.13(b)(2), the total of these payments for each State for any fiscal year shall be limited to the total amount of reimbursement payable to eligible schools within the State under this part for the fiscal year.</P> <P>(b) The Secretary shall prescribe by July 1 of each fiscal year annual adjustments to the nearest one-fourth cent in the national average per breakfast factors for all breakfasts and for free and reduced price breakfasts, that shall reflect changes in the cost of operating a breakfast program.</P> <P>(c) In addition to the funds made available under paragraph (a) of this section, funds shall be made available to the State agencies, and FNSROs where applicable, in such amounts as are needed to finance reimbursement rates assigned in accordance with the provisions of § 220.9(c).</P> <SECAUTH>(Secs. 801, 803, 812; Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1759(a), 1773, 1758); Pub. L. 97-370, 96 Stat. 1806)</SECAUTH> <CITA>[38 FR 35554, Dec. 28, 1973, as amended at 40 FR 30923, July 24, 1975; 46 FR 51367, Oct. 20, 1981; 48 FR 20896, May 10, 1983; Amdt. 49, 49 FR 18987, May 4, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.5</SECTNO> <SUBJECT>Method of payment to States.</SUBJECT> <P>Funds to be paid to any State for the School Breakfast Program shall be made available by means of Letters of Credit issued by FNS in favor of the State agency. The State agency shall:</P> <P>(a) Obtain funds needed for reimbursement to School Food Authorities through presentation by designated State officials of a payment Voucher on Letter of Credit in accordance with procedures prescribed by FNS and approved by the U.S. Treasury Department; (b) submit requests for funds only at such times and in such amounts, as will permit prompt payment of claims or authorized advances; and (c) use the funds received from such requests without delay for the purpose for which drawn.</P> <CITA>[Amdt. 25, 41 FR 34759, Aug. 17, 1976]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.6</SECTNO> <SUBJECT>Use of funds.</SUBJECT> <P>(a) Federal funds made available under the School Breakfast Program shall be used by State agencies, or FNSROs where applicable, to reimburse or make advance payments to School Food Authorities in connection with breakfasts served in accordance with the provisions of this part. However, with the approval of FNS, any State agency, or FNSRO where applicable, may reserve for use in carrying out special developmental projects an amount up to 1 per centum of the funds earned in any fiscal year under the School Breakfast Program. Advance payments to School Food Authorities may be made at such times and in such amounts as are necessary to meet current obligations.</P> <P>(b) Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property provided under this part, whether received directly or indirectly from the Department, shall—</P> <P>(1) If such funds, assets, or property are of a value of $100 or more, be fined not more than $25,000 or imprisoned not more than 5 years or both; or</P> <P>(2) If such funds, assets, or property are of a value of less than $100, be fined not more than $1,000 or imprisoned not more than one year or both.</P> <P>(c) Whoever receives, conceals, or retains to his use or gain funds, assets, or property provided under this part, whether received directly or indirectly from the Department, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud, shall be subject to the same penalties provided in paragraph (b) of this section.</P> <SECAUTH>(Sec. 10(a), Pub. L. 95-627, 92 Stat. 3623 (42 U.S.C. 1760); sec. 10(d)(3), Pub. L. 95-627, 92 Stat. 3624 (42 U.S.C. 1757); sec. 14, Pub. L. 95-627, 92 Stat. 3625-3626)</SECAUTH> <CITA>[40 FR 30923, July 24, 1975, as amended by Amdt. 25, 41 FR 34759, Aug. 17, 1976; Amdt. 28, 44 FR 37899, June 29, 1979; 64 FR 50742, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.7</SECTNO> <SUBJECT>Requirements for participation.</SUBJECT> <P>(a) The School Food Authority shall make written application to the State agency, or FNSRO where applicable, for any school in which it desires to operate the School Breakfast Program, if such school did not participate in the Program in the prior fiscal year. The School Food Authority shall also submit for approval, either with the application or at the request of the State agency, or FNSRO where applicable, a <PRTPAGE P="89"/>free and reduced price policy statement in accordance with part 245 of this chapter. A School Food Authority which simultaneously makes application for the National School Lunch Program and the School Breakfast Program shall submit one free and reduced price policy statement which shall provide that the terms, conditions, and eligibility criteria set forth in such policy statement shall apply to the service of free and reduced price lunches and to the service of free and reduced price breakfasts. If, at the time application is made for the School Breakfast Program, a School Food Authority has an approved free and reduced price policy statement on file with the State agency, or FNSRO where applicable, for the National School Lunch Program, it need only confirm in writing that such approved policy statement will also apply to the operation of its School Breakfast Program. Applications for the School Breakfast Program shall not be approved in the absence of an approved free and reduced price policy statement.</P> <P>(a-1) A school which also either participates in the National School Lunch Program or only receives donations of commodities for its nonprofit lunch program under the provisions of part 250 of this chapter (commodity only school) shall apply the same set of eligibility criteria so that children who are eligible for free lunches shall also be eligible for free breakfasts and children who are eligible for reduced price lunches shall also be eligible for reduced price breakfasts.</P> <P>(a-2) Schools shall, at least once during each school year, obtain a food safety inspection conducted by a State or local governmental agency responsible for food safety inspections. However, this requirement shall not apply to a school if a food safety inspection of the school is required by a State or local governmental agency responsible for food safety inspections.</P> <P>(b) Applications shall solicit information in sufficient detail to enable the State agency to determine whether the School Food Authority is eligible to participate in the Program and extent of the need for Program payments.</P> <P>(c) Within the funds available to them, State agencies, or FNSRO's where applicable, shall approve for participation in the School Breakfast Program any school making application and agreeing to carry out the program in accordance with this part. State agencies, or FNSRO's where applicable, have a positive obligation, however, to extend the benefits of the School Breakfast Program to children attending schools in areas where poor economic conditions exist.</P> <P>(d) Any School Food Authority may employ a food service management company (or other nonprofit agency or nonprofit organization) in the conduct of its feeding operation in one or more of its schools. A School Food Authority that employs a food service management company shall remain responsible for seeing that the feeding operation is in conformance with its agreement with the State Agency or the FNS Regional Office. The contract between the School Food Authority and the food service management company shall expressly provide that:</P> <P>(1) The food service management company shall maintain such records (supported by invoices, receipts, or other evidence) as the School Food Authority will need to meet its responsibilities under this part, and shall report thereon to the School Food Authority promptly at the end of each month;</P> <P>(2) Any federally donated commodities received by the School Food Authority and made available to the food service management company shall enure only to the benefit to the School Food Authority's nonprofit school food service and be utilized therein; and</P> <P>(3) The books and records of the food service management company pertaining to the School Food Authority's feeding operation shall be available for a period of 3 years from the date of the submission of the final Financial Status Report, for inspection and audit by representatives of the State agency, of the Department, and of the General Accounting Office at any reasonable time and place, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.<PRTPAGE P="90"/> </P> <P>(e) Each school food authority approved to participate in the program shall enter into a written agreement with the State agency or the Department through the FNSRO, as applicable, that may be amended as necessary. Nothing in the preceding sentence shall be construed to limit the ability of the State agency or the FNSRO to suspend or terminate the agreement in accordance with § 220.18. If a single State agency administers any combination of the Child Nutrition Programs, that State agency shall provide each SFA with a single agreement with respect to the operation of those programs. Such agreements shall provide that the School Food Authority shall, with respect to participating schools under its jurisdiction:</P> <P>(1)(i) Maintain a nonprofit school food service; (ii) in accordance with the financial management system established under § 220.13(i) of this part, use all revenues received by such food service only for the operation or improvement of that food service <E T="03">Except that,</E> facilities, equipment, and personnel support with funds provided to a school food authority under this part may be used to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 <E T="03">et seq.</E>); (iii) revenues received by the nonprofit school food service shall not be used to purchase land or buildings or to contruct buildings; (iv) limit its net cash resources to an amount that does not exceed three months average expenditure for its nonprofit school food service or such other amount as may be approved by the State agency; and (v) observe the limitations on any competitive food service as set forth in § 220.12 of this part;</P> <P>(2) Serve breakfasts which meet the minimum requirements prescribed in § 220.8, during a period designated as the breakfast period by the school;</P> <P>(3) Price the breakfast as a unit;</P> <P>(4) Supply breakfast without cost or at reduced price to all children who are determined by the School Food Authority to be unable to pay the full price thereof in accordance with the free and reduced price policy statements approved under part 245 of this chapter;</P> <P>(5) Make no discrimination against any child because of his inability to pay the full price of the breakfasts;</P> <P>(6) Claim reimbursement at the assigned rates only for breakfasts served in accordance with the agreement;</P> <P>(7) Submit Claims for Reimbursement in accordance with § 220.11 of this part and procedures established by the State agency, or FNSRO where applicable;</P> <P>(8) Maintain, in the storage, preparation and service of food, proper sanitation and health standards in conformance with all applicable State and local laws and regulations;</P> <P>(9) Purchase, in as large quantities as may be efficiently utilized in its nonprofit school food service, foods designated as plentiful by the State Agency, or CFPDO, where applicable;</P> <P>(10) Accept and use, in as large quantities as may be efficiently utilized in its nonprofit school food service, such foods as may be offered as a donation by the Department;</P> <P>(11) Maintain necessary facilities for storing, preparing, and serving food;</P> <P>(12) Maintain a financial management system as prescribed by the State agency, or FNSRO where applicable;</P> <P>(13) Upon request, make all accounts and records pertaining to its nonprofit school food service available to the State agency, to FNS and to OA for audit or review at a reasonable time and place. Such records shall be retained for a period of three years after the end of the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit;</P> <P>(14) Retain the individual application for free and reduced price breakfasts submitted by families for a period of three years after the end of the fiscal year to which they pertain; and</P> <P>(15) Comply with the requirements of the Department's regulations respecting nondiscrimination (7 CFR part 15).</P> <P>(f) Nothing contained in this part shall prevent the State Agency from imposing additional requirements for participation in the program which are <PRTPAGE P="91"/>not inconsistent with the provisions of this part.</P> <SECAUTH>(44 U.S.C. 3506; sec. 819, Pub. L. 97-35, 95 Stat. 533 (42 U.S.C. 1759a, 1773 and 1757); Pub. L. 79-396, 60 Stat. 231 (42 U.S.C. 1751); Pub. L. 89-647, 80 Stat. 885-890 (42 U.S.C. 1773); Pub. L. 91-248, 84 Stat. 207 (42 U.S.C. 1759))</SECAUTH> <CITA>[32 FR 34, Jan. 5, 1967]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 220.7, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 220.8</SECTNO> <SUBJECT>What are the nutrition standards and menu planning approaches for breakfasts?</SUBJECT> <P>(a) <E T="03">What are the nutrition standards for breakfasts for children age 2 and over?</E> School food authorities must ensure that participating schools provide nutritious and well-balanced breakfasts. For children age 2 and over, breakfasts, when averaged over a school week, must meet the nutrition standards and the appropriate nutrient and calorie levels in this section. The nutrition standards are:</P> <P>(1) Provision of one-fourth of the Recommended Dietary Allowances (RDA) for protein, calcium, iron, vitamin A and vitamin C in the appropriate levels (see paragraphs (b), (c), (e)(1), or (h) of this section);</P> <P>(2) Provision of the breakfast energy allowances (calories) for children in the appropriate levels (see paragraphs (b), (c), (e)(1), or (h) of this section);</P> <P>(3) These applicable recommendations of the 1995 Dietary Guidelines for Americans:</P> <P>(i) Eat a variety of foods;</P> <P>(ii) Limit total fat to 30 percent of total calories;</P> <P>(iii) Limit saturated fat to less than 10 percent of total calories;</P> <P>(iv) Choose a diet low in cholesterol;</P> <P>(v) Choose a diet with plenty of grain products, vegetables, and fruits; and</P> <P>(vi) Choose a diet moderate in salt and sodium.</P> <P>(4) These measures of compliance with the applicable recommendations of the 1995 Dietary Guidelines for Americans:</P> <P>(i) Limit the percent of calories from total fat to 30 percent of the actual number of calories offered;</P> <P>(ii) Limit the percent of calories from saturated fat to less than 10 percent of the actual number of calories offered;</P> <P>(iii) Reduce sodium and cholesterol levels; and</P> <P>(iv) Increase the level of dietary fiber.</P> <P>(5) School food authorities have several ways to plan menus. The minimum levels of nutrients and calories that breakfasts must offer depends on the menu planning approach used and the age/grades served. The menu planning approaches are:</P> <P>(i) Nutrient standard menu planning (see paragraphs (b) and (e) of this section);</P> <P>(ii) Assisted nutrient standard menu planning (see paragraphs (b) and (f) of this section);</P> <P>(iii) Traditional food-based menu planning (see paragraphs (c) and (g)(1) of this section);</P> <P>(iv) Enhanced food-based menu planning (see paragraphs (c) and (g)(2) of this section); or</P> <P>(v) Alternate menu planning as provided for in paragraph (h) of this section.</P> <P>(6) Schools must keep production and menu records for the breakfasts they produce. These records must show how the breakfasts contribute to the required food components, food items or menu items every day. In addition, these records must show how the breakfasts contribute to the nutrition standards in paragraph (a) of this section and the appropriate calorie and nutrient levels (see paragraphs (c), (d) or (h) of this section, depending on the menu planning approach used) over the school week. If applicable, schools or school food authorities must maintain nutritional analysis records to demonstrate that breakfasts, when averaged over each school week, meet:</P> <P>(i) The nutrition standards provided in paragraph (a) of this section; and</P> <P>(ii) The nutrient and calorie levels for children for each age or grade group in accordance with paragraphs (b), (e)(1) of this section or developed under paragraph (h) of this section.</P> <P>(b) <E T="03">What are the levels for nutrients and calories for breakfasts planned under the nutrient standard or assisted nutrient standard menu planning approaches?</E> <PRTPAGE P="92"/> </P> <P>(1) The required levels are:</P> <GPH DEEP="136" SPAN="2"> <GID>ER09MY00.007</GID> </GPH> <P>(2) Optional levels are:</P> <GPH DEEP="143" SPAN="2"> <GID>ER09MY00.008</GID> </GPH> <P>(3) Schools may also develop a set of nutrient and calorie levels for a school week. These levels are customized for the age groups of the children in the particular school.</P> <P>(c) <E T="03">What are the nutrient and calorie levels for breakfasts planned under the food-based menu planning approaches?</E>—(1) <E T="03">Traditional approach.</E> For the traditional food-based menu planning approach, the required levels are:</P> <GPH DEEP="126" SPAN="2"> <PRTPAGE P="93"/> <GID>ER09MY00.009</GID> </GPH> <P>(2) <E T="03">Enhanced approach.</E> For the enhanced food-based menu planning approach, the required levels are:</P> <GPH DEEP="146" SPAN="2"> <GID>ER09MY00.010</GID> </GPH> <P>(d) <E T="03">What exceptions and variations are allowed in reimbursable breakfasts?</E>—(1) <E T="03">Exceptions for medical or special dietary needs.</E> Schools must make substitutions in breakfasts for students who are considered to have a disability under 7 CFR Part 15b and whose disability restricts their diet. Schools may also make substitutions for students who do not have a disability but who cannot consume the regular breakfast because of medical or other special dietary needs. Substitutions must be made on a case by case basis only when supported by a statement of the need for substitutions that includes recommended alternate foods, unless otherwise exempted by FNS. Such statement must, in the case of a student with a disability, be signed by a physician or, in the case of a student who is not disabled, by a recognized medical authority.</P> <P>(2) <E T="03">Variations for ethnic, religious, or economic reasons.</E> Schools should consider ethnic and religious preferences when planning and preparing breakfasts. Variations on an experimental or continuing basis in the food components for the food-based menu planning approaches in paragraph (g) may be allowed by FNS. Any variations must be nutritionally sound and needed to meet ethnic, religious, or economic needs.<PRTPAGE P="94"/> </P> <P>(3) <E T="03">Exceptions for natural disasters.</E> If there is a natural disaster or other catastrophe, FNS may temporarily allow schools to serve breakfasts for reimbursement that do not meet the requirements in this section.</P> <P>(e) <E T="03">What are the requirements for the nutrient standard menu planning approach?</E> </P> <P>(1) <E T="03">Nutrient levels.</E>—(i) <E T="03">Adjusting nutrient levels for young children.</E> Schools with children who are age 2 must at least meet the nutrition standards in paragraph (a) of this section and the preschool nutrient and calorie levels in paragraph (b)(1) of this section over a school week. Schools may also use the preschool nutrient and calorie levels in paragraph (b)(2) of this section or may calculate nutrient and calorie levels for two year olds. FNS has a method for calculating these levels in menu planning guidance materials.</P> <P>(ii) <E T="03">Minimum levels for nutrients.</E> Breakfasts must at least offer the nutrient and calorie levels for the required grade groups in the table in paragraph (b)(1) of this section. Schools may also offer breakfasts meeting the nutrient and calorie levels for the age groups in paragraph (b)(2) of this section. If only one grade or age group is outside the established levels, schools may follow the levels for the majority of the children. Schools may also customize the nutrient and calorie levels for the children they serve. FNS has a method for calculating these levels in guidance materials for menu planning.</P> <P>(2) <E T="03">Reimbursable breakfasts.</E>—(i) <E T="03">Contents of a reimbursable breakfast.</E> A reimbursable breakfast must include at least three menu items. All menu items or foods offered in a reimbursable breakfast contribute to the nutrition standards in paragraph (a) of this section and to the levels of nutrients and calories that must be met in paragraphs (c) or (e)(1) of this section. Unless offered as part of a menu item in a reimbursable breakfast, foods of minimal nutritional value (see appendix B to part 220) are not included in the nutrient analysis. Reimbursable breakfasts planned under the nutrient standard menu planning approach must meet the nutrition standards in paragraph (a) of this section and the appropriate nutrient and calorie levels in paragraph (b) or (e)(1) of this section.</P> <P>(ii) <E T="03">Offer versus serve.</E> Schools must offer at least three menu items. At their option, school food authorities may allow students to select only two menu items and to decline a maximum of one menu item. The price of a reimbursable breakfast does not change if the student does not take a menu item or requests smaller portions.</P> <P>(3) <E T="03">Doing the analysis.</E> Schools using nutrient standard menu planning must conduct the analysis on all menu items and foods offered in a reimbursable breakfast. The analysis is conducted over a school week. Unless offered as part of a menu item in a reimbursable breakfast, foods of minimal nutritional value (see appendix B to part 220) are not included in the nutrient analysis.</P> <P>(4) <E T="03">Software elements.</E>—(i) <E T="03">The Child Nutrition Database.</E> The nutrient analysis is based on the Child Nutrition Database. This database is part of the software used to do a nutrient analysis. Software companies or others developing systems for schools may contact FNS for more information about the database.</P> <P>(ii) <E T="03">Software evaluation.</E> FNS or an FNS designee evaluates any nutrient analysis software before it may be used in schools. FNS or its designee determines if the software, as submitted, meets the minimum requirements. The approval of software does not mean that FNS or USDA endorses it. The software must be able to do all functions after the basic data is entered. The required functions include weighted averages and the optional combined analysis of the lunch and breakfast programs.</P> <P>(5) <E T="03">Nutrient analysis procedures.</E>—(i) <E T="03">Weighted averages.</E> Schools must include all menu items and foods offered in reimbursable breakfasts in the nutrient analysis. Menu items and foods are included based on the portion sizes and projected serving amounts. They are also weighted based on their proportionate contribution to the breakfasts offered. This means that menu items or foods more frequently offered are weighted more heavily than those not offered as frequently. Schools calculate weighting as indicated by FNS guidance and by the guidance provided <PRTPAGE P="95"/>by the software. Through September 30, 2003, schools are not required to conduct a weighted analysis.</P> <P>(ii) <E T="03">Analyzed nutrients.</E> The analysis includes all menu items and foods offered over a school week. The analysis must determine the levels of: Calories, protein, vitamin A, vitamin C, iron, calcium, total fat, saturated fat, sodium, cholesterol and dietary fiber.</P> <P>(iii) <E T="03">Combining the analysis of the lunch and breakfast programs.</E> At their option, schools may combine the analysis of breakfasts offered under this part and lunches offered under part 210 of this chapter. The analysis is done proportionately to the levels of participation in each program based on FNS guidance.</P> <P>(6) <E T="03">Comparing the results of the nutrient analysis.</E> Once the procedures in paragraph (i)(5) of this section are completed, schools must compare the results of the analysis to the appropriate nutrient and calorie levels, by age/grade groups, in paragraph (b) of this section or those developed under paragraph (e)(1) of this section. This comparison determines the school week's average. Schools must also make comparisons to the nutrition standards in paragraph (a) of this section to determine how well they are meeting the nutrition standards over the school week.</P> <P>(7) <E T="03">Adjustments to the menus.</E> Once schools know the results of the nutrient analysis based on the procedures in paragraphs (e)(5) and (e)(6) of this section, they must adjust future menu cycles to reflect production and how often the menu items and foods are offered. Schools may need to reanalyze menus when the students' selections and, consequently, production levels change. Schools may need to change the menu items and foods offered given the students' selections and may need to modify the recipes and other specifications to make sure that the nutrition standards in paragraph (a) and either paragraph (b) or (e)(1) of this section are met.</P> <P>(8) <E T="03">Standardized recipes.</E> If a school follows the nutrient standard menu planning approach, it must develop and follow standardized recipes. A standardized recipe is a recipe that was tested to provide an established yield and quantity using the same ingredients for both measurement and preparation methods. Any standardized recipes developed by USDA/FNS are in the Child Nutrition Database. If a school has its own recipes, they must be standardized and analyzed to determine the levels of calories, nutrients, and dietary components listed in paragraph (e)(5)(ii) of this section. Schools must add any local recipes to their local database as outlined in FNS guidance.</P> <P>(9) <E T="03">Processed foods.</E> The Child Nutrition Database includes a number of processed foods. Schools may use purchased processed foods and menu items that are not in the Child Nutrition Database. Schools or the State agency must add any locally purchased processed foods and menu items to their local database as outlined in FNS guidance. Schools or State agencies must obtain the levels of calories, nutrients, and dietary components listed in paragraph (e)(5)(ii) of this section.</P> <P>(10) <E T="03">Menu substitutions.</E> Schools may need to substitute foods or menu items in a menu that was already analyzed. If the substitution(s) occurs more than two weeks before the planned menu is served, the school must reanalyze the revised menu. If the substitution(s) occurs two weeks or less before the planned menu is served, the school does not need to do a reanalysis. However, schools should always try to substitute similar foods.</P> <P>(11) <E T="03">Meeting the nutrition standards.</E> The school's analysis shows whether their menus are meeting the nutrition standards in paragraph (a) of this section and the appropriate levels of nutrients and calories in paragraph (b) of this section or customized levels developed under paragraph (e)(1) of this section. If the analysis shows that the menu(s) are not meeting these standards, the school needs to take action to make sure that the breakfasts meet the nutrition standards and the calorie, nutrient, and dietary component levels. Actions may include technical assistance and training and may be taken by the State agency, the school food authority or by the school as needed.</P> <P>(12) <E T="03">Other Child Nutrition Programs and nutrient standard analysis menu planning.</E> School food authorities that <PRTPAGE P="96"/>operate the Summer Food Service Program (part 225 of this chapter) and/or the Child and Adult Care Food Program (part 226 of this chapter) may, with State agency approval, prepare breakfasts for these programs using the nutrient standard menu planning approach for children age two and over. FNS has guidance on the levels of nutrient and calories for adult breakfasts offered under the Child and Adult Care Food Program.</P> <P>(f) <E T="03">What are the requirements for the assisted nutrient standard menu planning approach?</E>—(1) <E T="03">Definition of assisted nutrient standard menu planning.</E> Some school food authorities may not be able to do all of the procedures necessary for nutrient standard menu planning. The assisted nutrient standard menu planning approach provides schools with menu cycles developed and analyzed by other sources. These sources include the State agency, other schools, consultants, or food service management companies.</P> <P>(2) <E T="03">Elements of assisted nutrient standard menu planning.</E> School food authorities using menu cycles developed under assisted nutrient standard menu planning must follow the procedures in paragraphs (e)(1) through (e)(10) of this section. The menu cycles must also incorporate local food preferences and accommodate local food service operations. The menu cycles must meet the nutrition standards in paragraph (a) of this section and meet the applicable nutrient and calorie levels for nutrient standard menu planning in paragraphs (b) or (e)(1) of this section. The supplier of the assisted nutrient standard menu planning approach must also develop and provide recipes, food product specifications, and preparation techniques. All of these components support the nutrient analysis results of the menu cycles used by the receiving school food authorities.</P> <P>(3) <E T="03">State agency approval.</E> Prior to its use, the State agency must approve the initial menu cycle, recipes and other specifications of the assisted nutrient standard menu planning approach. The State agency needs to make sure all the steps required for nutrient analysis were followed. School food authorities may also ask the State agency for assistance with implementation of their assisted nutrient standard menu planning approach.</P> <P>(4) <E T="03">Required adjustments.</E> After the initial service of the menu cycle developed under the assisted nutrient standard menu planning approach, the nutrient analysis must be reassessed and appropriate adjustments made as discussed in paragraph (e)(7) of this section.</P> <P>(5) <E T="03">Final responsibility for meeting the nutrition standards.</E> The school food authority using the assisted nutrient standard menu planning approach retains final responsibility for meeting the nutrition standards in paragraph (a) of this section and the applicable calorie and nutrient levels in paragraphs (b) or (e)(1) of this section.</P> <P>(6) <E T="03">Adjustments to the menus.</E> If the nutrient analysis shows that the breakfasts offered are not meeting the nutrition standards in paragraph (a) of this section and the applicable calorie and nutrient levels in paragraphs (b) or (e)(1) of this section, the State agency, school food authority or school must take action to make sure the breakfasts offered meet these requirements. Actions needed include technical assistance and training.</P> <P>(7) <E T="03">Other Child Nutrition Programs and assisted nutrient analysis menu planning.</E> School food authorities that operate the Summer Food Service Program (part 225 of this chapter) and/or the Child and Adult Care Food Program (part 226 of this chapter) may, with State agency approval, prepare breakfasts for these programs using the assisted nutrient standard menu planning approach for children age two and over. FNS has guidance on the levels of nutrients and calories for adult breakfasts offered under the Child and Adult Care Food Program.</P> <P>(g) <E T="03">What are the requirements for the food-based menu planning approaches?</E> (1) <E T="03">Food items.</E> There are two menu planning approaches based on meal patterns, not nutrient analysis. These approaches are the traditional food-based menu planning approach and the enhanced food-based menu planning approach. Schools using one of these approaches must offer these food items in at least the portions required for various age/grade groups:<PRTPAGE P="97"/> </P> <P>(i) A serving of fluid milk as a beverage or on cereal or used partly for both;</P> <P>(ii) A serving of fruit or vegetable or both, or full-strength fruit or vegetable juice; and</P> <P>(iii) Two servings from one of the following components or one serving from each component:</P> <P>(A) Grains/breads; and/or</P> <P>(B) Meat/meat alternate.</P> <P>(2) <E T="03">Quantities for the traditional food-based menu planning approach.</E> At a minimum, schools must offer the food items in the quantities specified for the appropriate age/grade group in the following table:</P> <GPH DEEP="286" SPAN="2"> <GID>ER09MY00.011</GID> </GPH> <P>(3) <E T="03">Quantities for the enhanced food-based menu planning approach.</E> At a minimum, schools must offer the food items in the quantities specified for the appropriate age/grade group in the following table:</P> <GPH DEEP="351" SPAN="2"> <PRTPAGE P="98"/> <GID>ER09MY00.012</GID> </GPH> <P>(4) <E T="03">Offer versus serve.</E> Each school must offer all four required food items listed in paragraph (g)(1) of this section. At the option of the school food authority, each school may allow students to refuse one food item from any component. The refused food item may be any of the four items offered to the student. A student's decision to accept all four food items or to decline one of the four food items must not affect the charge for a reimbursable breakfast.</P> <P>(5) <E T="03">Meal pattern exceptions for outlying areas.</E> Schools in American Samoa, Puerto Rico and the Virgin Islands may serve a starchy vegetable such as yams, plantains, or sweet potatoes to meet the grain/bread requirement.</P> <P>(h) <E T="03">What are the requirements for alternate menu planning approaches?</E> </P> <P>(1) <E T="03">Definition.</E> Alternate menu planning approaches are those adopted or developed by school food authorities or State agencies that differ from the standard approaches established in paragraphs (e) through (g) of this section.</P> <P>(2) <E T="03">Use and approval of major changes or new alternate approaches.</E> Within the guidelines established for developing alternate menu planning approaches, school food authorities or State agencies may modify one of the established <PRTPAGE P="99"/>menu planning approaches in paragraphs (e) through (g) of this section or may develop their own menu planning approach. The alternate menu planning approach must be available in writing for review and monitoring purposes. No formal plan is required; guidance material, a handbook or protocol is sufficient. As appropriate, the material must address how the guidelines in paragraph (h)(3) of this section are met. A State agency that develops an alternate approach that is exempt from FNS approval under paragraph (h)(2)(iii) of this section must notify FNS in writing when implementing the alternate approach.</P> <P>(i) <E T="03">Approval of local level plans.</E> Any school food authority-developed menu planning approach must have prior State agency review and approval.</P> <P>(ii) <E T="03">Approval of State agency plans.</E> Unless exempt under paragraph (h)(2)(iii) of this section, any State agency-developed menu planning approach must have prior FNS approval.</P> <P>(iii) <E T="03">State agency plans not subject to approval.</E> A State agency-developed menu planning approach does not need FNS approval if:</P> <P>(A) Five or more school food authorities in the State use it; and</P> <P>(B) The State agency maintains on-going oversight of the operation and evaluation of the approach and makes any needed adjustments to its policies and procedures to ensure that the appropriate guidelines in paragraph (h)(3) of this section are met.</P> <P>(3) <E T="03">Elements for major changes or new approaches.</E> Any alternate menu planning approach must:</P> <P>(i) offer fluid milk, as provided in paragraph (i) of this section;</P> <P>(ii) include the procedures for offer versus serve if the school food authority chooses to implement the offer versus serve option. Alternate approaches should follow the offer versus serve procedures in paragraphs (e)(2)(ii) and (g)(4) of this section, as appropriate. If these requirements are not followed, the approach must indicate:</P> <P>(A) The affected age/grade groups;</P> <P>(B) The number and type of items (and, if applicable, the quantities for the items) that constitute a reimbursable breakfast under offer versus serve;</P> <P>(C) How such procedures will reduce plate waste; and</P> <P>(D) How a reasonable level of calories and nutrients for the breakfast as taken is provided.</P> <P>(iii) Meet the Recommended Dietary Allowances and breakfast energy allowances (nutrient levels) and indicate the age/grade groups served and how the nutrient levels are met for those age/grade groups;</P> <P>(iv) Follow the requirements for competitive foods in § § 220.2(i-1) and 220.12 and appendix B to this part;</P> <P>(v) Follow the requirements for counting food items and products towards meeting the meal patterns. These requirements are found in paragraphs (g) and (i) of this section, in appendices A through C to this part, and in instructions and guidance issued by FNS. This only applies if the alternate approach is a food-based menu planning approach.</P> <P>(vi) Identify a reimbursable breakfast at the point of service.</P> <P>(A) To the extent possible, the procedures provided in paragraph (e)(2)(i) of this section for nutrient standard or assisted nutrient standard menu planning approaches or for food-based menu planning approaches provided in paragraph (g) of this section must be followed. Any instructions or guidance issued by FNS that further defines the elements of a reimbursable breakfast must be followed when using the existing regulatory provisions.</P> <P>(B) Any alternate approach that deviates from the provisions in paragraph (e)(2)(i) or paragraph (g) of this section must indicate what constitutes a reimbursable breakfast, including the number and type of items (and, if applicable, the quantities for the items) which comprise the breakfast, and how a reimbursable breakfast is to be identified at the point of service.</P> <P>(vii) explain how the alternate menu planning approach can be monitored under the applicable provisions of § 210.18 and § 210.19 of this chapter, including a description of the records that will be maintained to document compliance with the program's administrative and nutrition requirements. However, if the procedures under § 210.19 of this chapter cannot be used to monitor the alternate approach, a <PRTPAGE P="100"/>description of review procedures which will enable the State agency to assess compliance with the nutrition standards in paragraphs (a)(1) through (a)(4) of this section must be included; and</P> <P>(viii) follow the requirements for weighted analysis and for approved software for nutrient standard menu planning as required by paragraphs (e)(4) and (e)(5) of this section unless a State agency-developed approach meets the criteria in paragraph (h)(2)(iii) of this section. Through September 30, 2003, schools are not required to conduct a weighted analysis.</P> <P>(i) <E T="03">What are the requirements for offering milk?</E> </P> <P>(1) <E T="03">Serving milk.</E> A serving of milk as a beverage or on cereal or used in part for each purpose must be offered for breakfasts.</P> <P>(2) <E T="03">Inadequate milk supply.</E> If a school cannot get a supply of milk, it can still participate in the Program under the following conditions:</P> <P>(i) If emergency conditions temporarily prevent a school that normally has a supply of fluid milk from obtaining delivery of such milk, the State agency may allow the school to serve breakfasts during the emergency period with an alternate form of milk or without milk.</P> <P>(ii) If a school is unable to obtain a supply of any type of fluid milk on a continuing basis, the State agency may allow schools to substitute canned or dry milk in the required quantities in the preparation of breakfasts. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, and the Virgin Islands, if a sufficient supply of fluid milk cannot be obtained, “milk” includes reconstituted or recombined milk, or otherwise as allowed by FNS through a written exception.</P> <P>(j) <E T="03">What are the requirements for the infant breakfast pattern?</E> </P> <P>(1) <E T="03">Feeding breakfasts to infants.</E> Breakfasts served to infants ages birth through 11 months must meet the requirements described in paragraph (j)(4) of this section. Foods included in the breakfast must be of a texture and a consistency that are appropriate for the age of the infant being served. The foods must be served during a span of time consistent with the infant's eating habits. For those infants whose dietary needs are more individualized, exceptions to the meal pattern must be made in accordance with the requirements found in paragraph (d)(1) of this section.</P> <P>(2) <E T="03">Breastmilk and iron-fortified formula.</E> Either breastmilk or iron-fortified infant formula, or portions of both, must be served for the entire first year. Meals containing breastmilk and meals containing iron-fortified infant formula supplied by the school are eligible for reimbursement. However, infant formula provided by a parent (or guardian) and breastmilk fed directly by the infant's mother, during a visit to the school, contribute to a reimbursable breakfast only when the school supplies at least one component of the infant's meal.</P> <P>(3) <E T="03">Solid foods.</E> For infants ages 4 through 7 months, solid foods of an appropriate texture and consistency are required only when the infant is developmentally ready to accept them. The school should consult with the infant's parent (or guardian) in making the decision to introduce solid foods. Solid foods should be introduced one at a time, on a gradual basis, with the intent of ensuring the infant's health and nutritional well-being.</P> <P>(4) <E T="03">Infant meal pattern.</E> Infant breakfasts must have, at a minimum, each of the food components indicated, in the amount that is appropriate for the infant's age. For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered. In these situations, additional breastmilk must be offered if the infant is still hungry. Breakfasts may include portions of breastmilk and iron-fortified infant formula as long as the total number of ounces meets, or exceeds, the minimum amount required of this food component. Similarly, to meet the component requirement for vegetables and fruit, portions of both may be served.</P> <P>(i) <E T="03">Birth through 3 months.</E> 4 to 6 fluid ounces of breastmilk or iron-fortified infant formula—only breastmilk or iron-fortified formula is required to meet the infant's nutritional needs.</P> <P>(ii) <E T="03">4 through 7 months.</E> Breastmilk or iron-fortified formula is required. <PRTPAGE P="101"/>Some infants may be developmentally ready for solid foods of an appropriate texture and consistency. Breakfasts are reimbursable when schools provide all of the components in the meal pattern that the infant is developmentally ready to accept.</P> <P>(A) 4 to 8 fluid ounces of breastmilk or iron-fortified infant formula; and</P> <P>(B) 0 to 3 tablespoons of iron-fortified dry infant cereal.</P> <P>(iii) <E T="03">8 through 11 months.</E> Breastmilk or iron-fortified formula and solid foods of an appropriate texture and consistency are required.</P> <P>(A) 6 to 8 fluid ounces of breastmilk or iron-fortified infant formula; and</P> <P>(B) 2 to 4 tablespoons of iron-fortified dry infant cereal; and</P> <P>(C) 1 to 4 tablespoons of fruit or vegetable.</P> <P>(5) <E T="03">Infant meal pattern table.</E> The minimum amounts of food components to serve to infants, as described in paragraph (j)(4) of this section, are:</P> <GPOTABLE CDEF="s50,r50,r50" COLS="3" OPTS="L2,i1"> <TTITLE>Breakfast Pattern for Infants</TTITLE> <BOXHD> <CHED H="1">Birth through 3 months</CHED> <CHED H="1">4 through 7 months</CHED> <CHED H="1">8 through 11 months</CHED> </BOXHD> <ROW> <ENT I="01">4-6 fluid ounces of formula <SU>1</SU> or breastmilk <E T="51">2 3</E> </ENT> <ENT>4-8 fluid ounces of formula <SU>1</SU> or breastmilk <E T="51">2 3</E>; and</ENT> <ENT>6-8 fluid ounces of formula <SU>1</SU> or breastmilk <E T="51">2 3</E>; and</ENT> </ROW> <ROW> <ENT I="22"/> <ENT>0-3 tablespoons of infant cereal <E T="51">1 4</E> </ENT> <ENT>2-4 tablespoons of infant cereal <SU>1</SU>; and</ENT> </ROW> <ROW> <ENT I="22"/> <ENT O="xl"/> <ENT>1-4 tablespoons of fruit or vegetable or both.</ENT> </ROW> <TNOTE> <SU>1</SU> Infant formula and dry infant cereal must be iron-fortified.</TNOTE> <TNOTE> <SU>2</SU> Breastmilk or formula, or portions of both, may be served; however, it is recommended that breastmilk be served in place of formula from birth through 11 months.</TNOTE> <TNOTE> <SU>3</SU> For some breastfed infants who regularly consume less than the minimum amount of breastmilk per feeding, a serving of less than the minimum amount of breastmilk may be offered, with additional breastmilk offered if the infant is still hungry.</TNOTE> <TNOTE> <SU>4</SU> A serving of this component is required only when the infant is developmentally ready to accept it.</TNOTE> </GPOTABLE> <P>(k) <E T="03">What about serving additional foods?</E> Schools may offer additional foods with breakfasts to children over one year of age.</P> <P>(l) <E T="03">Must schools offer choices at breakfast?</E> FNS encourages schools to offer children a selection of foods and menu items at breakfast. Choices provide variety and encourage consumption. Schools may offer choices of reimbursable breakfasts or foods within a reimbursable breakfast. When a school offers a selection of more than one type of breakfast or when it offers a variety of food components, menu items or foods and milk for choice as a reimbursable breakfast, the school must offer all children the same selection(s) regardless of whether the child is eligible for free or reduced price breakfasts or must pay the designated full price. The school may establish different unit prices for each type of breakfast offered provided that the benefits made available to children eligible for free or reduced price breakfasts are not affected.</P> <P>(m) <E T="03">What must schools do about nutrition disclosure?</E> To the extent that school food authorities identify foods in a menu, or on the serving line or through other available means of communicating with program participants, school food authorities must identify products or dishes containing more than 30 parts fully hydrated alternate protein products (as specified in appendix A of this part) to less than 70 parts beef, pork, poultry or seafood on an uncooked basis, in a manner which does not characterize the product or dish solely as beef, pork, poultry or seafood. Additionally, FNS encourages schools to inform the students, parents, and the public about efforts they are making to meet the nutrition standards (see paragraph (a) of this section) for school breakfasts.</P> <CITA>[65 FR 26923, May 9, 2000, as amended at 65 FR 36317, June 8, 2000; 67 FR 36785, May 28, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.9</SECTNO> <SUBJECT>Reimbursement payments.</SUBJECT> <P>(a) State agencies, or FNSRO's where applicable, shall make reimbursement payments to schools only in connection with breakfasts meeting the requirements of § 220.8, and reported in accordance with § 220.11(b) of this part. School Food Authorities shall plan for and prepare breakfasts on the basis of participation trends, with the objective of providing one breakfast per child per day. Production and participation rec-ords shall be maintained to demonstrate positive action toward this objective. In recognition of the fluctuation in participation levels which makes it difficult to precisely estimate the number of breakfasts needed and to reduce the resultant waste, any excess breakfasts that are prepared may be <PRTPAGE P="102"/>served to eligible children and may be claimed for reimbursement unless the State agency, or FNSRO where applicable, determines that the School Food Authority has failed to plan and prepare breakfasts with the objective of providing one breakfast per child per day. In no event shall the School Food Authority claim reimbursement for free and reduced price breakfasts in excess of the number of children approved for free and reduced price meals.</P> <P>(b) The rates of reimbursement for breakfasts served to eligible children in schools not in severe need are the applicable national average payment factors for breakfasts. The maximum rates of reimbursement for breakfasts served to eligible children in schools determined to be in severe need are those prescribed by the Secretary. National average payment factors and maximum rates of reimbursement for the School Breakfast Program shall be prescribed annually by the Secretary in the <E T="04">Federal Register.</E> </P> <P>(c) The total reimbursement for breakfasts served to eligible children in, (1) schools not in severe need, and (2) severe need schools in State's with State Breakfast mandates as provided for in § 220.9(e)(3) (i) and (ii) in any School Food Authority during the school year shall not exceed the sum of the products obtained by multiplying the total numbers of such free, reduced price and paid breakfasts, respectively, by the applicable rate of reimbursement for each type of breakfast as prescribed for the school year.</P> <P>(d) For any school year, severe need reimbursement payments to any School Food Authority except as provided for in paragraph (c) of this section shall be the lesser of: (1) The cost of providing free and reduced price breakfast to eligible children in schools determined to be in severe need, less the reduced price payments received by such schools; or (2) the number of free and the number of reduced price breakfasts, respectively, that are served to eligible children in schools determined to be in severe need, multiplied by the applicable severe need reimbursement rates for such breakfasts.</P> <P>(e) <E T="03">Severe need schools.</E> The State agency, or FNSRO where applicable, shall determine whether a school is in severe need based on the following eligibility criteria: (1) The reimbursement rate per meal established by the Secretary is insufficient to cover the costs of the school's breakfast program; (2) the school is participating in or desiring to initiate a breakfast program; and (3) 40 percent or more of the lunches served to students at the school in the second preceding school year were served free or at a reduced price. In addition, schools which are required by State law to serve breakfasts and which fail to satisfy the required 40 percent eligibility criteria are eligible for severe need reimbursement rates only for the following limited time periods:</P> <P>(i) In States where the State legislature meets annually, the schools may receive severe need reimbursement rates until July 1, 1983; and (ii) in States where the State legislature meets biennially, the schools may receive severe need reimbursement rates until July 1, 1984. State agencies shall maintain on file, and have available for review and audits, their eligibility criteria for determining the severe need of schools and the source of the data to be used in making individual determinations. The State agency, or FNSRO where applicable, shall be responsible for establishing systems for determining breakfast costs where such costs are necessary to the determination of whether or not a school is in severe need.</P> <SECAUTH>(Sec. 6, Pub. L. 95-627, 92 Stat. 3620 (42 U.S.C. 1776; secs. 801, 803, 812; Pub. L. 97-35, 95 Stat. 521-535, 42 U.S.C. 1753, 1759(a), 1758, 1773; sec. 819, Pub. L. 97-35, 95 Stat. 533 (42 U.S.C. 1759a, 1773 and 1757); 44 U.S.C. 3506))</SECAUTH> <CITA>[Amdt. 25, 41 FR 34760, Aug. 17, 1976, as amended by Amdt. 29, 44 FR 48159, Aug. 17, 1979; Amdt. No. 38, 46 FR 50928, Oct. 16, 1981; 46 FR 51368, Oct. 20, 1981; 47 FR 746, Jan. 7, 1982; 47 FR 31375, July 20, 1982; 48 FR 40196, 40197, Sept. 6, 1983; 60 FR 31222, June 13, 1995; 65 FR 26923, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.10</SECTNO> <SUBJECT>Effective date for reimbursement.</SUBJECT> <P>Reimbursement payments under the School Breakfast Program may be made only to School Food Authorities operating under an agreement with the State Agency or the Department, and may be made only after execution of <PRTPAGE P="103"/>the agreement. Such payments may include reimbursement in connection with breakfasts served in accordance with provisions of the program in the calendar month preceding the calendar month in which the agreement is executed.</P> <CITA>[32 FR 35, Jan. 5, 1967, as amended by Amdt. 9, 37 FR 9613, May 13, 1972]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.11</SECTNO> <SUBJECT>Reimbursement procedures.</SUBJECT> <P>(a) To be entitled to reimbursement under this part, each School Food Authority shall submit to the State agency, or FNSRO where applicable, a monthly Claim for Reimbursement.</P> <P>(b) Claims for Reimbursement shall include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of School Program Operations required under § 220.13(b)(2). Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall include only breakfasts served in that month except if the first or last month of Program operations for any year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. If a single State agency administers any combination of the Child Nutrition Programs, the SFA shall be able to use a common claim form with respect to claims for reimbursement for meals served under those programs. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency, or FNSRO where applicable, not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency, or FNSRO where applicable, shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of School Program Operations (FNS-10) for the claim month which is required under § 220.13(b)(2). Upward adjustments in Program funds claimed which are not reflected in the final FNS-10 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary.</P> <P>(c) Where a school participates in both the National School Lunch Program and the School Breakfast Program, the State agency or FNSRO, where applicable, may authorize the submission of one claim for reimbursement to cover both programs.</P> <P>(d) [Reserved]</P> <P>(e) Notwithstanding any other provision of this section, the State agency, or FNSRO where applicable, may advance funds available for the School Breakfast Program to a School Food Authority in an amount equal to the reimbursement estimated for the total number of breakfasts, including free and reduced price breakfasts, to be served to children for 1 month. The State agency, or FNSRO where applicable, shall require School Food Authorities who receive advances of funds under the provisions of this paragraph to make timely submissions of claims for reimbursement on a monthly basis and shall suspend advances of funds in the absence of such timely submissions. Following the receipt of claims the State agency, or FNSRO where applicable, shall make such adjustments as are necessary in such advances of funds to insure that the total amount of reimbursement received by a School Food Authority for the fiscal year will not exceed an amount equal to the number of breakfasts, including free and reduced price breakfast, served to children times the respective rates of reimbursement assigned by the State <PRTPAGE P="104"/>agency, or FNSRO where applicable, in accordance with § 220.9.</P> <SECAUTH>(Title 1, Chapter I, Pub. L. 96-38, 93 Stat. 98 (42 U.S.C. 1776a); secs. 807 and 808, Pub. L. 97-35, 95 Stat. 521-535, 42 U.S.C. 1772, 1784, 1760; sec. 819, Pub. L. 97-35, 95 Stat. 533 (42 U.S.C. 1759a, 1773, 1757); Pub. L. 97-370, 96 Stat. 1806)</SECAUTH> <CITA>[32 FR 35, Jan. 5, 1967, as amended by Amdt. 9, 37 FR 9613, May 13, 1972; 40 FR 30924, July 24, 1975; 45 FR 82622, Dec. 16, 1980; 47 FR 31376, July 20, 1982; 48 FR 40196, Sept. 6, 1983; Amdt. 49, 49 FR 18987, May 4, 1984; 64 FR 50742, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.12</SECTNO> <SUBJECT>Competitive food services.</SUBJECT> <P>(a) State agencies and School Food Authorities shall establish such rules or regulations as are necessary to control the sale of foods in competition with breakfasts served under the Program. Such rules or regulations shall prohibit the sale of foods of minimal nutritional value, as listed in appendix B of this part, in the food service areas during the breakfast periods. The sale of other competitive foods may, at the discretion of the State agency and the School Food Authority, be allowed in the food service area during the breakfast period only if all income from the sale of such foods accrues to the benefit of the nonprofit school food service or the school or student organizations approved by the school. State agencies and School Food Authorities may impose additional restrictions on the sale of and income from all foods sold at any time throughout schools participating in the School Breakfast Program.</P> <P>(b)(1) Any person may submit a petition to FNS requesting that an individual food be exempted from a category of foods of minimal nutritional value listed in appendix B. In the case of artificially sweetened foods, the petition must include a statement of the percent of RDI for the eight nutrients listed in § 220.2(i-1) that the food provides per serving and the petitioner's source of this information. In the case of all other foods, the petition must include a statement of the percent of RDI for the eight nutrients listed in § 220.2(i-1) that the food provides per serving and per 100 calories and the petitioner's source of this information. The Department will determine whether or not the individual food is a food of minimal nutritional value as defined § 220.2(i-1), and will inform the petitioner in writing of such determination, and the public by notice in the <E T="04">Federal Register</E> as indicated under paragraph (b)(3) of this section. In determining whether an individual food is a food of minimal nutritional value, discrete nutrients added to the food will not be taken into account.</P> <P>(2) Any person may submit a petition to FNS requesting that foods in a particular category of foods be classified as foods of minimal nutritional value as defined in § 220.2(i-1). The petition must identify and define the food category in easily understood language, list examples of the foods contained in the category and include a list which the foods in that category usually contain. If, upon review of the petition, the Department determines that the foods in that category should not be classified as foods of minimal nutritional value, the petitioner will be so notified in writing. If upon review of the petition, the Department determines that there is a substantial likelihood that the foods in that category should be classified as foods of minimal nutritional value as defined in § 220.2(i-1), the Department shall at that time inform the petitioner. In addition, the Department shall publish a proposed rule restricting the sale of the foods in that category, setting forth the reasons for this action, and soliciting public comments. On the basis of comments received within 60 days of publication of the proposed rule and other available information, the Department will determine whether the nutrient composition of the foods indicates that the category should be classified as a category of foods of minimal nutritional value.</P> <FP>The petitioner shall be notified in writing and the public shall be notified of the Department's final determination upon publication in the <E T="04">Federal Register</E> as indicated under section (b)(3) of this section.</FP> <P>(3) By May 1 and November 1 of each year, the Department shall amend appendix B to exclude those individual foods identified under paragraph (b)(1) of this section, and to include those categories of foods identified under <PRTPAGE P="105"/>paragraph (b)(2) of this section, <E T="03">Provided</E> That there are necessary changes.</P> <SECAUTH>(Sec. 819, Pub. L. 97-35, 95 Stat. 533 (42 U.S.C. 1759a, 1773 and 1757))</SECAUTH> <CITA>[Amdt. 32, 45 FR 6771, Jan. 29, 1980, as amended by Amdt. 34, 45 FR 76937, Nov. 21, 1980; 50 FR 20547, May 17, 1985; 59 FR 23614, May 6, 1994]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.13</SECTNO> <SUBJECT>Special responsibilities of State agencies.</SUBJECT> <P>(a) [Reserved]</P> <P>(a-1) Each State agency, or FNSRO where applicable, shall require each School Food Authority of a school participating in the School Breakfast Program to develop and file for approval a free and reduced price policy statement in accordance with paragraph (a) of § 220.7.</P> <P>(b) <E T="03">Records and reports.</E> (1) Each State agency shall maintain Program records as necessary to support the reimbursement payments made to School Food Authorities under § 220.9 and the reports submitted to FNS under § 220.13(b)(2). The records may be kept in their original form or on microfilm, and shall be retained for a period of three years after the date of submission of the final Financial Status Report for the fiscal year, except that if audit findings have not been resolved, the records shall be retained beyond the three-year period as long as required for the resolution of the issues raised by the audit.</P> <P>(2) Each State agency shall submit to FNS a final Report of School Program Operations (FNS-10) for each month which shall be limited to claims submitted in accordance with § 220.11(b) and which shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency's report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (SF-269) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.</P> <P>(c) Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of either program, and shall take appropriate action to correct any irregularities. State Agencies shall maintain on file evidence of such investigations and actions. FNS or OI shall make investigations at the request of the State Agency or where FNS or OI determines investigations are appropriate.</P> <P>(d) The State agency shall release to FNS any Federal funds made available to it under the Act which are unobligated at the end of each fiscal year. Any such funds shall remain available to FNS for the purposes of the programs authorized by the Act until expended. Release of funds by the State Agency shall be made as soon as practicable, but in any event not later than 30 days following demand by FNSRO and shall be reflected by related adjustment in the State Agency's Letter of Credit.</P> <P>(e) State agencies shall provide School Food Authorities with monthly information on foods available in plentiful supply, based on information provided by the Department.</P> <P>(f) Each State agency shall provide program assistance as follows:</P> <P>(1) Each State agency or FNSRO where applicable shall provide consult-ative, technical, and managerial personnel to administer programs, monitor performance, and measure progress toward achieving program goals.</P> <P>(2) State agencies shall conduct reviews of schools participating in the <PRTPAGE P="106"/>Program for compliance with the provisions of this part when such schools are being reviewed under the provisions identified under § 210.18(i) of this title. Compliance reviews of participating schools shall focus on the reviewed school's compliance with the required certification, counting and breakfast service procedures. School food authorities may appeal a denial of all or a part of the Claim for Reimbursement or withholding of payment arising from review activity conducted by the State agency under § 210.18 of this title or by FNS under § 210.30(d)(2) of this title. Any such appeal shall be subject to the procedures set forth under § 210.18(q) of this title or § 210.30(d)(3) of this title, as appropriate.</P> <P>(3) For the purposes of compliance with the nutrition standards in § 220.8(a) and the nutrient and calorie levels in § 220.8(b) or (c) or those developed under § 220.8(e)(1) or (h), the State agency shall follow the provisions specified § 210.19(a)(1) of this chapter.</P> <P>(4) Such assistance shall include visits to participating schools to ensure compliance with program regulations and with the Department's nondiscrimination regulations (part 15 of this title), issued under title VI, of the Civil Rights Act of 1964.</P> <P>(5) Documentation of such assistance shall be maintained on file by the State agency, or FNSRO where applicable.</P> <P>(g) State agencies shall adequately safeguard all assets and assure that they are used solely for authorized purposes.</P> <P>(h) [Reserved]</P> <P>(i) Each State agency, or FNS where applicable, shall establish a financial management system under which School Food Authorities shall account for all revenues and expenditures of their nonprofit school food service. The system shall prescribe the allowability of nonprofit school food service expenditures in accordance with this part and, as applicable, the cost principles contained in OMB Circular A-87 and 7 CFR part 3015. The system shall permit determination of school food service net cash resources, and shall include any criteria for approval of net cash resources in excess of three months average expenditures. In addition, School Food Authorities shall be required to account separately for other food services which are operated by the School Food Authority.</P> <P>(j) During audits, supervisory assistance reviews, or by other means, State agencies, or FNSROs where applicable, shall be responsible for monitoring the net cash resources of the nonprofit school food service of each School Food Authority participating in the Program. In the event that such resources exceed three months average expenditures for the School Food Authority's nonprofit school food service, or such amount as may be approved by the State agency or FNSRO where applicable, the State agency or FNSRO where applicable, may require the School Food Authority to reduce children's prices, improve food quality or take other actions designed to improve the nonprofit school food service. In the absence of any such action, adjustments in the rates of reimbursement under the Program shall be made.</P> <P>(k)State agencies shall require compliance by School Food Authorities with applicable provisions of this part.</P> <SECAUTH>(44 U.S.C. 3506; sec. 812, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1759a); sec. 819, Pub. L. 97-35, 95 Stat. 533 (42 U.S.C. 1759a, 1773 and 1757); Pub. L. 79-396, 60 Stat. 231 (42 U.S.C. 1751); Pub. L. 89-642, 80 Stat 885-890 (42 U.S.C. 1773); Pub. L. 91-248, 84 Stat. 207 (42 U.S.C. 1759))</SECAUTH> <CITA>[32 FR 37, Jan. 5, 1967. Redesignated by Amdt. 2, 33 FR 14513, Sept. 27, 1968]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 220.13, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 220.14</SECTNO> <SUBJECT>Claims against school food authorities.</SUBJECT> <P>(a) State agencies shall disallow any portion of a claim and recover any payment made to a School Food Authority that was not properly payable under this part. State agencies will use their own procedures to disallow claims and recover overpayments already made.</P> <P>(b) [Reserved]</P> <P>(c) The State agency may refer to CND through the FNSRO for determination any action it proposes to take under this section.</P> <P>(d) The State agency shall maintain all records pertaining to action taken <PRTPAGE P="107"/>under this section. Such records shall be retained for a period of 3 years after the end of the fiscal year to which they pertain.</P> <P>(e) If CND does not concur with the State agency's action in paying a claim or a reclaim, or in failing to collect an overpayment, CND shall assert a claim against the State agency for the amount of such claim, reclaim, or overpayment. In all such cases the State agency shall have full opportunity to submit to CND evidence or information concerning the action taken. If, in the determination of CND, the State agency's action was unwarranted, the State agency shall promptly pay to FNS the amount of the claim, reclaim, or overpayment.</P> <P>(f) The amounts recovered by the State agency from Schools may be utilized, first, to make payments to School Food Authorities for the purposes of the related program during the fiscal year for which the funds were initially available, and second to repay any State funds expended in the reimbursement of claims under the program and not otherwise repaid. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.</P> <P>(g) With respect to School Food Authorities of schools in which the program is administered by FNSRO, when FNSRO disallows a claim or a portion of a claim, or makes a demand for refund of an alleged overpayment, it shall notify the School Food Authority of the reasons for such disallowance or demand and the School Food Authority shall have full opportunity to submit evidence or to file reclaims for any amounts disallowed or demanded in the same manner as that afforded in this section to School Food Authorities of schools in which the program is administered by State agencies.</P> <P>(h) In the event that the State agency or FNSRO, where applicable, finds that a school is failing to meet the requirements of § 220.8(g), § 220.8(i)(2) and (i)(3), whichever is applicable, the State agency or FNSRO need not disallow payment or collect an overpayment arising out of such failure, if the State agency or FNSRO takes such other action as, in its opinion, will have a corrective effect.</P> <P>(i) The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of Title 28, U.S. Code, to conduct litigation on behalf of the United States.</P> <SECAUTH>(44 U.S.C. 3506; secs. 804, 816 and 817, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771 and 1785))</SECAUTH> <CITA>[32 FR 37, Jan. 5, 1967. Redesignated by Amdt. 2, 33 FR 14513, Sept. 27, 1968, and amended by Amdt. 9, 37 FR 9614, May 13, 1972; 40 FR 30925, July 24, 1975. Redesignated and amended by Amdt. 25, 41 FR 34757, 34760, Aug. 17, 1976; 47 FR 746, Jan. 7, 1982; Amdt. 42, 47 FR 14134, Apr. 2, 1982; 60 FR 31222, June 13, 1995; 65 FR 26931, May 9, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.15</SECTNO> <SUBJECT>Management evaluations and audits.</SUBJECT> <P>(a) State agencies and school food authorities shall comply with the requirements of part 3015 of this title concerning the audit requirements for recipients and subrecipients of the Department's financial assistance.</P> <P>(b) These requirements call for organization-wide financial and compliance audits to ascertain whether financial operations are conducted properly; financial statements are presented fairly; recipients and subrecipients comply with the laws and regulations that affect the expenditures of Federal funds; recipients and subrecipients have established procedures to meet the objectives of federally assisted programs; and recipients and subrecipients are providing accurate and reliable information concerning grant funds. States and school food authorities shall use their own procedures to arrange for and prescribe the scope of independent audits, provided that such audits comply with the requirements set forth in part 3016 of this title.</P> <P>(c) Each State agency shall provide FNS with full opportunity to conduct management evaluations (including visits to schools) of all operations of the State agency under the programs <PRTPAGE P="108"/>covered by this part and shall provide OA with full opportunity to conduct audits (including visits to schools) of all operations of the State agency under such programs. Each State agency shall make available its rec-ords, including records of the receipt and expenditure of funds under such programs, upon a reasonable request by FNS or OA. OA shall also have the right to make audits of the records and operations of any school.</P> <P>(d) In conducting management evaluations, reviews or audits for any fiscal year, the State agency, FNS, or OIG may disregard any overpayment if the total overpayment does not exceed $600 or, in the case of State agency claims in State administered Programs, it does not exceed the amount established under State law, regulations or procedure as a minimum amount for which claim will be made for State losses but not to exceed $600. However, no overpayment is to be disregarded where there is substantial evidence of violations of criminal law or civil fraud statutes.</P> <SECAUTH>(Secs. 805 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1773); sec. 812, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1759a))</SECAUTH> <CITA>[40 FR 30925, July 24, 1975. Redesignated and amended by Amdt. 25, 41 FR 34757, 34760, Aug. 17, 1976; 43 FR 59825, Dec. 22, 1978; Amdt. 41, 47 FR 14135, Apr. 2, 1982; Amdt. 43, 47 FR 18564, Apr. 30, 1982; Amdt. 56, 54 FR 2990, Jan. 23, 1989; 57 FR 38587, Aug. 26, 1992; 59 FR 1894, Jan. 13, 1994; 64 FR 50742, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.16</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <P>(a) <E T="03">Requirements</E>. State agencies and School Food Authorities shall comply with the requirements of the Office of Management and Budget (OMB) Circular A-102 and the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart S (46 FR 55658) concerning the procurement of supplies, food, equipment and other services with Program funds. These requirements are adopted by FNS to ensure that such materials and services are obtained for the Program efficiently and economically and in compliance with applicable laws and executive orders.</P> <P>(b) <E T="03">Contractual responsibilities</E>. The standards contained in OMB Circular A-102 and 7 CFR 3015, do not relieve the State agency or School Food Authority of any contractual responsibilities under its contract. The State agency or School Food Authority is the responsible authority, without recourse to FNS, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in connection with the Program. This includes but is not limited to: source evaluation, protests, disputes, claims, or other matters of a contractual nature. Matters concerning violation of law are to be referred to the local, State or Federal authority that has proper jurisdiction.</P> <P>(c) <E T="03">Procurement procedure</E>. The State agency or School Food Authority may use their own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with Program funds adhere to the standards set forth in OMB Circular A-102 and 7 CFR part 3015.</P> <P>(d) <E T="03">Buy American.</E>—(1) <E T="03">Definition of domestic commodity or product</E>. In this paragraph (d), the term “domestic commodity or product” means—</P> <P>(i) An agricultural commodity that is produced in the United States; and</P> <P>(ii) A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States.</P> <P>(2) <E T="03">Requirement.</E>—(i) <E T="03">In general</E>. Subject to paragraph (d)(2)(ii) of this section, the Department shall require that a school food authority purchase, to the maximum extent practicable, domestic commodities or products.</P> <P>(ii) <E T="03">Limitations</E>. Paragraph (d)(2)(i) of this section shall apply only to—</P> <P>(A) A school food authority located in the contiguous United States; and</P> <P>(B) A purchase of domestic commodity or product for the school breakfast program under this part.</P> <P>(3) <E T="03">Applicability to Hawaii</E>. Paragraph (d)(2)(i) of this section shall apply to a school food authority in Hawaii with respect to domestic commodities or products that are produced in Hawaii in sufficient quantities to meet the needs of meals provided under the <PRTPAGE P="109"/>school breakfast program under this part.</P> <SECAUTH>(Pub. L. 79-396, 60 Stat. 231 (42 U.S.C. 1751); Pub. L. 89-642, 80 Stat. 885-890 (42 U.S.C. 1773); Pub. L. 91-248, 84 Stat. 207 (42 U.S.C. 1759))</SECAUTH> <CITA>[Amdt. 45, 48 FR 19355, Apr. 29, 1983, as amended at 64 FR 50743, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.17</SECTNO> <SUBJECT>Prohibitions.</SUBJECT> <P>(a) In carrying out the provisions of this part, the Department shall not impose any requirements with respect to teaching personnel, curriculum, instructions, methods of instruction, and materials of instruction in any school as a condition for participation in the Program.</P> <P>(b) The value of assistance to children under the Act shall not be considered to be income or resources for any purposes under any Federal or State laws, including, but not limited to, laws relating to taxation, welfare, and public assistance programs. Expenditure of funds from State and local sources for the maintenance of food programs for children shall not be diminished as a result of funds received under the Act.</P> <CITA>[32 FR 37, Jan. 5, 1967. Redesignated by Amdt. 2, 33 FR 14513, Sept. 27, 1968. Redesignated and amended by Amdt. 25, 41 FR 34757, 34760, Aug. 17, 1976; 64 FR 50743, Sept. 20, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.18</SECTNO> <SUBJECT>Suspension, termination and grant closeout procedures.</SUBJECT> <P>Whenever it is determined that a State agency has materially failed to comply with the provisions of this part, or with FNS guidelines and instructions, FNS may suspend or terminate the Program in whole, or in part, or take any other action as may be available and appropriate. A State agency may also terminate the Program by mutual agreement with FNS. FNS and the State agency shall comply with the provisions of the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N concerning grant suspension, termination and closeout procedures. Furthermore, the State agency or FNSRO were applicable, shall apply these provisions to suspension or termination of the Program in School Food Authorities.</P> <CITA>[Amdt. 49, 49 FR 18988, May 4, 1984]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.19</SECTNO> <SUBJECT>Free and reduced price breakfasts.</SUBJECT> <P>The determination of the children to whom free and reduced price breakfasts are to be served because of inability to pay the full price thereof, and the serving of the breakfasts to such children, shall be effected in accordance with part 245 of this chapter.</P> <CITA>[Amdt. 25, 41 FR 34760, Aug. 17, 1976]</CITA> </SECTION> <SECTION> <SECTNO>§ 220.20</SECTNO> <SUBJECT>Program information.</SUBJECT> <P>School Food Authorities desiring information concerning the program should write to their State educational agency or to the appropriate Food and Nutrition Service Regional Office as indicated below:</P> <P>(a) In the States of Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, and West Virginia: Mid-Atlantic Regional Office, FNS, U.S. Department of Agriculture, 300 Corporate Boulevard, Robbinsville, New Jersey 08691-1598.</P> <P>(b) In the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, FNS, U.S. Department of Agriculture, 161 Forsyth Street SW., Room 8T36, Atlanta, Georgia 30303.</P> <P>(c) In the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin: Midwest Regional Office, FNS, U.S. Department of Agriculture, 77 West Jackson Boulevard, 20th Floor, Chicago, Illinois 60604-3507.</P> <P>(d) In the States of Arkansas, Louisiana, New Mexico, Oklahoma, and Texas: Southwest Regional Office, FNS, U.S. Department of Agriculture, 1100 Commerce Street, Room 5-C-30, Dallas, Texas 75242.</P> <P>(e) In the States of Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, the Commonwealth of the Northern Mariana Islands, and Washington: Western Regional Office, FNS, U.S. Department of Agriculture, 550 Kearny Street, Room 400, San Francisco, California 94108.<PRTPAGE P="110"/> </P> <P>(f) In the States of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont: Northeast Regional Office, FNS, U.S. Department of Agriculture, 10 Causeway Street, Room 501, Boston, Massachusetts 02222-1065.</P> <P>(g) In the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming: Mountain Plains Regional Office, FNS, U.S. Department of Agriculture, 1244 Speer Boulevard, Suite 903, Denver, Colorado 80204.</P> <SECAUTH>(Sec. 10(a), Pub. L. 95-627, 92 Stat. 3623 (42 U.S.C. 1760); sec. 10(d)(3), Pub. L. 95-627, 92 Stat. 3624 (42 U.S.C. 1757); sec. 14, Pub. L. 95-627, 92 Stat. 3625-3626; secs. 804, 816, 817 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771, 1773, and 1785))</SECAUTH> <CITA>[32 FR 37, Jan. 5, 1967. Redesignated at 49 FR 18988, May 4, 1984]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 220.20, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 220.21</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <GPOTABLE CDEF="s25,10" COLS="2" OPTS="L2,i1"> <BOXHD> <CHED H="1">7 CFR section where requirements are described</CHED> <CHED H="1">Current OMB control number</CHED> </BOXHD> <ROW> <ENT I="01">220.3(e)</ENT> <ENT>0584-0327</ENT> </ROW> <ROW> <ENT I="01">220.5</ENT> <ENT>0584-0012</ENT> </ROW> <ROW> <ENT I="01">220.7(a)-(e)</ENT> <ENT>0584-0329 <LI>0584-0012 </LI> <LI>0584-0026</LI> </ENT> </ROW> <ROW> <ENT I="01">220.8(f)</ENT> <ENT>0584-0012</ENT> </ROW> <ROW> <ENT I="01">220.9(a)</ENT> <ENT>0584-0012</ENT> </ROW> <ROW> <ENT I="01">220.11 (a), (b), (e)</ENT> <ENT>0584-0012<LI>0584-0002</LI> <LI>0584-0341</LI> </ENT> </ROW> <ROW> <ENT I="01">220.12(b)</ENT> <ENT>0584-0012</ENT> </ROW> <ROW> <ENT I="01">220.13 (a-1)-(c), (f)</ENT> <ENT>0584-0026<LI>0584-0002</LI> <LI>0584-0341</LI> <LI>0584-0012</LI> </ENT> </ROW> <ROW> <ENT I="01">220.14(d)</ENT> <ENT>0584-0012</ENT> </ROW> <ROW> <ENT I="01">220.15</ENT> <ENT>0584-0012</ENT> </ROW> </GPOTABLE> <CITA>[Amdt. 56, 54 FR 2990, Jan. 23, 1989]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 220, App. A</EAR> <HD SOURCE="HED">Appendix A to Part 220—Alternate Foods for Meals</HD> <HD SOURCE="HD1">I. Formulated Grain-Fruit Products</HD> <P>1. Schools may utilize the formulated grain-fruit products defined in paragraph 3 as a food component in meeting the meal requirements of this part under the following terms and conditions:</P> <P>(a) Formulated grain-fruit products may be used to meet <E T="03">one</E> bread/bread alternate and the fruit/vegetable requirement in the breakfast pattern specified in § 220.8.</P> <P>(b) Only individually wrapped formulated grain-fruit products which bear a label conforming to the following legend shall be utilized. “This product conforms to U.S.D.A. Child Nutrition Program specifications. For breakfast, it meets the requirements for fruit/vegetable/juice and one bread/bread alternate.”</P> <P>2. Only formulated grain-fruit products that have been accepted by the Food and Nutrition Service (FNS) for use in the USDA child nutrition programs may be labeled as provided in paragraph 1.(b) of this appendix. Manufacturers seeking acceptance of their product shall furnish FNS a chemical analysis, protein efficiency ratio analysis, and such other pertinent data as may be requested by FNS. This information shall be forwarded to: Director, Nutrition and Technical Services Staff, Food and Nutrition Service, U.S. Department of Agriculture, Alexandria, Virginia 22302. All laboratory analyses are to be performed by independent or other laboratories acceptable to FNS. (FNS prefers an independent laboratory.) All laboratories shall retain the “raw” laboratory data for a period of one year. Such information shall be made available to FNS upon request.</P> <P>3. To be accepted by FNS, products must have the following characteristics and meet the following nutritional specifications:</P> <P>(a) Types. There are two types of products: one is a grain-type product and the other a grain-fruit type product.</P> <P>(b) Ingredients. A grain-type product shall have grain as its primary ingredient. A grain-fruit type product shall have fruit as its primary ingredient. Both types of products must have at least 25 percent of their weight derived from grain. All ingredients and/or components shall comply with pertinent requirements or standards of the USDA and the Food, Drug, and Cosmetic Act, as amended, and any regulations issued thereunder.</P> <P>(c) Nutritional specifications. Each serving of the product shall meet the minimum compositional requirements in the following table. The requirements as specified for those nutrients not limited by maximum values will be deemed to have been met if reasonable overages of the vitamins and minerals, within the limits of good manufacturing practice, are present to insure that the required levels are maintained throughout the expected shelf life under customary conditions of distribution and storage. An exception will be made for vitamins or minerals which occur naturally in an ingredient at such concentration that the level specified will be substantially exceeded in the final product. Such excess will be permitted <PRTPAGE P="111"/>but no lable claim of nutritional advantage can be made for overages for any nutrients. Analytical methods employed should be according to the standard procedures defined in the Association of Official Analytical Chemists, 1970, “Official Methods of Analysis,” 11th edition, Washington, DC or by appropriate analytical procedures FNS considers reliable.</P> <GPOTABLE CDEF="s25,xs48,6,6" COLS="4" OPTS="L2"> <TTITLE>Nutritional Levels of Grain-Fruit Products <SU>1</SU> </TTITLE> <BOXHD> <CHED H="1">Nutrient</CHED> <CHED H="1">Unit</CHED> <CHED H="1">Minimum</CHED> <CHED H="1">Maximum</CHED> </BOXHD> <ROW> <ENT I="01">Weight</ENT> <ENT>Ounce</ENT> <ENT>2</ENT> <ENT>4.0</ENT> </ROW> <ROW> <ENT I="01">PER</ENT> <ENT>Casein=2.5</ENT> <ENT>2.0</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Moisture</ENT> <ENT>Percent weight</ENT> <ENT/> <ENT>40.0</ENT> </ROW> <ROW> <ENT I="01">Fat <SU>2</SU> </ENT> <ENT>......do</ENT> <ENT/> <ENT>22.0</ENT> </ROW> <ROW> <ENT I="01">Fiber</ENT> <ENT>......do</ENT> <ENT/> <ENT>0.8</ENT> </ROW> <ROW> <ENT I="01">Protein (N×6.25)</ENT> <ENT>Gram</ENT> <ENT>5.0</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Energy</ENT> <ENT>Kilocalorie</ENT> <ENT>250</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Vitamin A <SU>3</SU> </ENT> <ENT>International unit</ENT> <ENT>1,115</ENT> <ENT>1,675.0</ENT> </ROW> <ROW> <ENT I="01">Vitamin E</ENT> <ENT>......do</ENT> <ENT>5</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Vitamin B<E T="52">12</E> </ENT> <ENT>Microgram</ENT> <ENT>1.25</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Thiamin</ENT> <ENT>Milligram</ENT> <ENT>.26</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Riboflavin</ENT> <ENT>......do</ENT> <ENT>.13</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Vitamin B<E T="52">6</E> </ENT> <ENT>......do</ENT> <ENT>.26</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Vitamin C</ENT> <ENT>......do</ENT> <ENT>20</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Niacin</ENT> <ENT>......do</ENT> <ENT>2.65</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Folacin</ENT> <ENT>......do</ENT> <ENT>.04</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Iron <SU>4</SU> </ENT> <ENT>......do</ENT> <ENT>4.4</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Calcium</ENT> <ENT>......do</ENT> <ENT>120</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Phosphorus</ENT> <ENT>......do</ENT> <ENT>120</ENT> <ENT/> </ROW> <ROW> <ENT I="01">Magnesium</ENT> <ENT>......do</ENT> <ENT>30</ENT> <ENT/> </ROW> <TNOTE> <SU>1</SU> These specifications are based on a nutrient level for acceptable products plus <FR>1/2</FR> pint of fluid milk (as defined in § 220.2 of the regulations (7 CFR part 220)) to provide at least 25 percent of the Recommended Dietary Allowances (RDA), 1968, for 10- to 12-year-old boys and girls for specified nutrients except magnesium and kilocalories. Magnesium and kilocalories—at least 13 percent of this RDA.</TNOTE> <TNOTE> <SU>2</SU> Although the maximum fat in these specifications is 22 percent, consideration should be given to the development of formulated items containing less fat. Most medical authorities recommend keeping the dietary intake of fats at about <FR>1/3</FR> of the day's calories. At least 5 percent of the total calories shall be from linoleic acid.</TNOTE> <TNOTE> <SU>3</SU> Vitamin A levels above the maximum of 1,675 I.U. will be allowed in products containing this nutrient as a natural food, and if the vitamin has not been added to the ingredients or foods.</TNOTE> <TNOTE> <SU>4</SU> Recommended sources of iron are ferric ammonium citrate, ferrous fumarate, ferrous sulfates (FeSO<E T="52">4</E> or FeSO<E T="52">4</E> 7H<E T="52">2</E> O), ferrous gluconate, reduced iron, or other sources known to have a similar relative biological value.</TNOTE> </GPOTABLE> <HD SOURCE="HD1">II. Alternate Protein Products</HD> <HD SOURCE="HD2">A. What Are the Criteria for Alternate Protein Products Used in the School Breakfast Program?</HD> <P>1. An alternate protein product used in meals planned under the food-based menu planning approaches in § 220.8(g), must meet all of the criteria in this section.</P> <P>2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:</P> <P>a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.</P> <P>b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).</P> <P>c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).</P> <P>d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A.2. a through c of this appendix.</P> <P>e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.</P> <P>f. For an alternate protein product mix, manufacturers should provide information on:</P> <P>(1) The amount by weight of dry alternate protein product in the package;</P> <P>(2) Hydration instructions; and</P> <P>(3) instructions on how to combine the mix with meat or other meat alternates.</P> <HD SOURCE="HD2">B. How Are Alternate Protein Products Used in the School Breakfast Program?</HD> <P>1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 220.8. The following terms and conditions apply:</P> <P>a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.</P> <P>b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).</P> <HD SOURCE="HD2">C. How Are Commercially Prepared Products Used in the School Breakfast Program?</HD> <P>Schools, institutions, and service institutions may use a commercially prepared meat or other meat alternate products combined with alternate protein products or use a <PRTPAGE P="112"/>commercially prepared product that contains only alternate protein products.</P> <SECAUTH>(Secs. 804, 816, 817, and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771, 1773 and 1785))</SECAUTH> <CITA>[Amdt. 18, 39 FR 11249, Mar. 27, 1974, as amended at 40 FR 37027, Aug. 25, 1975; Amdt. 45, 48 FR 195, Jan. 4, 1983; Amdt. 57, 54 FR 13048, Mar. 30, 1989; 60 FR 31222, June 13, 1995; 65 FR 12436, Mar. 9, 2000; 65 FR 26923, May 9, 2000]</CITA> </APPENDIX> <APPENDIX> <EAR>Pt. 220, App. B</EAR> <HD SOURCE="HED">Appendix B to Part 220—Categories of Foods of Minimal Nutritional Value</HD> <P>(1) Soda Water—A class of beverages made by absorbing carbon dioxide in potable water. The amount of carbon dioxide used is not less than that which will be absorbed by the beverage at a pressure of one atmosphere and at a temperature of 60° F. It either contains no alcohol or only such alcohol, not in excess of 0.5 percent by weight of the finished beverage, as is contributed by the flavoring ingredient used. No product shall be excluded from this definition because it contains artificial sweeteners or discrete nutrients added to the food such as vitamins, minerals and protein.</P> <P>(2) <E T="03">Water ices</E>. As defined by 21 CFR 135.160 Food and Drug Administration Regulations except that water ices which contain fruit or fruit juices are not included in this definition.</P> <P>(3) <E T="03">Chewing gum</E>. Flavored products from natural or synthetic gums and other ingredients which form an insoluble mass for chewing.</P> <P>(4) <E T="03">Certain candies</E>. Processed foods made predominantly from sweeteners or artificial sweeteners with a variety of minor ingredients which characterize the following types: (a) <E T="03">Hard candy</E>. A product made predominantly from sugar (sucrose) and corn syrup which may be flavored and colored, is characterized by a hard, brittle texture, and includes such items as sour balls, fruit balls, candy sticks, lollipops, starlight mints, after dinner mints, sugar wafers, rock candy, cinnamon candies, breath mints, jaw breakers and cough drops.</P> <P>(b) <E T="03">Jellies and gums</E>. A mixture of carbohydrates which are combined to form a stable gelatinous system of jelly-like character, and are generally flavored and colored, and include gum drops, jelly beans, jellied and fruit-flavored slices.</P> <P>(c) <E T="03">Marshmallow candies</E>. An aerated confection composed of sugar, corn syrup, invert sugar, 20% water and gelatin or egg white to which flavors and colors may be added.</P> <P>(d) <E T="03">Fondant</E>. A product consisting of microscopic-sized sugar crystals which are separated by a thin film of sugar and/or invert sugar in solution such as candy corn, soft mints.</P> <P>(e) <E T="03">Licorice</E>. A product made predominantly from sugar and corn syrup which is flavored with an extract made from the licorice root.</P> <P>(f) <E T="03">Spun candy</E>. A product that is made from sugar that has been boiled at high temperature and spun at a high speed in a special machine.</P> <P>(g) <E T="03">Candy coated popcorn</E>. Popcorn which is coated with a mixture made predominantly from sugar and corn syrup.</P> <GPOTABLE CDEF="s25,xs46,xs46" COLS="3" OPTS="L2"> <TTITLE>Schedule for Amending Appendix B</TTITLE> <BOXHD> <CHED H="1">Actions for publication</CHED> <CHED H="1">Publication</CHED> <CHED H="2">May</CHED> <CHED H="2">November</CHED> </BOXHD> <ROW> <ENT I="01">Deadline for receipt of petitions by USDA</ENT> <ENT>Nov. 15</ENT> <ENT>May 15.</ENT> </ROW> <ROW> <ENT I="01">USDA to notify petitioners of results of Departmental review and publish proposed rule (if applicable)</ENT> <ENT>Feb. 1</ENT> <ENT>Aug. 1.</ENT> </ROW> <ROW> <ENT I="01">60 Day Comment Period</ENT> <ENT>Feb 1 through Apr. 1</ENT> <ENT>Aug. 1 through Oct. 1.</ENT> </ROW> <ROW> <ENT I="01">Public Notice of Amendment of Appendix B by</ENT> <ENT>May 1</ENT> <ENT>Nov. 1.</ENT> </ROW> </GPOTABLE> <FP>Written petitions should be sent to the Chief, Technical Assistance Branch, Nutrition and Technical Services Divisions, FNS, USDA, Alexandria, Virginia 22302 on or before November 15 or May 15 of each year. Petitions must include all information specified in § 210.15b(b) (1) or (2), and § 220.12(b) (1) or (2) as appropriate.</FP> <SECAUTH>(Sec. 17, Pub. L. 95-166, 91 Stat. 1345 (42 U.S.C. 1779); secs. 804, 816, 817 and 819, Pub. L. 97-35, 95 Stat. 521-535 (42 U.S.C. 1753, 1756, 1759, 1771, 1773 and 1785))</SECAUTH> <CITA>[Amdt. 32, 45 FR 6772, Jan. 29, 1980, as amended at 45 FR 72081, Oct. 31, 1980; 45 FR 76937, Nov. 21, 1980; Amdt. 45, 48 FR 195, Jan. 4, 1983; 54 FR 18466, May 1, 1989]</CITA> </APPENDIX> <APPENDIX> <EAR>Pt. 220, App. C</EAR> <HD SOURCE="HED">Appendix C to Part 220—Child Nutrition (CN) Labeling Program</HD> <P>1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service (FNS) in conjunction with the Food Safety and Inspection Service (FSIS), and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA), and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer's recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements <PRTPAGE P="113"/>and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.</P> <P>2. Products eligible for CN labels are as follows:</P> <P>(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 225.21, and 226.20 and are served in the main dish.</P> <P>(b) Juice drinks and juice drink products that contain a minimum of 50 percent full-strength juice by volume.</P> <P>3. For the purpose of this appendix the following definitions apply:</P> <P>(a) “CN label” is a food product label that contains a CN label statement and CN logo as defined in paragraph 3 (b) and (c) below.</P> <P>(b) The “CN logo” (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).</P> <GPH DEEP="85" SPAN="2"> <GID>EC17SE91.003</GID> </GPH> <P>(c) The “CN label statement” includes the following:</P> <P>(1) The product identification number (assigned by FNS),</P> <P>(2) The statement of the product's contribution toward meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 220.8, 225.21, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements,</P> <P>(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and</P> <P>(4) The approval date.</P> <P>For example:</P> <GPH DEEP="65" SPAN="2"> <GID>EC17SE91.004</GID> </GPH> <P>(d) <E T="03">Federal inspection</E> means inspection of food products by FSIS, AMS or USDC.</P> <P>4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:</P> <P>(a) The CN label must be reviewed and approved at the national level by the Food and Nutrition Service and appropriate USDA or USDC Federal agency responsible for the inspection of the product.</P> <P>(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.</P> <P>(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate, and the manufacturer's or distributor's name and address.</P> <P>(1) The inspection marking for CN labeled non-meat, non-poultry, and non-seafood <PRTPAGE P="114"/>products with the exception of juice drinks and juice drink products is established as follows:</P> <GPH DEEP="42" SPAN="1"> <GID>EC17SE91.005</GID> </GPH> <P>(d) Yields for determining the product's contribution toward meal pattern requirements must be calculated using the <E T="03">Food Buying Guide for Child Nutrition Programs</E> (Program Aid Number 1331).</P> <P>5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.</P> <P>6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the child nutrition programs purchases a CN labeled product and uses it in accordance with the manufacturer's directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10 or 210.10a, whichever is applicable, 220.8, 225.21, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report of the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Services of the USDC, Food and Drug Administration, or the Department of Justice for action against the company.</P> <P>Any or all of the following courses of action may be taken:</P> <P>(a) The company's CN label may be revoked for a specific period of time;</P> <P>(b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product;</P> <P>(c) The company's name will be circulated to regional FNS offices;</P> <P>(d) FNS will require the food service program involved to notify the State agency of the labeling violation.</P> <P>7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program.</P> <P>To apply for a CN label and to obtain additional information on CN label application procedures write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.</P> <SECAUTH>(National School Lunch Act, secs. 9, 13, 17; 42 U.S.C. 1758, 1761, 1766; 7 CFR 210.10, 220.8, 225.21, 226.20)</SECAUTH> <CITA>[49 FR 18457, May 1, 1984; 49 FR 45109, Nov. 15, 1984; 60 FR 31222, June 13, 1995; 65 FR 26923, May 9, 2000]</CITA> </APPENDIX> </PART> <PART> <EAR>Pt. 225</EAR> <HD SOURCE="HED">PART 225—SUMMER FOOD SERVICE PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECHD>Sec.</SECHD> <SECTNO>225.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <SECTNO>225.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>225.3</SECTNO> <SUBJECT>Administration.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—State Agency Provisions</HD> <SECTNO>225.4</SECTNO> <SUBJECT>Program management and administration plan.</SUBJECT> <SECTNO>225.5</SECTNO> <SUBJECT>Payments to State agencies and use of Program funds.</SUBJECT> <SECTNO>225.6</SECTNO> <SUBJECT>State agency responsibilities.</SUBJECT> <SECTNO>225.7</SECTNO> <SUBJECT>Program monitoring and assistance.</SUBJECT> <SECTNO>225.8</SECTNO> <SUBJECT>Records and reports.</SUBJECT> <SECTNO>225.9</SECTNO> <SUBJECT>Program assistance to sponsors.</SUBJECT> <SECTNO>225.10</SECTNO> <SUBJECT>Audits and management evaluations.</SUBJECT> <SECTNO>225.11</SECTNO> <SUBJECT>Corrective action procedures.</SUBJECT> <SECTNO>225.12</SECTNO> <SUBJECT>Claims against sponsors.</SUBJECT> <SECTNO>225.13</SECTNO> <SUBJECT>Appeal procedures.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Sponsor and Site Provisions</HD> <SECTNO>225.14</SECTNO> <SUBJECT>Requirements for sponsor participation.</SUBJECT> <SECTNO>225.15</SECTNO> <SUBJECT>Management responsibilities of sponsors.</SUBJECT> <SECTNO>225.16</SECTNO> <SUBJECT>Meal service requirements.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—General Administrative Provisions</HD> <SECTNO>225.17</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <SECTNO>225.18</SECTNO> <SUBJECT>Miscellaneous administrative provisions.</SUBJECT> <SECTNO>225.19</SECTNO> <SUBJECT>Regional office addresses.</SUBJECT> <SECTNO>225.20</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <APP>Appendix A to Part 225—Alternate Foods for Meals</APP> <APP>Appendix B to Part 225 [Reserved]</APP> <APP>Appendix C to Part 225—Child Nutrition (CN) Labeling Program</APP> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 9, 13 and 14, National School Lunch Act, as amended (42 U.S.C. 1758, 1761 and 1762a).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>54 FR 18208, Apr. 27, 1989, unless otherwise noted.</P> </SOURCE> <SUBPART> <PRTPAGE P="115"/> <HD SOURCE="HED">Subpart A—General</HD> <SECTION> <SECTNO>§ 225.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <P>This part establishes the regulations under which the Secretary will administer a Summer Food Service Program. Section 13 of the Act authorizes the Secretary to assist States through grants-in-aid to conduct nonprofit food service programs for children during the summer months and at other approved times. The primary purpose of the Program is to provide food service to children from needy areas during periods when area schools are closed for vacation.</P> </SECTION> <SECTION> <SECTNO>§ 225.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">Act</E> means the National School Lunch Act, as amended.</P> <P> <E T="03">Administrative costs</E> means costs incurred by a sponsor related to planning, organizing, and managing a food service under the Program, and excluding interest costs and operating costs.</P> <P> <E T="03">Adult</E> means, for the purposes of the collection of social security numbers as a condition of eligibility for Program meals, any individual 21 years of age or older.</P> <P> <E T="03">Advance payments</E> means financial assistance made available to a sponsor for its operating costs and/or administrative costs prior to the end of the month in which such costs will be incurred.</P> <P> <E T="03">Areas in which poor economic conditions exist</E> means:</P> <P>(a) The local areas from which an open site and restricted open site draw their attendance in which at least 50 percent of the children are eligible for free or reduced-price school meals under the National School Lunch Program and the School Breakfast Program, as determined:</P> <P>(1) By information provided from departments of welfare and education, zoning commissions, census tracts, and organizations determined by the State agency to be migrant organizations;</P> <P>(2) By the number of free and reduced-price lunches or breakfasts served to children attending public and nonprofit private schools located in the areas of Program sites; or</P> <P>(3) From other appropriate sources; or</P> <P>(b) A closed enrolled site.</P> <P> <E T="03">Camps</E> means residential summer camps and nonresidential day camps which offer a regularly scheduled food service as part of an organized program for enrolled children. Nonresidential camp sites shall offer a continuous schedule of organized cultural or recreational programs for enrolled children between meal services.</P> <P> <E T="03">Children</E> means (a) persons 18 years of age and under, and (b) persons over 18 years of age who are determined by a State educational agency or a local public educational agency of a State to be mentally or physically handicapped and who participate in a public or nonprofit private school program established for the mentally or physically handicapped.</P> <P> <E T="03">Closed enrolled site</E> means a site which is open only to enrolled children, as opposed to the community at large, and in which at least 50 percent of the enrolled children at the site are eligible for free or reduced price school meals under the National School Lunch Program and the School Breakfast Program, as determined by approval of applications in accordance with § 225.15(f).</P> <P> <E T="03">Continuous school calendar</E> means a situation in which all or part of the student body of a school is (a) on a vacation for periods of 15 continuous school days or more during the period October through April and (b) in attendance at regularly scheduled classes during most of the period May through September.</P> <P> <E T="03">Costs of obtaining food</E> means costs related to obtaining food for consumption by children. Such costs may include, in addition to the purchase price of agricultural commodities and other food, the cost of processing, distributing, transporting, storing, or handling any food purchased for, or donated to, the Program.</P> <P> <E T="03">Current income</E> means income, as defined in § 225.15(f)(4)(vi), received during the month prior to application for free meals. If such income does not accurately reflect the household's annual income, income must be based on the projected annual household income. If the prior year's income provides an accurate reflection of the household's current annual income, the prior year may be used as a base for the projected annual income.<PRTPAGE P="116"/> </P> <P> <E T="03">Department</E> means the U.S. Department of Agriculture.</P> <P> <E T="03">Disclosure</E> means individual children's program eligibility information obtained through the free and reduced price meal eligibility process that is revealed or used for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.</P> <P> <E T="03">Documentation</E> means:</P> <P>(a) The completion of the following information on a free meal application:</P> <P>(1) Names of all household members;</P> <P>(2) Income received by each household member, identified by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income);</P> <P>(3) The signature of an adult household member; and</P> <P>(4) The social security number of the adult household member who signs the application, or an indication that he/she does not possess a social security number; or</P> <P>(b) For a child who is a member of a household receiving food stamp, FDPIR, or TANF benefits, “documentation” means completion of only the following information on a free meal application:</P> <P>(1) The name(s) and appropriate food stamp, FDPIR, or TANF case number(s) for the child(ren); and</P> <P>(2) the signature of an adult member of the household.</P> <P> <E T="03">Experienced site</E> means a site which, as determined by the State agency, has successfully participated in the Program in the prior year.</P> <P> <E T="03">Experienced sponsor</E> means a sponsor which, as determined by the State agency, has successfully participated in the Program in the prior year.</P> <P> <E T="03">Family</E> means a group of related or nonrelated individuals who are not residents of an institution or boarding house but who are living as one economic unit.</P> <P> <E T="03">FDPIR household</E> means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Distribution Program on Indian Reservations.</P> <P> <E T="03">Fiscal year</E> means the period beginning October 1 of any calendar year and ending September 30 of the following calendar year.</P> <P> <E T="03">FNS</E> means the Food and Nutrition Service of the Department.</P> <P> <E T="03">FNSRO</E> means the appropriate FNS Regional Office.</P> <P> <E T="03">Food service management company</E> means any commercial enterprise or nonprofit organization with which a sponsor may contract for preparing unitized meals, with or without milk, for use in the Program, or for managing a sponsor's food service operations in accordance with the limitations set forth in § 225.15. Food service management companies may be: (a) Public agencies or entities; (b) private, nonprofit organizations; or (c) private, for-profit companies.</P> <P> <E T="03">Food stamp household</E> means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Stamp Program.</P> <P> <E T="03">Household</E> means “family,” as defined in this section.</P> <P> <E T="03">Income accruing to the program</E> means all funds used by a sponsor in its food service program, including but not limited to all monies, other than program payments, received from Federal, State and local governments, from food sales to adults, and from any other source including cash donations or grants. Income accruing to the Program will be deducted from combined operating and administrative costs.</P> <P> <E T="03">Income standards</E> means the family-size and income standards prescribed annually by the Secretary for determining eligibility for reduced price meals under the National School Lunch Program and the School Breakfast Program.</P> <P> <E T="03">Meals</E> means food which is served to children at a food service site and which meets the nutritional requirements set out in this part.</P> <P> <E T="03">Medicaid</E> means the State medical assistance program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).</P> <P> <E T="03">Milk</E> means whole milk, lowfat milk, skim milk, and buttermilk. All milk must be fluid and pasteurized and must <PRTPAGE P="117"/>meet State and local standards for the appropriate type of milk. Milk served may be flavored or unflavored. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands of the United States, if a sufficient supply of such types of fluid milk cannot be obtained, reconstituted or recombined milk may be used. All milk should contain Vitamins A and D at the levels specified by the Food and Drug Administration and at levels consistent with State and local standards for such milk.</P> <P> <E T="03">Needy children</E> means children from families whose incomes are equal to or below the Secretary's Guidelines for Determining Eligibility for Reduced Price School Meals.</P> <P> <E T="03">New site</E> means a site which did not participate in the Program in the prior year, or, as determined by the State agency, a site which has experienced significant staff turnover from the prior year.</P> <P> <E T="03">New sponsor</E> means a sponsor which did not participate in the Program in the prior year, or, as determined by the State agency, a sponsor which has experienced significant staff turnover from the prior year.</P> <P> <E T="03">NYSP</E> means the National Youth Sports Program administered by the National Collegiate Athletic Association.</P> <P> <E T="03">NYSP feeding site</E> means a site at which all of the children receiving Program meals are enrolled in the NYSP and which qualifies for Program participation on the basis of documentation that the site meets the definition of “areas in which poor economic conditions exist” as provided in this section.</P> <P> <E T="03">OIG</E> means the Office of the Inspector General of the Department.</P> <P> <E T="03">Open site</E> means a site at which meals are made available to all children in the area and which is located in an area in which at least 50 percent of the children are from households that would be eligible for free or reduced price school meals under the National School Lunch Program and the School Breakfast Program, as determined in accordance with paragraph (a) of the definition of <E T="03">Areas in which poor economic conditions exist.</E> </P> <P> <E T="03">Operating costs</E> means the cost of operating a food service under the Program,</P> <P>(a) Including the (1) cost of obtaining food, (2) labor directly involved in the preparation and service of food, (3) cost of nonfood supplies, (4) rental and use allowances for equipment and space, and (5) cost of transporting children in rural areas to feeding sites in rural areas, but</P> <P>(b) Excluding (1) the cost of the purchase of land, acquisition or construction of buildings, (2) alteration of existing buildings, (3) interest costs, (4) the value of in-kind donations, and (5) administrative costs.</P> <P> <E T="03">Private nonprofit</E> means tax exempt under the Internal Revenue Code of 1986, as amended.</P> <P> <E T="03">Private nonprofit organization</E> means an organization (other than private nonprofit residential camps, school food authorities, or colleges or universities participating in the NYSP) which meets the definition of “private nonprofit” in this section and which:</P> <P>(a) Administers the Program:</P> <P>(1) At no more than 25 sites, with not more than 300 children being served at any approved meal service at any one site; or</P> <P>(2) With a waiver granted by the State in accordance with § 225.6(b)(ii), not more than 500 children being served at any approved meal service at any one site;</P> <P>(b) Operates in areas where a school food authority has not indicated that it will operate the Program in the current year;</P> <P>(c) Exercises full control and authority over the operation of the Program at all sites under its sponsorship;</P> <P>(d) Provides ongoing year-round activities for children or families;</P> <P>(e) Demonstrates that it possesses adequate management and the fiscal capacity to operate the Program; and</P> <P>(f) Meets applicable State and local health, safety, and sanitation standards.</P> <P> <E T="03">Program</E> means the Summer Food Service Program for Children authorized by Section 13 of the Act.</P> <P> <E T="03">Program funds</E> means Federal financial assistance made available to State <PRTPAGE P="118"/>agencies for the purpose of making Program payments.</P> <P> <E T="03">Program payments</E> means financial assistance in the form of start-up payments, advance payments, or reimbursement paid to sponsors for operating and administrative costs.</P> <P> <E T="03">Restricted open site</E> means a site which is initially open to broad community participation, but at which the sponsor restricts or limits attendance for reasons of security, safety or control. Site eligibility for a restricted open site shall be documented in accordance with paragraph (a) of the definition of <E T="03">Areas in which poor economic conditions exist.</E> </P> <P> <E T="03">Rural</E> means (a) any area in a county which is not a part of a Metropolitan Statistical Area or (b) any “pocket” within a Metropolitan Statistical Area which, at the option of the State agency and with FNSRO concurrence, is determined to be geographically isolated from urban areas.</P> <P> <E T="03">School food authority</E> means the governing body which is responsible for the administration of one or more schools and which has the legal authority to operate a lunch program in those schools. In addition, for the purpose of determining the applicability of food service management company registration and bid procedure requirements, “school food authority” also means any college or university which participates in the Program.</P> <P> <E T="03">Secretary</E> means the Secretary of Agriculture.</P> <P> <E T="03">Self-preparation sponsor</E> means a sponsor which prepares the meals that will be served at its site(s) and does not contract with a food service management company for unitized meals, with or without milk, or for management services.</P> <P> <E T="03">Session</E> means a specified period of time during which an enrolled group of children attend camp.</P> <P> <E T="03">Site</E> means a physical location at which a sponsor provides a food service for children and at which children consume meals in a supervised setting.</P> <P> <E T="03">Special account</E> means an account which a State agency may require a vended sponsor to establish with the State agency or with a Federally insured bank. Operating costs payable to the sponsor by the State agency are deposited in the account and disbursement of monies from the account must be authorized by both the sponsor and the food service management company.</P> <P> <E T="03">Sponsor</E> means a public or private nonprofit school food authority, a public or private nonprofit residential summer camp, a unit of local, municipal, county or State government, a public or private nonprofit college or university currently participating in the NYSP, or a private nonprofit organization which develops a special summer or other school vacation program providing food service similar to that made available to children during the school year under the National School Lunch and School Breakfast Programs and which is approved to participate in the Program. Sponsors are referred to in the Act as “service institutions”.</P> <P> <E T="03">Start-up payments</E> means financial assistance made available to a sponsor for administrative costs to enable it to effectively plan a summer food service, and to establish effective management procedures for such a service. These payments shall be deducted from subsequent administrative cost payments.</P> <P> <E T="03">State</E> means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.</P> <P> <E T="03">State agency</E> means the State educational agency or an alternate agency that has been designated by the Governor or other appropriate executive or legislative authority of the State and which has been approved by the Department to administer the Program within the State, or, in States where FNS administers the Program, FNSRO.</P> <P> <E T="03">State Children's Health Insurance Program (SCHIP)</E> means the State medical assistance program under title XXI of the Social Security Act (42 U.S.C. 1397aa et seq.).</P> <P> <E T="03">TANF</E> means the State funded program under part A of title IV of the Social Security Act that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, <PRTPAGE P="119"/>1995. This program is commonly referred to as Temporary Assistance for Needy Families, although States may refer to the program by another name.</P> <P> <E T="03">Unit of local, municipal, county or State government</E> means an entity which is so recognized by the State constitution or State laws, such as the State administrative procedures act, tax laws, or other applicable State laws which delineate authority for government responsibility in the State.</P> <P> <E T="03">Vended sponsor</E> means a sponsor which purchases from a food service management company the unitized meals, with or without milk, which it will serve at its site(s), or a sponsor which purchases management services, subject to the limitations set forth in § 225.15, from a food service management company.</P> <P> <E T="03">Yogurt</E> means commercially prepared coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements and to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration's Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, (21 CFR 131.200), (21 CFR 131.203), (21 CFR 131.206), respectively.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 54 FR 27153, June 28, 1989; 55 FR 13466, Apr. 10, 1990; 61 FR 25553, May 22, 1996; 64 FR 72483, Dec. 28, 1999; 64 FR 72895, Dec. 29, 1999; 66 FR 2202, Jan. 11, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) <E T="03">Responsibility within the Department.</E> FNS shall act on behalf of the Department in the administration of the Program.</P> <P>(b) <E T="03">State administered programs.</E>Within the State, responsibility for the administration of the Program shall be in the State agency. Each State agency must notify the Department by November 1 of the fiscal year regarding its intention to administer the Program. Each State agency desiring to take part in the Program shall enter into a written agreement with FNS for the administration of the Program in accordance with the provisions of this part. The agreement shall cover the operation of the Program during the period specified therein and may be extended by written consent of both parties. The agreement shall contain an assurance that the State agency will comply with the Department's nondiscrimination regulations (7 CFR part 15) issued under title VI of the Civil Rights Act of 1964, and any Instructions issued by FNS pursuant to those regulations, title IX of the Education Amendments of 1972, and section 504 of the Rehabilitation Act of 1973. However, if a State educational agency is not permitted by law to disburse funds to any of the nonpublic schools in the State, the Secretary shall disburse the funds directly to such schools within the State for the same purposes and subject to the same conditions as the disbursements to public schools within the State by the State educational agency.</P> <P>(c) <E T="03">Regional office administered programs.</E> The Secretary shall not administer the Program in the States, except that if a FNSRO has continuously administered the Program in any State since October 1, 1980, FNS shall continue to administer the Program in that State. In States in which FNSRO administers the Program, it shall have all of the responsibilities of a State agency and shall earn State administrative and Program funds as set forth in this part. A State in which FNS administers the Program may, upon request to FNS, assume administration of the Program.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13466, Apr. 10, 1990; 64 FR 72483, Dec. 28, 1999]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—State Agency Provisions</HD> <SECTION> <SECTNO>§ 225.4</SECTNO> <SUBJECT>Program management and administration plan.</SUBJECT> <P>(a) Not later than February 15 of each year, each State agency shall submit to FNSRO a Program management and administration plan for that fiscal year.</P> <P>(b) Each plan shall be acted on or approved by March 15 or, if it is submitted late, within 30 calendar days of receipt of the plan. If the plan initially submitted is not approved, the State agency and FNS shall work together to ensure that changes to the plan, in the form of amendments, are submitted so that the plan can be approved within 60 <PRTPAGE P="120"/>calendar days following the initial submission of the plan. Upon approval of the plan, the State agency shall be notified of the level of State administrative funding which it is assured of receiving under § 225.5(a)(3).</P> <P>(c) Approval of the Plan by FNS shall be a prerequisite to the withdrawal of Program funds by the State from the Letter of Credit and to the donation by the Department of any commodities for use in the State's Program.</P> <P>(d) The Plan must include, at a minimum, the following information:</P> <P>(1) The State's administrative budget for the fiscal year, and the State's plan to comply with any standards prescribed by the Secretary for the use of these funds;</P> <P>(2) The State's plan for use of Program funds and funds from within the State to the maximum extent practicable to reach needy children;</P> <P>(3) The State's plans for providing technical assistance and training to eligible sponsors;</P> <P>(4) The State's plans for monitoring and inspecting sponsors, feeding sites, and food service management companies and for ensuring that such companies do not enter into contracts for more meals than they can provide effectively and efficiently;</P> <P>(5) The State's plan for timely and effective action against Program violators;</P> <P>(6) The State's plan for ensuring the fiscal integrity of sponsors not subject to auditing requirements prescribed by the Secretary;</P> <P>(7) The State's plan for ensuring compliance with the food service managment company procurement monitoring requirements set forth at § 225.6(h); and</P> <P>(8) An estimate of the State's need, if any, for monies available to pay for the cost of conducting health inspections and meal quality tests.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13466, Apr. 10, 1990; 64 FR 72483, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.5</SECTNO> <SUBJECT>Payments to State agencies and use of Program funds.</SUBJECT> <P>(a) <E T="03">State administrative funds.</E> (1) <E T="03">Administrative funding formula.</E> For each fiscal year, FNS shall pay to each State agency for administrative expenses incurred in the Program an amount equal to</P> <P>(i) 20 percent of the first $50,000 in Program funds properly payable to the State in the preceding fiscal year;</P> <P>(ii) 10 percent of the next $100,000 in Program funds properly payable to the State in the preceding fiscal year;</P> <P>(iii) 5 percent of the next $250,000 in Program funds properly payable to the State in the preceding fiscal year; and</P> <P>(iv) 2<FR>1/2</FR> percent of any remaining Program funds properly payable to the State in the preceding fiscal year,</P> <FP> <E T="03">Provided, however,</E> That FNS may make appropriate adjustments in the level of State administrative funds to reflect changes in Program size from the preceding fiscal year as evidenced by information submitted in the State Program management and administration plan and any other information available to FNS. If a State agency fails to submit timely and accurate reports under § 225.8(c) of this part, State administrative funds payable under this paragraph shall be subject to sanction. For such failure, FNS may recover, withhold, or cancel payment of up to one hundred percent of the funds payable to the State agency under this paragraph during the fiscal year.</FP> <P>(2) <E T="03">Use of State administrative funds.</E> State administrative funds paid to any State shall be used by State agencies to employ personnel, including travel and related expenses, and to supervise and give technical assistance to sponsors in their initiation, expansion, and conduct of any food service for which Program funds are made available. State agencies may also use administrative funds for such other administrative expenses as are set forth in their approved Program management and administration plan.</P> <P>(3) <E T="03">Funding assurance.</E> At the time FNS approves the State's management and administration plan, the State shall be assured of receiving State administrative funding equal to the lesser of the following amounts: 80 percent of the amount obtained by applying the formula set forth in paragraph (a)(1) of this section to the total amount of Program payments made within the State during the prior fiscal year; or, 80 percent of the amount obtained by <PRTPAGE P="121"/>applying the formula set forth in paragraph (a)(1) to the amount of Program funds estimated to be needed in the management and administration plan. The State agency shall be assured that it will receive no less than this level unless FNS determines that the State agency has failed or is failing to meet its responsibilities under this part.</P> <P>(4) <E T="03">Limitation.</E> In no event may the total payment for State administrative costs in any fiscal year exceed the total amount of expenditures incurred by the State agency in administering the Program.</P> <P>(b) <E T="03">State administrative funds Letter of Credit.</E> (1) At the beginning of each fiscal year, FNS shall make available to each participating State agency by Letter of Credit an initial allocation of State administrative funds for use in that fiscal year. This allocation shall not exceed one-third of the administrative funds provided to the State in the preceding fiscal year. For State agencies which did not receive any Program funds during the preceding fiscal year, the amount to be made available shall be determined by FNS.</P> <P>(2) Additional State administrative funds shall be made available upon the receipt and approval by FNS of the State's Program management and administration plan. The amount of such funds, plus the initial allocation, shall not exceed 80 percent of the State administrative funds determined by the formula set forth in paragraph (a)(1) of this section and based on the estimates set forth in the approved Program management and administration plan.</P> <P>(3) Any remaining State administrative funds shall be paid to each State agency as soon as practicable after the conduct of the funding assessment described in paragraph (c) of this section. However, regardless of whether such assessment is made, the remaining administrative funds shall be paid no later than September 1. The remaining administrative payment shall be in an amount equal to that determined to be needed during the funding evaluation or, if such evaluation is not conducted, the amount owed the State in accordance with paragraph (a)(1) of this section, less the amounts paid under paragraphs (b) (1) and (2) of this section.</P> <P>(c) <E T="03">Administrative funding evaluation.</E> FNSRO shall conduct data on the need for Program and State administrative funding within any State agency <E T="03">if</E> the funding needs estimated in a State's management and administration plan are no longer accurate. Based on this data, FNS may make adjustments in the level of State administrative funding paid or payable to the State agency under paragraph (b) of this section to reflect changes in the size of the State's Program as compared to that estimated in its management and administration plan. The data shall be based on approved Program participation levels and shall be collected during the period of Program operations. As soon as possible following this data collection, payment of any additional administrative funds owed shall be made to the State agency. The payment may reflect adjustments made to the level of State administrative funding based on the information collected during the funding assessment. However, FNS shall not decrease the amount of a State's administrative funds as a result of this assessment unless the State failed to make reasonable efforts to administer the Program as proposed in its management and administration plan or the State incurred unnecessary expenses.</P> <P>(d) <E T="03">Letter of Credit for Program payments.</E> (1) Not later than April 15 of each fiscal year, FNS shall make available to each participating State in a Letter of Credit an amount equal to 65 percent of the preceding fiscal year's Program payments for operating costs plus 65 percent of the preceding fiscal year's Program payments for administrative costs in the State. This amount may be adjusted to reflect changes in reimbursement rates made pursuant to § 225.9(d)(8). However, the State shall not withdraw funds from this Letter of Credit until its Program management and administration plan is approved by FNS.</P> <P>(2) Based on the State agency's approved management and administration plan, FNS shall, if necessary, adjust the State's Letter of Credit to ensure that 65 percent of estimated current year Program operating and administrative funding needs is available. Such adjustment shall be made no <PRTPAGE P="122"/>later than May 15, or within 90 days of FNS receipt of the State agency's management and administration plan, whichever date is later.</P> <P>(3) Subsequent to the adjustment provided for in paragraph (d)(2) of this section, FNS will, if necessary, make one additional adjustment to ensure that the State agency's Letter of Credit contains at least 65 percent of the Program operating and administrative funds needed during the current fiscal year. Such adjustment may be based on the administrative funding assessment provided for in paragraph (c) of this section, if one is conducted, or on any additional information which demonstrates that the funds available in the Letter of Credit do not equal at least 65 percent of current year Program needs. In no case will such adjustments be made later than September 1. Funds made available in the Letter of Credit shall be used by the State agency to make Program payments to sponsors.</P> <P>(4) The Letter of Credit shall include sufficient funds to enable the State agency to make advance payments to sponsors serving areas in which schools operate under a continuous school calendar. These funds shall be made available no later than the first day of the month prior to the month during which the food service will be conducted.</P> <P>(5) FNS shall make available any remaining Program funds due within 45 days of the receipt of valid claims for reimbursement from sponsors by the State agency. However, no payment shall be made for claims submitted later than 60 days after the month covered by the claim unless an exception is granted by FNS.</P> <P>(6) Each State agency shall release to FNS any Program funds which it determines are unobligated as of September 30 of each fiscal year. Release of funds by the State agency shall be made as soon as practicable, but in no event later than 30 calendar days following demand by FNS, and shall be accomplished by an adjustment in the State agency's Letter of Credit.</P> <P>(e) <E T="03">Adjustment to Letter of Credit.</E> Prior to May 15 of each fiscal year, FNS shall make any adjustments necessary in each State's Letter of Credit to reflect actual expenditures in the preceding fiscal year's Program.</P> <P>(f) <E T="03">Health inspection funds.</E> If the State agency's approved management and administration plan estimates a need for health inspection funding, FNS shall make available by letter of credit an amount up to one percent of Program funds estimated to be needed in the management and administration plan. Such amount may be adjusted, based on the administrative funding assessment provided for in paragraph (c) of this section, if such assessment is conducted. Health inspection funds shall be used solely to enable State or local health departments or other governmental agencies charged with health inspection functions to carry out health inspections and meal quality tests, provided that if these agencies cannot perform such inspections or tests, the State agency may use the funds to contract with an independent agency to conduct the inspection or meal quality tests. Funds so provided but not expended or obligated shall be returned to the Department by September 30 of the same fiscal year.</P> </SECTION> <SECTION> <SECTNO>§ 225.6</SECTNO> <SUBJECT>State agency responsibilities.</SUBJECT> <P>(a) <E T="03">General responsibilities.</E> (1) The State agency shall provide sufficient qualified consultative, technical, and managerial personnel to administer the Program, monitor performance, and measure progress in achieving Program goals. The State agency shall assign Program responsibilities to personnel to ensure that all applicable requirements under this part are met.</P> <P>(2) By February 1 of each fiscal year, each State agency shall announce the purpose, eligibility criteria, and availability of the Program throughout the State, through appropriate means of communication.As part of this effort, each State agency shall identify rural areas, Indian tribal territories, and areas with a concentration of migrant farm workers which qualify for the Program and actively seek eligible applicant sponsors to serve such areas. State agencies shall identify priority outreach areas in accordance with FNS guidance and target outreach efforts in <PRTPAGE P="123"/>these areas. State agencies shall identify priority outreach areas in accordance with FNS guidance and target outreach efforts in these areas.</P> <P>(3) Each State agency shall require applicant sponsors submitting Program application site information sheets, Program agreements, or a request for advance payments, and sponsors submitting claims for reimbursement to certify that the information submitted on these forms is true and correct and that the sponsor is aware that deliberate misrepresentation or withholding of information may result in prosecution under applicable State and Federal statutes.</P> <P>(4) In addition to the warnings specified in paragraph (a)(3) of this section, State agencies may include the following information on applications and pre-application materials distributed to prospective sponsors:</P> <P>(i) The criminal penalties and provisions established in section 12(g) of the National School Lunch Act (42 U.S.C. 1760(g)) that states substantially: Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 <E T="03">et seq.</E>), whether received directly or indirectly from the United States Department of Agriculture, or whoever receives, conceals, or retains such funds, assets, or property to personal use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen, or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $25,000 or imprisoned not more than five years, or both, or, if such funds, assets, or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.</P> <P>(ii) The procedures for termination from Program participation of any site or sponsor which is determined to be seriously deficient in its administration of the Program. In addition, the application may also state that appeals of sponsor or site terminations will follow procedures mandated by the State agency and will also meet the minimum requirements of 7 CFR 225.13.</P> <P>(b) <E T="03">Approval of sponsor applications.</E> (1) Each State agency must inform all of the previous year's sponsors which meet current eligibility requirements and all other potential sponsors of the deadline date for submitting a written application for participation in the Program. The State agency must require that all applicant sponsors submit written applications for Program participation to the State agency by June 15. However, the State agency may establish an earlier deadline for the Program application submission.Sponsors applying for participation in the Program due to an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar) shall be exempt from the application submission deadline.</P> <P>(2) Each State agency shall inform potential sponsors of the procedure for applying for advance operating and administrative costs payments as provided for in § 225.9(c). Where applicable, each State agency shall inform sponsors of the procedure for applying for start-up payments provided for in § 225.9(a).</P> <P>(3) Within 30 days of receiving a complete and correct application, the State agency shall notify the applicant of its approval or disapproval. If an incomplete application is received, the State agency shall so notify the applicant within 15 days and shall provide technical assistance for the purpose of completing the application. Any disapproved applicant shall be notified of its right to appeal under § 225.13.</P> <P>(4) The State agency shall determine the eligibility of sponsors applying for participation in the Program in accordance with the applicant sponsor eligibility criteria outlined in § 225.14. However, State agencies may approve the application of an otherwise eligible applicant sponsor which does not provide a year-round service to the community which it proposes to serve under the Program only if it meets one or more of the following criteria: It is a residential camp; it proposes to provide a food service for the children of migrant workers; a failure to do so would deny the Program to an area in which poor <PRTPAGE P="124"/>economic conditions exist; a significant number of needy children will not otherwise have reasonable access to the Program; or it proposes to serve an area affected by an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar). In addition, the State agency may approve a sponsor for participation during an unanticipated school closure without a prior application if the sponsor participated in the program at any time during the current year or in either of the prior two calendar years.</P> <P>(5) The State agency must use the following priority system in approving applicants to operate sites that propose to serve the same area or the same enrolled children:</P> <P>(i) Public or nonprofit private school food authorities;</P> <P>(ii) Public agencies and private nonprofit organizations that have demonstrated successful program performance in a prior year;</P> <P>(iii) New public agencies; and</P> <P>(iv) New private nonprofit organizations.</P> <P>(v) If two or more sponsors that qualify under paragraph (b)(5)(ii) of this section apply to serve the same area, the State agency must determine on a case-by-case basis which sponsor or sponsors it will select to serve the needy children in the area. The State agency should consider the resources and capabilities of each applicant.</P> <P>(6) The following limitations apply on the number of sites and children that may be served per day:</P> <P>(i) The State agency must not approve any school food authority or public agency to operate more than 200 sites or to serve more than an average of 50,000 children per day. However, the State agency may approve exceptions if the applicant can demonstrate that it has the capability of managing a program larger than these limits.</P> <P>(ii) The State agency must not approve any private nonprofit organization to operate more than 25 sites. In addition, the State agency must not approve any private nonprofit organization to serve more than 300 children at any one site for any approved meal service. However, the State agency may grant a waiver to allow up to 500 children served at any one site operated by a private nonprofit organization. To be approved for the waiver, the private nonprofit organization must demonstrate that it is fully capable of managing a site with more than 300 children and that there are no other sponsors capable of serving the children in excess of 300.</P> <P>(7) The State agency shall review each applicant's administrative budget as a part of the application approval process in order to assess the applicant's ability to operate in compliance with these regulations within its projected reimbursement. In approving the applicant's administrative budget, the State agency shall take into consideration the number of sites and children to be served, as well as any other relevant factors. A sponsor's administrative budget shall be subject to review for adjustments by the State agency if the sponsor's level of site participation or the number of meals served to children changes significantly.</P> <P>(8) Applicants which qualify as camps shall be approved for reimbursement only for meals served free to enrolled children who meet the Program's eligibility standards.</P> <P>(9) The State agency shall not approve the application of any applicant sponsor identifiable through its organization or principals as a sponsor which has been determined to be seriously deficient as described in § 225.11(c). However, the State agency may approve the application of a sponsor which has been disapproved or terminated in prior years in accordance with this paragraph if the applicant demonstrates to the satisfaction of the State agency that it has taken appropriate corrective actions to prevent recurrence of the deficiencies.</P> <P>(10) If the sponsor's application to participate is denied, the official making the determination of denial must notify the applicant sponsor in writing stating all of the grounds on which the State agency based the denial. Pending the outcome of a review of a denial, the State agency shall proceed to approve other applicants in accordance with its responsibilities under paragraph (b)(5) <PRTPAGE P="125"/>of this section, without regard to the application under review.</P> <P>(11) The State agency shall not approve the application of any applicant sponsor which submits fraudulent information or documentation when applying for Program participation or which knowingly withholds information that may lead to the disapproval of its application. Complete information regarding such disapproval of an applicant shall be submitted by the State agency through FNSRO to OIG.</P> <P>(c) <E T="03">Content of sponsor application.</E> </P> <P>(1) <E T="03">Application forms.</E> The applicant shall submit a written application to the State agency for participation in the Program as a sponsor. Sponsors proposing to serve an area affected by an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar) may be exempt, at the discretion of the State agency, from submitting a new application if they have participated in the program at any time during the current year or in either of the prior two calendar years. The State agency may use the application form developed by FNS, or it may develop an application form, for use in the Program. Application shall be made on a timely basis in accordance with the deadline date established under § 225.6(b)(1).</P> <P>(2) <E T="03">Requirements for new sponsors, new sites, and, as determined by the State agency, sponsors and sites which have experienced significant operational problems in the prior year.</E>—(i) <E T="03">Site information sheets.</E> At a minimum, the application submitted by new sponsors and by sponsors which, in the determination of the State agency, have experienced significant operational problems in the prior year shall include a site information sheet, as developed by the State agency, for each site where a food service operation is proposed. The site information sheet for new sponsors and new sites, and for sponsors and sites which, in the determination of the State agency, have experienced significant operational problems in the current year must demonstrate or describe the following:</P> <P>(A) An organized and supervised system for serving meals to attending children;</P> <P>(B) The estimated number and types of meals to be served and the times of service;</P> <P>(C) Arrangements, within standards prescribed by the State or local health authorities, for delivery and holding of meals until time of service, and arrangements for storing and refrigerating any leftover meals until the next day;</P> <P>(D) Arrangements for food service during periods of inclement weather;</P> <P>(E) Access to a means of communication for making necessary adjustments in the number of meals delivered in accordance with the number of children attending daily at each site;</P> <P>(F) Whether the site is rural, as defined in § 225.2, or non-rural, and whether the site's food service will be self-prepared or vended;</P> <P>(G) For open sites and restricted open sites, documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist. However, for sites that a sponsor proposes to serve during an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar), any site which has participated in the Program at any time during the current year or in either of the prior two calendar years shall be considered eligible without new documentation;</P> <P>(H) For closed enrolled sites, the projected number of children enrolled and the projected number of children eligible for free and reduced price meals for each of these sites;</P> <P>(I) For NYSP sites, certification from the sponsor that all of the children who will receive Program meals are enrolled participants in the NYSP;</P> <P>(J) For camps, the number of children enrolled in each session who meet the Program's income standards. If such information is not available at the time of application, it shall be submitted as soon as possible thereafter and in no case later than the filing of the camp's claim for reimbursement for each session;</P> <P>(K) For those sites at which applicants will serve children of migrant workers, certification from a migrant organization which attests that the site serves children of migrant worker <PRTPAGE P="126"/>families. If the site also serves non-migrant children, the sponsor shall certify that the site predominantly serves migrant children; and</P> <P>(L) For a site that serves homeless children, information sufficient to demonstrate that the site is not a residential child care institution, as defined in paragraph (c) of the definition of <E T="03">school</E> in § 210.2 of this chapter. If cash payments, food stamps, or any in-kind service are required of any meal recipient at these sites, sponsors must describe the method(s) used to ensure that no such payments or services are received for any Program meal served to children. In addition, sponsors must certify that such sites employ meal counting methods which ensure that reimbursement is claimed only for meals served to children.</P> <P>(ii) <E T="03">Other application requirements.</E> New sponsors and sponsors which in the determination of the State agency have experienced significant operational problems in the prior year shall also include in their applications:</P> <P>(A) Information in sufficient detail to enable the State agency to determine whether the applicant meets the criteria for participation in the Program as set forth in § 225.14; the extent of Program payments needed, including a request for advance payments and start-up payments, if applicable; and a staffing and monitoring plan;</P> <P>(B) A complete administrative and operating budget for State agency review and approval. The administrative budget shall contain the projected administrative expenses which a sponsor expects to incur during the operation of the Program, and shall include information in sufficient detail to enable the State agency to assess the sponsor's ability to operate the Program within its estimated reimbursement. A sponsor's approved administrative budget shall be subject to subsequent review by the State agency for adjustments in projected administrative costs;</P> <P>(C) A summary of how meals will be obtained (e.g., self-prepared at each site, self-prepared and distributed from a central kitchen, purchased from a school food authority, competitively procured from a food service management company, etc.). If an invitation for bid is required under § 225.15(g), sponsors shall also submit a schedule for bid dates, and a copy of their invitation for bid; and</P> <P>(D) For each applicant which seeks approval under § 225.14(b)(3) as a unit of local, municipal, county or State government, or under § 225.14(b)(5) as a private nonprofit organization, certification that it will directly operate the Program in accordance with § 225.14(d)(3).</P> <P>(3) <E T="03">Requirements for experienced sponsors and experienced sites.</E>—(i) <E T="03">Site information sheets.</E> At a minimum, the application submitted by experienced sponsors shall include a site information sheet, as developed by the State agency, for each site where a food service operation is proposed. The site information sheet for experienced sponsors and experienced sites must demonstrate or describe the information below. The State agency also may require experienced sponsors and experienced sites to provide any of the information required in paragraph (c)(2) of this section.</P> <P>(A) The estimated number and types of meals to be served and the times of service;</P> <P>(B) For open sites and restricted open sites, new documentation supporting the eligibility of each site as serving an area in which poor economic conditions exist shall be submitted. Such documentation shall be submitted every three years when school data are used. When census data are used, such documentation shall be submitted when new census data are available, or earlier if the State agency believes that an area's socioeconomic status has changed significantly since the last census. For sites that a sponsor proposes to serve during an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar), any site which has participated in the Program at any time during the current year or in either of the prior two calendar years shall be considered eligible without new documentation of serving an area in which poor economic conditions exist;</P> <P>(C) For closed enrolled sites, the projected number of children enrolled and <PRTPAGE P="127"/>the projected number of children eligible for free and reduced price school meals for each of these sites; and</P> <P>(D) For camps, the number of children enrolled in each session who meet the Program's income standards. If such information is not available at the time of application, it shall be submitted as soon as possible thereafter and in no case later than the filing of the camp's claim for reimbursement for each session.</P> <P>(ii) <E T="03">Other application requirements.</E> Experienced sponsors shall also include on their applications:</P> <P>(A) The extent of Program payments needed, including a request for advance payments and start-up payments, if applicable, and a staffing and monitoring plan;</P> <P>(B) A complete administrative and operating budget for State agency review and approval. The administrative budget shall contain the projected administrative expenses which a sponsor expects to incur during the operation of the Program, and shall include information in sufficient detail to enable the State agency to assess the sponsor's ability to operate the Program within its estimated reimbursement. A sponsor's approved administrative budget shall be subject to subsequent review by the State agency for adjustments in projected administrative costs; and</P> <P>(C) If an invitation for bid is required under § 225.15(g), a schedule for bid dates. Sponsors shall also submit a copy of the invitation for bid if it is changed from the previous year. If the method of procuring meals is changed, sponsors shall submit a summary of how meals will be obtained (e.g., self-prepared at each site, self-prepared and distributed from a central kitchen, purchased from a school food authority, competitively procured from a food service management company, etc.).</P> <P>(4) <E T="03">Free meal policy statement.</E> </P> <P>(i) Each applicant must submit a statement of nondiscrimination in its policy for serving meals to children. The statement must consist of an assurance that all children are served the same meals and that there is no discrimination in the course of the food service. A school sponsor must submit the policy statement only once, with the initial application to participate as a sponsor. However, if there is a substantive change in the school's free and reduced price policy, a revised policy statement must be provided at the State agency's request. In addition to the policy of service/nondiscrimination statement described in paragraph (c)(3) of this section, all applicants except camps must include a statement that the meals served are free at all sites.</P> <P>(ii) In addition to the policy of service/nondiscrimination statement described in paragraph (c)(3) of this section, all applicants that are camps that charge separately for meals must include the following:</P> <P>(A) A statement that the eligibility standards conform to the Secretary's family size and income standards for reduced price school meals;</P> <P>(B) A description of the method or methods to be used in accepting applications from families for Program meals. Such methods must ensure that households are permitted to apply on behalf of children who are members of households receiving food stamp, FDPIR, or TANF benefits using the categorical eligibility procedures described in §225.15(f);</P> <P>(C) A description of the method used by camps for collecting payments from children who pay the full price of the meal while preventing the overt identification of children receiving a free meal;</P> <P>(D) An assurance that the camp will establish a hearing procedure for families wishing to appeal a denial of an application for free meals. Such hearing procedures shall meet the requirements set forth in paragraph (c)(5) of this section;</P> <P>(E) An assurance that, if a family requests a hearing, the child shall continue to receive free meals until a decision is rendered; and</P> <P>(F) An assurance that there will be no overt identification of free meal recipients and no discrimination against any child on the basis of race, color, national origin, sex, age, or handicap.</P> <P>(5) <E T="03">Hearing procedures statement.</E>Each applicant that is a camp shall submit with its application a copy of its hearing procedures. At a minimum, these procedures shall provide:<PRTPAGE P="128"/> </P> <P>(i) That a simple, publicly announced method will be used for a family to make an oral or written request for a hearing;</P> <P>(ii) That the family will have the opportunity to be assisted or represented by an attorney or other person;</P> <P>(iii) That the family will have an opportunity to examine the documents and records supporting the decision being appealed both before and during the hearing;</P> <P>(iv) That the hearing will be reasonably prompt and convenient for the family;</P> <P>(v) That adequate notice will be given to the family of the time and place of the hearing;</P> <P>(vi) That the family will have an opportunity to present oral or documentary evidence and arguments supporting its position;</P> <P>(vii) That the family will have an opportunity to question or refute any testimony or other evidence and to confront and cross-examine any adverse witnesses;</P> <P>(viii) That the hearing shall be conducted and the decision made by a hearing official who did not participate in the action being appealed;</P> <P>(ix) That the decision shall be based on the oral and documentary evidence presented at the hearing and made a part of the record;</P> <P>(x) That the family and any designated representative shall be notified in writing of the decision;</P> <P>(xi) That a written record shall be prepared for each hearing which includes the action being appealed, any documentary evidence and a summary of oral testimony presented at the hearing, the decision and the reasons for the decision, and a copy of the notice sent to the family; and</P> <P>(xii) That the written record shall be maintained for a period of three years following the conclusion of the hearing, during which it shall be available for examination by the family or its representatives at any reasonable time and place.</P> <P>(d) <E T="03">Approval of sites.</E> (1) When evaluating a proposed food service site, the State agency shall ensure that:</P> <P>(i) If not a camp, the proposed site serves an area in which poor economic conditions exist, as defined by § 225.2;</P> <P>(ii) The area which the site proposes to serve is not or will not be served in whole or in part by another site, unless it can be demonstrated to the satisfaction of the State agency that each site will serve children not served by any other site in the same area for the same meal;</P> <P>(iii) The site is approved to serve no more than the number of children for which its facilities are adequate and;</P> <P>(iv) If it is a site proposed to operate during an unanticipated school closure, it is a non-school site.</P> <P>(2) When approving the application of a site which will serve meals prepared by a food service management company, the State agency shall establish for each meal service an approved level for the maximum number of children's meals which may be served under the Program. These approved levels shall be established in accordance with the following provisions:</P> <P>(i) The initial maximum approved level shall be based upon the historical record of attendance at the site if such a record has been established in prior years and the State agency determines that it is accurate. The State agency shall develop a procedure for establishing initial maximum approved levels for sites when no accurate record from prior years is available.</P> <P>(ii) The maximum approved level shall be adjusted, if warranted, based upon information collected during site reviews. If attendance at the site on the day of the review is significantly below the site's approved level, the State agency should consider making a downward adjustment in the approved level with the objective of providing only one meal per child.</P> <P>(iii) The sponsor may seek an upward adjustment in the approved level for its sites by requesting a site review or by providing the State agency with evidence that attendance exceeds the sites’ approved levels.</P> <P>(iv) Whenever the State agency establishes or adjusts approved levels of meal service for a site, it shall document the action in its files, and it shall provide the sponsor with immediate written confirmation of the approved level.<PRTPAGE P="129"/> </P> <P>(v) Upon approval of its application or any adjustment to its maximum approved levels, the sponsor shall inform the food service management company with which it contracts of the approved level for each meal service at each site served by the food service management company. This notification of any adjustments in approved levels shall take place within the time frames set forth in the contract for adjusting meal orders. Whenever the sponsor notifies the food service management company of the approved levels or any adjustments to these levels for any of its sites, the sponsor shall clearly inform the food service management company that an approved level of meal service represents the maximum number of meals which may be served at a site and is not a standing order for a specific number of meals at that site. When the number of children attending is below the site's approved level, the sponsor shall adjust meal orders with the objective of serving only one meal per child as required under § 225.15(b)(3).</P> <P>(e) <E T="03">State-Sponsor Agreement.</E> A sponsor approved for participation in the Program must enter into a written agreement with the State agency. If the sponsor is a school food authority that operates more than one child nutrition program (e.g., the National School Lunch Program, the School Breakfast Program, or the Child and Adult Care Food Program) under a single State agency, a single permanent agreement that includes all the child nutrition programs must be executed with the State agency, as described in § 210.9(b) of this chapter. All sponsors must agree in writing to:</P> <P>(1) Operate a nonprofit food service during the period specified, as follows:</P> <P>(i) From May through September for children on school vacation;</P> <P>(ii) At any time of the year, in the case of sponsors administering the Program under a continuous school calendar system; or</P> <P>(iii) During the period from October through April, if it serves an area affected by an unanticipated school closure due to a natural disaster, major building repairs, court orders relating to school safety or other issues, labor-management disputes, or, when approved by the State agency, a similar cause.</P> <P>(2) For school food authorities, offer meals which meet the requirements and provisions set forth in § 225.16 during times designated as meal service periods by the sponsor, and offer the same meals to all children;</P> <P>(3) For all other sponsors, serve meals which meet the requirements and provisions set forth in § 225.16 during times designated as meal service periods by the sponsor, and serve the same meals to all children;</P> <P>(4) Serve meals without cost to all children, except that camps may charge for meals served to children who are not served meals under the Program;</P> <P>(5) Issue a free meal policy statement in accordance with § 225.6(c);</P> <P>(6) Meet the training requirement for its administrative and site personnel, as required under § 225.15(d)(1);</P> <P>(7) Claim reimbursement only for the type or types of meals specified in the agreement and served without charge to children at approved sites during the approved meal service period, except that camps shall claim reimbursement only for the type or types of meals specified in the agreement and served without charge to children who meet the Program's income standards. The agreement shall specify the approved levels of meal service for the sponsor's sites if such levels are required under § 225.6(d)(2). No permanent changes may be made in the serving time of any meal unless the changes are approved by the State agency;</P> <P>(8) Submit claims for reimbursement in accordance with procedures established by the State agency, and those stated in § 225.9;</P> <P>(9) In the storage, preparation and service of food, maintain proper sanitation and health standards in conformance with all applicable State and local laws and regulations;</P> <P>(10) Accept and use, in quantities that may be efficiently utilized in the Program, such foods as may be offered as a donation by the Department;</P> <P>(11) Have access to facilities necessary for storing, preparing, and serving food;<PRTPAGE P="130"/> </P> <P>(12) Maintain a financial management system as prescribed by the State agency;</P> <P>(13) Maintain on file documentation of site visits and reviews in accordance with § 225.15(d) (2) and (3);</P> <P>(14) Upon request, make all accounts and records pertaining to the Program available to State, Federal, or other authorized officials for audit or administrative review, at a reasonable time and place. The records shall be retained for a period of 3 years after the end of the fiscal year to which they pertain, unless audit or investigative findings have not been resolved, in which case the records shall be retained until all issues raised by the audit or investigation have been resolved;</P> <P>(15) Maintain children on site while meals are consumed; and</P> <P>(16) Retain final financial and administrative responsibility for its program.</P> <P>(f) <E T="03">Special Account</E>. In addition, the State agency may require any vended sponsor to enter into a special account agreement with the State agency. The special account agreement shall stipulate that the sponsor shall establish a special account with a State agency or Federally insured bank for operating costs payable to the sponsor by the State. The agreement shall also stipulate that any disbursement of monies from the account must be authorized by both the sponsor and the food service management company. The special account agreement may contain such other terms, agreed to by both the sponsor and the food service management company, which are consistent with the terms of the contract between the sponsor and the food service management company. A copy of the special account agreement shall be submitted to the State agency and another copy maintained on file by the sponsor. Any charges made by the bank for the account described in this section shall be considered an allowable sponsor administrative cost.</P> <P>(g) <E T="03">Food service management company registration.</E> A State agency may require each food service management company, operating within the State, to register based on State procedures. A State agency may further require the food service management company to certify that the information submitted on its application for registration is true and correct and that the food service management company is aware that misrepresentation may result in prosecution under applicable State and Federal statutes.</P> <P>(h) <E T="03">Monitoring of food service management company procurements.</E> (1) The State agency shall ensure that sponsors’ food service management company procurements are carried out in accordance with §§ 225.15(g) and 225.17 of this part.</P> <P>(2) Each State agency shall develop a standard form of contract for use by sponsors in contracting with food service management companies. Sponsors which are public entities, sponsors with exclusive year-round contracts with a food service management company, and sponsors whose food service management company contract(s) do not exceed $10,000 in aggregate value may use their existing or usual form of contract, provided that such form of contract has been submitted to and approved by the State agency. The standard contract developed by the State agency shall expressly and without exception provide that:</P> <P>(i) All meals prepared by a food service management company shall be unitized, with or without milk or juice, unless the State agency has approved, pursuant to paragraph (h)(3) of this section, a request for exceptions to the unitizing requirement for certain components of a meal;</P> <P>(ii) A food service management company entering into a contract with a sponsor under the Program shall not subcontract for the total meal, with or without milk, or for the assembly of the meal;</P> <P>(iii) The sponsor shall provide to the food service management company a list of State agency approved food service sites, along with the approved level for the number of meals which may be claimed for reimbursement for each site, established under § 225.6(d)(2), and shall notify the food service management company of all sites which have been approved, cancelled, or terminated subsequent to the submission of the initial approved site list and of any changes in the approved level of meal service for a site. Such notification <PRTPAGE P="131"/>shall be provided within the time limits mutually agreed upon in the contract;</P> <P>(iv) The food service management company shall maintain such records (supported by invoices, receipts, or other evidence) as the sponsor will need to meet its responsibilities under this part, and shall submit all required reports to the sponsor promptly at the end of each month, unless more frequent reports are required by the sponsor;</P> <P>(v) The food service management company must have State or local health certification for the facility in which it proposes to prepare meals for use in the Program. It must ensure that health and sanitation requirements are met at all times. In addition, the food service management company must ensure that meals are inspected periodically to determine bacteria levels present in the meals and that the bacteria levels found to be present in the meals conform with the standards set by local health authorities. The results of the inspections must be submitted promptly to the sponsor and to the State agency.</P> <P>(vi) The meals served under the contract shall conform to the cycle menus and meal quality standards and food specifications approved by the State agency and upon which the bid was based;</P> <P>(vii) The books and records of the food service management company pertaining to the sponsor's food service operation shall be available for inspection and audit by representatives of the State agency, the Department and the U.S. General Accounting Office at any reasonable time and place for a period of 3 years from the date of receipt of final payment under the contract, except that, if audit or investigation findings have not been resolved, such records shall be retained until all issues raised by the audit or investigation have been resolved;</P> <P>(viii) The sponsor and the food service management company shall operate in accordance with current Program regulations;</P> <P>(ix) The food service management company shall be paid by the sponsor for all meals delivered in accordance with the contract and this part. However, neither the Department nor the State agency assumes any liability for payment of differences between the number of meals delivered by the food service management company and the number of meals served by the sponsor that are eligible for reimbursement;</P> <P>(x) Meals shall be delivered in accordance with a delivery schedule prescribed in the contract;</P> <P>(xi) Increases and decreases in the number of meals ordered shall be made by the sponsor, as needed, within a prior notice period mutually agreed upon;</P> <P>(xii) All meals served under the Program shall meet the requirements of § 225.16;</P> <P>(xiii) In cases of nonperformance or noncompliance on the part of the food service management company, the company shall pay the sponsor for any excess costs which the sponsor may incur by obtaining meals from another source;</P> <P>(xiv) If the State agency requires the sponsor to establish a special account for the deposit of operating costs payments in accordance with the conditions set forth in § 225.6(f), the contract shall so specify;</P> <P>(xv) The food service management company shall submit records of all costs incurred in the sponsor's food service operation in sufficient time to allow the sponsor to prepare and submit the claim for reimbursement to meet the 60-day submission deadline; and</P> <P>(xvi) The food service management company shall comply with the appropriate bonding requirements, as set forth in § 225.15(g) (6)-(8).</P> <P>(3) All meals prepared by a food service management company shall be unitized, with or without milk or juice, unless the sponsor submits to the State agency a request for exceptions to the unitizing requirement for certain components of a meal. These requests shall be submitted to the State agency in writing in sufficient time for the State agency to respond prior to the sponsor's advertising for bids. The State agency shall notify the sponsor in writing of its determination in a timely manner.<PRTPAGE P="132"/> </P> <P>(4) Each State agency shall have a representative present at all food service management company procurement bid openings when sponsors are expected to receive more than $100,000 in Program payments.</P> <P>(5) Copies of all contracts between sponsors and food service management companies, along with a certification of independent price determination, shall be submitted to the State agency prior to the beginning of Programoperations. Sponsors shall also submit to the State agency copies of all bids received and their reason for selecting the food service management company chosen.</P> <P>(6) All bids in an amount which exceeds the lowest bid shall be submitted to the State agency for approval before acceptance. All bids totaling $100,000 or more shall be submitted to the State agency for approval before acceptance. State agencies shall respond to a request for approval of such bids within 5 working days of receipt.</P> <P>(7) Failure by a sponsor to comply with the provisions of this paragraph or § 225.15(g)(1) shall be sufficient grounds for the State agency to terminate participation by the sponsor in accordance with § 225.18(b).</P> <P>(i) <E T="03">Meal pattern exceptions.</E> The State agency shall review and act upon requests for exceptions to the meal pattern in accordance with the guidelines and limitations set forth in § 225.16.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13467, Apr. 10, 1990; ; 64 FR 72484, Dec. 28, 1999; 64 FR 72896, Dec. 29, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.7</SECTNO> <SUBJECT>Program monitoring and assistance.</SUBJECT> <P>(a) <E T="03">Training.</E> Prior to the beginning of Program operations, each State agency shall make available training in all necessary areas of Program administration to sponsor personnel, food service management company representatives, auditors, and health inspectors who will participate in the Program in that State. Prior to Program operations, the State agency shall ensure that the sponsor's supervisory personnel responsible for the food service receive training in all necessary areas of Program administration and operations. This training shall reflect the fact that individual sponsors or groups of sponsors require different levels and areas of Program training. State agencies are encouraged to utilize in such training, and in the training of site personnel, sponsor personnel who have previously participated in the Program. Training should be made available at convenient locations. State agencies are not required to conduct this training for sponsors operating the Program during unanticipated school closures during the period from October through April (or at any time of the year in an area with a continuous school calendar).</P> <P>(b) <E T="03">Program materials.</E> Each State agency shall develop and make available all necessary Program materials in sufficient time to enable applicant sponsors to prepare adequately for the Program.</P> <P>(c) <E T="03">Food specifications and meal quality standards.</E> With the assistance of the Department, each State agency shall develop and make available to all sponsors minimum food specifications and model meal quality standards which shall become part of all contracts between vended sponsors and food service management companies.</P> <P>(d) <E T="03">Program monitoring and assistance.</E> The State agency shall conduct Program monitoring and provide Program assistance according to the following provisions:</P> <P>(1) <E T="03">Pre-approval visits.</E> The State agency shall conduct pre-approval visits of sponsors and sites, as specified below, to assess the applicant sponsor's or site's potential for successful Program operations and to verify information provided in the application. The State agency shall visit prior to approval:</P> <P>(i) All applicant sponsors which did not participate in the program in the prior year. However, if a sponsor is a school food authority, has been reviewed by the State agency under the National School Lunch Program during the preceding 12 months, and had no significant deficiencies noted in that review, a pre-approval visit may be conducted at the discretion of the State agency. In addition, pre-approval visits of sponsors proposing to operate the Program during unanticipated school closures during the period from October through April (or at any time <PRTPAGE P="133"/>of the year in an area with a continuous school calendar) may be conducted at the discretion of the State agency;</P> <P>(ii) All applicant sponsors which, as a result of operational problems noted in the prior year, the State agency has determined need a pre-approval visit; and</P> <P>(iii) All sites which the State agency has determined need a pre-approval visit.</P> <P>(2) <E T="03">Sponsor and site reviews</E>—(i) <E T="03">General.</E> The State agency must review sponsors and sites to ensure compliance with Program regulations, the Department's non-discrimination regulations (7 CFR part 15) and any other applicable instructions issued by the Department. In determining which sponsors and sites to review, the State agency must, at a minimum, consider the sponsors’ and sites’ previous participation in the Program, their current and previous Program performance, and the results of previous reviews of the sponsor and sites. When the same school food authority personnel administer this Program as well as the National School Lunch Program (7 CFR part 210), the State agency is not required to conduct a review of the Program in the same year in which the National School Lunch Program operations have been reviewed and determined to be satisfactory. Reviews shall be conducted as follows:</P> <P>(ii) <E T="03">Frequency and number of required reviews.</E> State agencies shall:</P> <P>(A) Conduct a review of every new sponsor at least once during the first year of operation;</P> <P>(B) Annually review a number of sponsors whose program reimbursements, in the aggregate, accounted for at least one-half of the total program meal reimbursements in the State in the prior year;</P> <P>(C) Annually review every sponsor which experienced significant operational problems in the prior year;</P> <P>(D) Review each sponsor at least once every three years; and</P> <P>(E) As part of each sponsor review, conduct reviews of at least 10 percent of each sponsor's sites, or one site, whichever number is greater.</P> <P>(3) <E T="03">Follow-up reviews.</E> The State agency shall conduct follow-up reviews of sponsors and sites as necessary.</P> <P>(4) <E T="03">Monitoring system.</E> Each State agency shall develop and implement a monitoring system to ensure that sponsors, including site personnel, and the sponsor's food service management company, if applicable, immediately receive a copy of any review reports which indicate Program violations and which could result in a Program disallowance.</P> <P>(5) <E T="03">Records.</E> Documentation of Program assistance and the results of such assistance shall be maintained on file by the State agency.</P> <P>(6) <E T="03">Food service management company facility visits.</E> As a part of the review of any vended sponsor which contracts for the preparation of meals, the State agency shall inspect the food service management company's facilities. Each State agency shall establish an order of priority for visiting facilities at which food is prepared for the Program. The State agency shall respond promptly to complaints concerning facilities. If a food service management company fails to correct violations noted by the State agency during a review, the State agency shall notify the sponsor and the food service management company that reimbursement shall not be paid for meals prepared by the food service management company after a date specified in the notification. Funds provided for in § 225.5(f) may be used for conducting food service management company facility inspections.</P> <P>(7) <E T="03">Forms for reviews by sponsors.</E> Each State agency shall develop and provide monitor review forms to all approved sponsors. These forms shall be completed by sponsor monitors. The monitor review form shall include, but not be limited to, the time of the reviewer's arrival and departure, the site supervisor's signature, a certification statement to be signed by the monitor, the number of meals prepared or delivered, the number of meals served to children, the deficiencies noted, the corrective actions taken by the sponsor, and the date of such actions.</P> <P>(8) <E T="03">Statistical monitoring.</E> State agencies may use statistical monitoring <PRTPAGE P="134"/>procedures in lieu of the site monitoring requirements prescribed in paragraph (d)(2) of this section to accomplish the monitoring and technical assistance aspects of the Program. State agencies which use statistical monitoring procedures may use the findings in evaluating claims for reimbursement. Statistical monitoring may be used for some or all of a State's sponsors. Use of statistical monitoring does not eliminate the requirements for reviewing sponsors as specified in paragraph (d)(2) of this section.</P> <P>(9) <E T="03">Corrective actions.</E> Corrective actions which the State agency may take when Program violations are observed during the conduct of a review are discussed in § 225.11. The State agency shall conduct follow-up reviews as appropriate when corrective actions are required.</P> <P>(e) <E T="03">Other facility inspections and meal quality tests.</E> In addition to those inspections required by paragraph (d)(6) of this section, the State agency may also conduct, or arrange to have conducted: inspections of self-preparation and vended sponsors’ food preparation facilities; inspections of food service sites; and meal quality tests. The procedures for carrying out these inspections and tests shall be consistent with procedures used by local health authorities. For inspections of food service management companies’ facilities not conducted by State agency personnel, copies of the results shall be provided to the State agency. The company and the sponsor shall also immediately receive a copy of the results of these inspections when corrective action is required. If a food service management company fails to correct violations noted by the State agency during a review, the State agency shall notify the sponsor and the food service management company that reimbursement shall not be paid for meals prepared by the food service management company after a date specified in the notification. Funds provided for in § 225.5(f) may be used for conducting these inspections and tests.</P> <P>(f) <E T="03">Financial management.</E> Each State agency shall establish a financial management system, in accordance with the Department's Uniform Financial Assistance Regulations (7 CFR part 3015) and FNS guidance, to identify allowable Program costs and to establish standards for sponsor recordkeeping and reporting. The State agency shall provide guidance on these financial management standards to each sponsor.</P> <P>(g) <E T="03">Nondiscrimination.</E> (1) Each State agency shall comply with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department's regulations concerning nondiscrimination (7 CFR parts 15, 15a and 15b), including requirements for racial and ethnic participation data collection, public notification of the nondiscrimination policy, and reviews to assure compliance with such policy, to the end that no person shall, on the grounds of race, color, national origin, sex, age, or handicap, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under, the Program.</P> <P>(2) Complaints of discrimination filed by applicants or participants shall be referred to FNS or the Secretary of Agriculture, Washington, DC 20250. A State agency which has an established grievance or complaint handling procedure may resolve sex and handicap discrimination complaints before referring a report to FNS.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13468, Apr. 10, 1990; 64 FR 72485, Dec. 28, 1999; 64 FR 72898, Dec. 29, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.8</SECTNO> <SUBJECT>Records and reports.</SUBJECT> <P>(a) Each State agency shall maintain complete and accurate current accounting records of its Program operations which will adequately identify funds authorizations, obligations, unobligated balances, assets, liabilities, income, claims against sponsors and efforts to recover overpayments, and expenditures for administrative and operating costs. These records shall be retained for a period of three years after the date of the submission of the final Program Operations and Financial Status Report (SF-269), except that, if audit findings have not been resolved, the affected records shall be retained beyond the three year period until such time as any issues raised by the audit <PRTPAGE P="135"/>findings have been resolved. The State agency shall also retain a complete record of each review or appeal conducted, as required under § 225.13, for a period of three years following the date of the final determination on the review or appeal. Records may be kept in their original form or on microfilm.</P> <P>(b) Each State agency shall submit to FNS a final report on the Summer Food Service Program Operations (FNS-418) for each month no more than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not postmarked and/or submitted within this time limit unless FNS grants an exception. Upward adjustments to a State's report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made without FNS authorization, regardless of when it is determined that such adjustments need to be made. Adjustments to a State's report shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (SF-269) on the use of Program funds. Such reports shall be submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. Action may be taken against the State agency, in accordance with § 225.5(a)(1), for failure to submit accurate and timely reports.</P> <P>(c) The State agency must submit to FNS a final Financial Status Report no later than 120 days after the end of the fiscal year, on a form (SF-269) provided by FNS. Any requested increase in reimbursement levels for a fiscal year resulting from corrective action taken after submission of the final Program Operations and Financial Status Reports shall be submitted to FNS for approval. The request shall be accompanied by a written explanation of the basis for the adjustment and the actions taken to minimize the need for such adjustments in the future. If FNS approves such an increase, it will make payment, subject to availability of funds. Any reduction in reimbursement for that fiscal year resulting from corrective action taken after submission of the final fiscal year Program Operations and Financial Status Reports shall be handled in accordance with the provisions of § 225.12(d), except that amounts recovered may not be used to make Program payments.</P> <P>(d)(1) By May 1 of each year, State agencies must submit to the appropriate FNSRO a list of potential private nonprofit organization sponsors. The list must include the following information for each applicant sponsor:</P> <P>(i) Name and address;</P> <P>(ii) Geographical area(s) proposed to be served;</P> <P>(iii) Proposed number of sites; and</P> <P>(iv) Any available details of each proposed site including address, dates of operation, and estimated daily attendance.</P> <P>(2) State agencies must also notify the appropriate FNSRO within 5 working days after they approve each private nonprofit organization to participate as a SFSP sponsor. When State agencies notify the FNSRO of sponsor approval, they must provide the following information:</P> <P>(i) Any changes to site locations, dates of operation, and estimated daily attendance that was previously provided;</P> <P>(ii) The hours and type(s) of approved meal service at each site;</P> <P>(iii) The type of site approval—open, restricted open, closed enrolled, or camp; and</P> <P>(iv) Any other important details about each site that would help the FNSRO plan reviews, including whether the site is rural or urban, or vended or self-preparation.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13469, Apr. 10, 1990; 64 FR 72485, Dec. 28, 1999; 65 FR 82251, Dec. 28, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.9</SECTNO> <SUBJECT>Program assistance to sponsors.</SUBJECT> <P>(a) <E T="03">Start-up payments.</E> At their discretion, State agencies may make start-up payments to sponsors which have executed Program agreements. Start-up payments shall not be made more than two months before the sponsor is scheduled to begin food service operations and shall not exceed 20 percent of the sponsor's approved administrative budget. The amount of the start-<PRTPAGE P="136"/>up payment shall be deducted from the first advance payment for administrative costs or, if the sponsor does not receive advance payments, from the first administrative reimbursement.</P> <P>(b) <E T="03">Commodity assistance.</E> (1) Sponsors eligible to receive commodities under the Program include: Self-preparation sponsors; sponsors which have entered into an agreement with a school or school food authority for the preparation of meals; and sponsors which are school food authorities and have competitively procured Program meals from the same food service management company from which they competitively procured meals for the National School Lunch Program during the last period in which school was in session. The State agency shall make available to these sponsors information on available commodities. Sponsors shall use in the Program food donated by the Department and accepted by sponsors.</P> <P>(2) Not later than June 1 of each year, State agencies shall prepare a list of the sponsors which are eligible to receive commodities and the average daily number of eligible meals to be served by each of these sponsors. If the State agency does not handle the distribution of commodities donated by the Department, this list shall be forwarded to the agency of the State responsible for the distribution of commodities. The State agency shall be responsible for promptly revising the list to reflect additions or terminations of sponsors and for adjusting the average daily participation data as it deems necessary.</P> <P>(c) <E T="03">Advance payments.</E> At the sponsor's request, State agencies shall make advance payments to sponsors which have executed Program agreements in order to assist these sponsors in meeting operating costs and administrative expenses. For sponsors operating under a continuous school calendar, all advance payments shall be forwarded on the first day of each month of operation. Advance payments shall be made by the dates specified in paragraphs (c) (1) and (2) of this section for all other sponsors whose requests are received at least 30 days prior to those dates. Requests received less than 30 days prior to those dates shall be acted upon within 30 days of receipt. When making advance payments, State agencies shall observe the following criteria:</P> <P>(1) <E T="03">Operating costs.</E> (i) State agencies shall make advance payments for operating costs by June 1, July 15, and August 15. Except for school food authorities, sponsors must conduct training sessions before receiving the second advance payment. Training sessions must cover Program duties and responsibilities for the sponsor's staff and for site personnel.A sponsor shall not receive advance operating cost payments for any month in which it will participate in the Program for less than ten days.</P> <P>(ii) To determine the amount of the advance payment to any sponsor, the State agency shall employ whichever of the following methods will result in the larger payment:</P> <P>(A) The total operating costs paid to the sponsor for the same calendar month in the preceding year; or</P> <P>(B) For vended sponsors, 50 percent of the amount determined by the State agency to be needed that month for meals, and, for self-preparation sponsors, 65 percent of the amount determined by the State agency to be needed that month for meals.</P> <P>(2) <E T="03">Administrative costs.</E> (i) State agencies shall make advance payments for administrative costs by June 1 and July 15. To be eligible for the second advance payment, the sponsor must certify that it is operating the number of sites for which the administrative budget was approved and that its projected administrative costs do not differ significantly from the approved budget. A sponsor shall not receive advance administrative costs payments for any month in which it will participate in the Program for less than 10 days. However, if a sponsor operates for less than 10 days in June but for at least 10 days in August, the second advance administrative costs payment shall be made by August 15.</P> <P>(ii) Each payment shall equal one-third of the total amount which the State agency determines the sponsor will need to administer its program. For sponsors which will operate for 10 or more days in only one month and, therefore, will qualify for only one advance administrative costs payment, <PRTPAGE P="137"/>the payment shall be no less than one-half, and no more than two-thirds, of the total amount which the State agency determines the sponsor will need to administer its program.</P> <P>(3) <E T="03">Advance payment estimates.</E> When determining the amount of advance payments payable to the sponsor, the State agency shall make the best possible estimate based on the sponsor's request and any other available data. Under no circumstances may the amount of the advance payment for operating or administrative costs exceed the amount estimated by the State agency to be needed by the sponsor to meet operating or administrative costs, respectively.</P> <P>(4) <E T="03">Limit.</E> The sum of the advance operating and administrative costs payments to a sponsor for any one month shall not exceed $40,000 unless the State agency determines that a larger payment is necessary for the effective operation of the Program and the sponsor demonstrates sufficient administrative and managerial capability to justify a larger payment.</P> <P>(5) <E T="03">Deductions from advance payments.</E> The State agency shall deduct from either advance operating payments or advance administrative payments the amount of any previous payment which is under dispute or which is part of a demand for recovery under § 225.12.</P> <P>(6) <E T="03">Withholding of advance payments.</E> If the State agency has reason to believe that a sponsor will not be able to submit a valid claim for reimbursement covering the month for which advance payments have already been made, the subsequent month's advance payment shall be withheld until a valid claim is received.</P> <P>(7) <E T="03">Repayment of excess advance payments.</E> Upon demand of the State agency, sponsors shall repay any advance Program payments in excess of the amount cited on a valid claim for reimbursement.</P> <P>(d) <E T="03">Reimbursements.</E> Sponsors shall not be eligible for reimbursements for operating and administrative costs unless they have executed an agreement with the State agency. All reimbursements shall be in accordance with the terms of this agreement. Reimbursements shall not be paid for meals served at a site before the sponsor has received written notification that the site has been approved for participation in the Program. Income accruing to a sponsor's program shall be deducted from combined operating and administrative costs. The State agency may make full or partial reimbursement upon receipt of a claim for reimbursement, but shall first make any necessary adjustments in the amount to be paid. The following requirements shall be observed in submitting and paying claims:</P> <P>(1) School food authorities that operate the Program, and operate more than one child nutrition program under a single State agency, must use a common claim form (as provided by the State agency) for claiming reimbursement for meals served under those programs.</P> <P>(2) No reimbursement may be issued until the sponsor certifies that it operated all sites for which it is approved and that there has been no significant change in its projected administrative costs since its preceding claim and, for a sponsor receiving an advance payment for only one month, that there has been no significant change in its projected administrative costs since its initial advance administrative costs payment.</P> <P>(3) Sponsors which operate less than 10 days in the final month of operations shall submit a combined claim for the final month and the immediate preceding month within 60 days of the last day of operation.</P> <P>(4) The State agency shall forward reimbursements within 45 days of receiving valid claims. If a claim is incomplete or invalid, the State agency shall return the claim to the sponsor within 30 days with an explanation of the reason for disapproval. If the sponsor submits a revised claim, final action shall be completed within 45 days of receipt.</P> <P>(5) Claims for reimbursement shall report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Reports of Summer Food Service Program Operations required under § 225.8(b). In submitting a claim for reimbursement, each sponsor shall certify that the <PRTPAGE P="138"/>claim is correct and that records are available to support this claim. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. The costs of meals served to adults performing necessary food service labor may be included in the claim. Under no circumstances may a sponsor claim the cost of any disallowed meals as operating costs.</P> <P>(6) A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency not later than 60 days after the last day of the month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not filed within the 60 day deadline shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the month covered by the claim and are reflected in the final Program Operations Report (FNS-418). Upward adjustments in Program funds claimed which are not reflected in the final FNS-418 for the month covered by the claim cannot be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made without FNS authorization, regardless of when it is determined that such adjustments are necessary.</P> <P>(7) Payments to a sponsor for operating costs must equal the lesser of the following totals:</P> <P>(i) The actual operating costs incurred by the sponsor; or</P> <P>(ii) The sum of the amounts derived by multiplying the number of meals, by type, actually served under the sponsor's program to eligible children by the current rates for each meal type, as adjusted in accordance with paragraph (d)(9) of this section.</P> <P>(8) Payments to a sponsor for administrative costs must equal the lowest of the following totals:</P> <P>(i) The amount estimated in the sponsor's approved administrative budget (taking into account any amendments);</P> <P>(ii) The actual administrative costs incurred by the sponsor; or</P> <P>(iii) The sum of the amounts derived by multiplying the number of meals, by type, actually served under the sponsor's program to eligible children by the current administrative rates for each meal type, as adjusted in accordance with paragraph (d)(9) of this section. Sponsors must be eligible to receive additional administrative reimbursement for each meal served to participating children at rural or self-preparation sites, and the rates for such additional administrative reimbursement must be adjusted in accordance with paragraph (d)(9) of this section.</P> <P>(9) On each January 1, or as soon thereafter or as practicable, FNS will publish a notice in the <E T="04">Federal Register</E> announcing any adjustment to the reimbursement rates described in paragraphs (d)(7)(ii) and (d)(8)(iii) of this section. Adjustments will be based upon changes in the series for food away from home of the Consumer Price Index(CPI) for all urban consumers since the establishment of the rates. Higher rates will be established for Alaska and Hawaii, based on the CPI for those States.</P> <P>(10) Sponsors of camps shall be reimbursed only for meals served to children in camps whose eligibility for Program meals is documented. Sponsors of NYSP sites shall only claim reimbursement for meals served to children enrolled in the NYSP.</P> <P>(11) If a State agency has reason to believe that a sponsor or food service management company has engaged in unlawful acts in connection with Program operations, evidence found in audits, reviews, or investigations shall be a basis for nonpayment of the applicable sponsor's claims for reimbursement.</P> <P>(e) The sponsor may claim reimbursement for any meals which are examined for meal quality by the State <PRTPAGE P="139"/>agency, auditors, or local health authorities and found to meet the meal pattern requirements.</P> <P>(f) The sponsor shall not claim reimbursement for meals served to children at any site in excess of the site's approved level of meal service, if one has been established under § 225.6(d)(2). However, the total number of meals for which operating costs are claimed may exceed the approved level of meal service if the meals exceeding this level were served to adults performing necessary food service labor in accordance with paragraph (d)(5) of this section. In reviewing a sponsor's claim, the State agency shall ensure that reimbursements for second meals are limited to the percentage tolerance established in § 225.15(b)(4).</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13469, Apr. 10, 1990; 64 FR 72485, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.10</SECTNO> <SUBJECT>Audits and management evaluations.</SUBJECT> <P>(a) <E T="03">Audits.</E> State agencies shall arrange for audits of their own operations to be conducted in accordance with the Department's Uniform Federal Assistance Regulations (7 CFR part 3015). Unless otherwise exempt, sponsors shall arrange for audits to be conducted in accordance with 7 CFR part 3015. State agencies shall provide OIG with full opportunity to audit the State agency and sponsors. Each State agency shall make available its records, including records of the receipt and expenditure of funds, upon a reasonable request from OIG. While OIG shall rely to the fullest extent feasible upon State-sponsored audits of sponsors, it shall, when considered necessary, (1) make audits on a State-wide basis, (2) perform on-site test audits, and (3) review audit reports and related working papers of audits performed by or for State agencies.</P> <P>(b) <E T="03">Management evaluations.</E> (1) State agencies shall provide FNS with full opportunity to conduct management evaluations (including visits to sponsors) of all operations of the State agency. Each State agency shall make available its records, including records of the receipts and expenditures of funds, upon a reasonable request by FNS.</P> <P>(2) The State agency shall fully respond to any recommendations made by FNSRO pursuant to the management evaluation.</P> <P>(3) FNSRO may require the State agency to submit on 20 days notice a corrective action plan regarding serious problems observed during any phase of the management evaluation.</P> <P>(c) <E T="03">Disregards.</E> In conducting management evaluations or audits for any fiscal year, the State agency, FNS or OIG may disregard overpayment which does not exceed $100 or, in the case of State agency administered programs, does not exceed the amount established by State law, regulations or procedures as a minimum for which claims will be made for State losses generally. No overpayment shall be disregarded, however, when there are unpaid claims for the same fiscal year from which the overpayment can be deducted or when there is substantial evidence of violation of criminal law or civil fraud statutes.</P> </SECTION> <SECTION> <SECTNO>§ 225.11</SECTNO> <SUBJECT>Corrective action procedures.</SUBJECT> <P>(a) <E T="03">Purpose.</E> The provisions in this section shall be used by the State agency to improve Program performance.</P> <P>(b) <E T="03">Investigations.</E> Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. The State agency shall maintain on file all evidence relating to such investigations and actions. The State agency shall inform the appropriate FNSRO of any suspected fraud or criminal abuse in the Program which would result in a loss or misuse of Federal funds. The Department may make investigations at the request of the State agency, or where the Department determines investigations are appropriate.</P> <P>(c) <E T="03">Denial of applications and termination of sponsors.</E> Except as specified below, the State agency shall not enter into an agreement with any applicant sponsor identifiable through its corporate organization, officers, employees, or otherwise, as an institution which participated in any Federal child nutrition program and was seriously deficient in its operation of any such <PRTPAGE P="140"/>program. The State agency shall terminate the Program agreement with any sponsor which it determines to be seriously deficient. However, the State agency shall afford a sponsor reasonable opportunity to correct problems before terminating the sponsor for being seriously deficient. The State agency may approve the application of a sponsor which has been disapproved or terminated in prior years in accordance with this paragraph if the sponsor demonstrates to the satisfaction of the State agency that the sponsor has taken appropriate corrective actions to prevent recurrence of the deficiencies. Serious deficiencies which are grounds for disapproval of applications and for termination include, but are not limited to, any of the following:</P> <P>(1) Noncompliance with the applicable bid procedures and contract requirements of Federal child nutrition program regulations;</P> <P>(2) The submission of false information to the State agency;</P> <P>(3) Failure to return to the State agency any start-up or advance payments which exceeded the amount earned for serving meals in accordance with this part, or failure to submit all claims for reimbursement in any prior year, provided that failure to return any advance payments for months for which claims for reimbursement are under dispute from any prior year shall not be grounds for disapproval in accordance with this paragraph; and</P> <P>(4) Program violations at a significant proportion of the sponsor's sites. Such violations include, but are not limited to, the following:</P> <P>(i) Noncompliance with the meal service time restrictions set forth at § 225.16(c);</P> <P>(ii) Failure to maintain adequate records;</P> <P>(iii) Failure to adjust meal orders to conform to variations in the number of participating children;</P> <P>(iv) The simultaneous service of more than one meal to any child;</P> <P>(v) The claiming of Program payments for meals not served to participating children;</P> <P>(vi) Service of a significant number of meals which did not include required quantities of all meal components;</P> <P>(vii) Excessive instances of off-site meal consumption;</P> <P>(viii) Continued use of food service management companies that are in violation of health codes.</P> <P>(d) <E T="03">Meal service restriction.</E> With the exception for residential camps set forth at § 225.16(b)(1)(ii), the State agency shall restrict to one meal service per day:</P> <P>(1) Any food service site which is determined to be in violation of the time restrictions for meal service set forth at § 225.16(c) when corrective action is not taken within a reasonable time as determined by the State agency; and</P> <P>(2) All sites under a sponsor if more than 20 percent of the sponsor's sites are determined to be in violation of the time restrictions set forth at § 225.16(c).</P> <FP>If this action results in children not receiving meals under the Program, the State agency shall make reasonable effort to locate another source of meal service for these children.</FP> <P>(e) <E T="03">Meal disallowances.</E> (1) If the State agency determines that a sponsor has failed to plan, prepare, or order meals with the objective of providing only one meal per child at each meal service at a site, the State agency shall disallow the number of children's meals prepared or ordered in excess of the number of children served.</P> <P>(2) If the State agency observes meal service violations during the conduct of a site review, the State agency shall disallow as meals served to children all of the meals observed to be in violation.</P> <P>(3) The State agency shall also disallow children's meals which are in excess of a site's approved level established under § 225.6(d)(2).</P> <P>(f) <E T="03">Corrective action and termination of sites.</E> (1) Whenever the State agency observes violations during the course of a site review, it shall require the sponsor to take corrective action. If the State agency finds a high level of meal service violations, the State agency shall require a specific immediate corrective action plan to be followed by the sponsor and shall either conduct a follow-up visit or in some other manner verify that the specified corrective action has been taken.</P> <P>(2) The State agency shall terminate the participation of a sponsor's site if <PRTPAGE P="141"/>the sponsor fails to take action to correct the Program violations noted in a State agency review report within the timeframes established by the corrective action plan.</P> <P>(3) The State agency shall immediately terminate the participation of a sponsor's site if during a review it determines that the health or safety of the participating children is imminently threatened.</P> <P>(4) If the site is vended, the State agency shall within 48 hours notify the food service management company providing meals to the site of the site's termination.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13469, Apr. 10, 1990]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.12</SECTNO> <SUBJECT>Claims against sponsors.</SUBJECT> <P>(a) The State agency shall disallow any portion of a claim for reimbursement and recover any payment to a sponsor not properly payable under this part, except as provided for in § 225.10(c). State agencies may consider claims for reimbursement not properly payable if a sponsor's records do not justify all costs and meals claimed. However, the State agency shall notify the sponsor of the reasons for any disallowance or demand for repayment.</P> <P>(b) Minimum State agency collection procedures for unearned payments shall include:</P> <P>(1) Written demand to the sponsor for the return of improper payments;</P> <P>(2) If after 30 calendar days the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, a second written demand for the return of improper payments, sent by certified mail, return receipt requested;</P> <P>(3) If after 60 calendar days following the original written demand, the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, a third written demand for the return of improper payments, sent by certified mail, return receipt requested;</P> <P>(4) If after 90 calendar days following the original written demand, the sponsor fails to remit full payment or agree to a satisfactory repayment schedule, the State agency shall refer the claim against the sponsor to the appropriate State or Federal authorities for pursuit of legal remedies.</P> <P>(c) If FNS does not concur with the State agency's action in paying a sponsor or in failing to collect an overpayment, FNS shall notify the State agency of its intention to assert a claim against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning the action taken. The State agency shall be liable to FNS for failure to collect an overpayment unless FNS determines that the State agency has conformed with this part in issuing the payment and has exerted reasonable efforts in accordance with paragraph (b) of this section to recover the improper payment.</P> <P>(d) The amounts recovered by the State agency from sponsors may be utilized to make Program payments to sponsors for the period for which the funds were initially available and/or to repay the State for any of its own funds used to make payments on claims for reimbursement. Any amounts recovered which are not so utilized shall be returned to FNS in accordance with the requirements of this part.</P> </SECTION> <SECTION> <SECTNO>§ 225.13</SECTNO> <SUBJECT>Appeal procedures.</SUBJECT> <P>(a) Each State agency shall establish a procedure to be followed by an applicant appealing: A denial of an application for participation; a denial of a sponsor's request for an advance payment; a denial of a sponsor's claim for reimbursement (except for late submission under § 225.9(d)(5)); a State agency's refusal to forward to FNS an exception request by the sponsor for payment of a late claim or a request for an upward adjustment to a claim; a claim against a sponsor for remittance of a payment; the termination of the sponsor or a site; a denial of a sponsor's application for a site; a denial of a food service management company's application for registration, if applicable; or the revocation of a food service management company's registration, if applicable. Appeals shall not be allowed on decisions made by FNS with respect to late claims or upward adjustments under § 225.9(d)(5).</P> <P>(b) At a minimum, appeal procedures shall provide that:</P> <P>(1) The sponsor or food service management company be advised in writing <PRTPAGE P="142"/>of the grounds upon which the State agency based the action. The notice of action, which shall be sent by certified mail, return receipt requested, shall also state that the sponsor or food service management company has the right to appeal the State's action;</P> <P>(2) The sponsor or food service management company be advised in writing that the appeal must be made within a specified time and must meet the requirements of paragraph (b)(4) of this section. The State agency shall establish this period of time at not less than one week nor more than two weeks from the date on which the notice of action is received;</P> <P>(3) The appellant be allowed the opportunity to review any information upon which the action was based;</P> <P>(4) The appellant be allowed to refute the charges contained in the notice of action either in person or by filing written documentation with the review official. To be considered, written documentation must be submitted by the appellant within seven days of submitting the appeal, must clearly identify the State agency action being appealed, and must include a photocopy of the notice of action issued by the State agency;</P> <P>(5) A hearing be held by the review official in addition to, or in lieu of, a review of written information submitted by the appellant only if the appellant so specifies in the letter appealing the action. The appellant may retain legal counsel or may be represented by another person. Failure of the appellant's representative to appear at a scheduled hearing shall constitute the appellant's waiver of the right to a personal appearance before the review official, unless the review official agrees to reschedule the hearing. A representative of the State agency shall be allowed to attend the hearing to respond to the appellant's testimony and written information and to answer questions from the review official;</P> <P>(6) If the appellant has requested a hearing, the appellant and the State agency shall be provided with at least 5 days advance written notice, sent by certified mail, return receipt requested, of the time and place of the hearing;</P> <P>(7) The hearing be held within 14 days of the date of the receipt of the request for review, but, where applicable, not before the appellant's written documentation is received in accordance with paragraphs (b) (4) and (5) of this section;</P> <P>(8) The review official be independent of the original decision-making process;</P> <P>(9) The review official make a determination based on information provided by the State agency and the appellant, and on Program regulations;</P> <P>(10) Within 5 working days after the appellant's hearing, or within 5 working days after receipt of written documentation if no hearing is held, the reviewing official make a determination based on a full review of the administrative record and inform the appellant of the determination of the review by certified mail, return receipt requested;</P> <P>(11) The State agency's action remain in effect during the appeal process. However, participating sponsors and sites may continue to operate the Program during an appeal of termination, and if the appeal results in overturning the State agency's decision, reimbursement shall be paid for meals served during the appeal process. However, such continued Program operation shall not be allowed if the State agency's action is based on imminent dangers to the health or welfare of children. If the sponsor or site has been terminated for this reason, the State agency shall so specify in its notice of action; and</P> <P>(12) The determination by the State review official is the final administrative determination to be afforded to the appellant.</P> <P>(c) The State agency shall send written notification of the complete appeal procedures and of the actions which are appealable, as specified in paragraph (a) of this section, to each potential sponsor applying to participate and to each food service management company applying to register in accordance with § 225.6(g).</P> <P>(d) A record regarding each review shall be kept by the State agency, as required under § 225.8(a). The record shall document the State agency's <PRTPAGE P="143"/>compliance with these regulations and shall include the basis for its decision.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 64 FR 72486, Dec. 28, 1999]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—Sponsor and Site Provisions</HD> <SECTION> <SECTNO>§ 225.14</SECTNO> <SUBJECT>Requirements for sponsor participation.</SUBJECT> <P>(a) <E T="03">Applications.</E> Sponsors shall make written application to the State agency to participate in the Program. Such application shall be made on a timely basis in accordance with the requirements of § 225.6(b)(1). Sponsors proposing to operate a site during an unanticipated school closure during the period from October through April (or at any time of the year in an area with a continuous school calendar) may be exempt, at the discretion of the State agency, from submitting a new application if they have participated in the program at any time during the current year or in either of the prior two calendar years.</P> <P>(b) <E T="03">Sponsor eligibility.</E> Applicants eligible to sponsor the Program include:</P> <P>(1) Public or nonprofit private school food authorities;</P> <P>(2) Public or nonprofit private residential summer camps;</P> <P>(3) Units of local, municipal, county, or State governments;</P> <P>(4) Public or private nonprofit colleges or universities which are currently participating in the National Youth Sports Program; and</P> <P>(5) Private nonprofit organizations as defined in § 225.2.</P> <P>(c) <E T="03">General requirements.</E> No applicant sponsor shall be eligible to participate in the Program unless it:</P> <P>(1) Demonstrates financial and administrative capability for Program operations and accepts final financial and administrative responsibility for total Program operations at all sites at which it proposes to conduct a food service;</P> <P>(2) Has not been seriously deficient in operating the Program;</P> <P>(3) Will conduct a regularly scheduled food service for children from areas in which poor economic conditions exist, or qualifies as a camp;</P> <P>(4) Has adequate supervisory and operational personnel for overall monitoring and management of each site, including adequate personnel to conduct the visits and reviews required in §§ 225.15(d) (2) and (3);</P> <P>(5) Provides an ongoing year-round service to the community which it proposes to serve under the Program, except as provided for in § 225.6(b)(4);</P> <P>(6) Certifies that all sites have been visited and have the capability and the facilities to provide the meal service planned for the number of children anticipated to be served; and</P> <P>(7) Enters into a written agreement with the State agency upon approval of its application, as required in § 225.6(e).</P> <P>(d) <E T="03">Requirements specific to sponsor types.</E> (1) If the sponsor is a camp, it must certify that it will collect information on participants' eligibility to support its claim for reimbursement.</P> <P>(2) If the sponsor administers the Program at sites that provide summer school sessions, it must ensure that these sites are open to children enrolled in summer school and to all children residing in the area served by the site.</P> <P>(3) Sponsors which are units of local, municipal, county or State government, and sponsors which are private nonprofit organizations, will only be approved to administer the Program at sites where they have direct operational control. Operational control means that the sponsor shall be responsible for:</P> <P>(i) Managing site staff, including the hiring, terminating, and determining conditions of employment for site staff; and</P> <P>(ii) Exercising management control over Program operations at sites throughout the period of Program participation by performing the functions specified in § 225.15.</P> <P>(4) If the sponsor administers homeless feeding sites, it must:</P> <P>(i) Document that the site is not a residential child-care institution as defined in paragraph (c) of the definition of 'School' contained in § 210.2 of this chapter;</P> <P>(ii) Document that the primary purpose of the homeless feeding site is to provide shelter and meals to homeless families; and</P> <P>(iii) Certify that these sites employ meal counting methods to ensure that <PRTPAGE P="144"/>reimbursement is claimed only for meals served to homeless and non-homeless children.</P> <P>(5) If the sponsor administers NYSP sites, it must ensure that all children at these sites are enrolled participants in the NYSP.</P> <P>(6) If the sponsor is a private nonprofit organization, it must certify that it:</P> <P>(i) Administers the Program:</P> <P>(A) At no more than 25 sites, with not more than 300 children being served at any approved meal service at any one site, or</P> <P>(B) With a waiver granted by the State agency in accordance with § 225.6(b)(6)(ii), not more than 500 children being served at any approved meal service at any one site;</P> <P>(ii) Operates in areas where a school food authority has not indicated that it will operate the Program in the current year;</P> <P>(iii) Exercises full control and authority over the operation of the Program at all sites under its sponsorship;</P> <P>(iv) Provides ongoing year-round activities for children or families;</P> <P>(v) Demonstrates that it possesses adequate management and the fiscal capacity to operate the Program; and</P> <P>(vi) Meets applicable State and local health, safety, and sanitation standards.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13469, Apr. 10, 1990; 64 FR 72486, Dec. 28, 1999; 64 FR 72898, Dec. 29, 1999; 65 FR 50128, Aug. 17, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.15</SECTNO> <SUBJECT>Management responsibilities of sponsors.</SUBJECT> <P>(a) <E T="03">General.</E> (1) Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part.</P> <P>(2) Sponsors shall not claim reimbursement under parts 210, 215, 220, or 226 of this chapter. In addition, the sponsor must ensure that records of any site serving homeless children accurately reflect commodity allotments received as a “charitable institution”, as defined in §§ 250.3 and 250.41 of this chapter. Commodities received for Program meals must be based only on the number of eligible children's meals served. Sponsors may use funds from other Federally-funded programs to supplement their meal service but must, in calculating their claim for reimbursement, deduct such funds from total operating and administrative costs in accordance with the definition of “income accruing to the Program” at § 225.2 and with the regulations at § 225.9(d). Sponsors which are school food authorities may use facilities, equipment and personnel supported by funds provided under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 <E T="03">et seq</E>.).</P> <P>(3) No sponsor may contract out for the management responsibilities of the Program described in this section.</P> <P>(b) <E T="03">Meal Ordering.</E> (1) Each sponsor shall, to the maximum extent feasible, utilize either its own food service facilities or obtain meals from a school food service facility. If the sponsor obtains meals from a school food service facility, the applicable requirements of this part shall be embodied in a written agreement between the sponsor and the school.</P> <P>(2) Upon approval of its application or any adjustment in the approved levels of meal service for its sites established under § 225.6(d)(2), vended sponsors shall inform their food service management company of the approved level at each site for which the food service management company will provide meals.</P> <P>(3) Sponsors shall plan for and prepare or order meals on the basis of participation trends with the objective of providing only one meal per child at each meal service. The sponsor shall make the adjustments necessary to achieve this objective using the results from its monitoring of sites. For sites for which approved levels of meal service have been established in accordance with § 225.6(d)(2), the sponsor shall adjust the number of meals ordered or prepared with the objective of providing only one meal per child whenever the number of children attending the site is below the approved level. The sponsor shall not order or prepare meals for children at any site in excess <PRTPAGE P="145"/>of the site's approved level, but may order or prepare meals above the approved level if the meals are to be served to adults performing necessary food service labor in accordance with § 225.9(d)(4). Records of participation and of preparation or ordering of meals shall be maintained to demonstrate positive action toward meeting this objective.</P> <P>(4) In recognition of the fluctuation in participation levels which makes it difficult to estimate precisely the number of meals needed and to reduce the resultant waste, sponsors may claim reimbursement for a number of second meals which does not exceed two percent of the number of first meals served to children for each meal type (i.e., breakfasts, lunches, supplements, or suppers) during the claiming period. The State agency shall disallow all claims for second meals if it determines that the sponsor failed to plan and prepare or order meals with the objective of providing only one meal per child at each meal service. Second meals shall be served only after all participating children at the site's meal service have been served a meal.</P> <P>(c) <E T="03">Records and claims.</E> (1) Sponsors shall maintain accurate records which justify all costs and meals claimed. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. The sponsor's records shall be available at all times for inspection and audit by representatives of the Secretary, the Comptroller General of the United States, and the State agency for a period of three years following the date of submission of the final claim for reimbursement for the fiscal year.</P> <P>(2) Sponsors shall submit claims for reimbursement in accordance with this part. All final claims must be submitted to the State agency within 60 days following the last day of the month covered by the claim.</P> <P>(d) <E T="03">Training and monitoring.</E> (1) Each sponsor shall hold Program training sessions for its administrative and site personnel and shall allow no site to operate until personnel have attended at least one of these training sessions. The State agency may waive these training requirements for operation of the Program during unanticipated school closures during the period from October through April (or at any time of the year in an area with a continuous school calendar). Training of site personnel shall, at a minimum, include: the purpose of the Program; site eligibility; recordkeeping; site operations; meal pattern requirements; and the duties of a monitor. Each sponsor shall ensure that its administrative personnel attend State agency training provided to sponsors, and sponsors shall provide training throughout the summer to ensure that administrative personnel are thoroughly knowledgeable in all required areas of Program administration and operation and are provided with sufficient information to enable them to carry out their Program responsibilities. Each site shall have present at each meal service at least one person who has received this training.</P> <P>(2) Sponsors shall visit each of their sites at least once during the first week of operation under the Program and shall promptly take such actions as are necessary to correct any deficiencies.</P> <P>(3) Sponsors shall review food service operations at each site at least once during the first four weeks of Program operations, and thereafter shall maintain a reasonable level of site monitoring. Sponsors shall complete a monitoring form developed by the State agency during the conduct of these reviews.</P> <P>(e) <E T="03">Media Release.</E> Each sponsor shall annually announce in the media serving the area from which it draws its attendance the availability of free meals. Camps and other programs not eligible under § 225.2 (paragraph (a) of “areas in which poor economic conditions exist”) shall annually announce to all participants the availability of free meals for eligible children. All media releases issued by camps and other programs not eligible under § 225.2 (paragraph (a) of “areas in which poor economic conditions exist”) shall include: the Secretary's family-size and income standards for reduced price school meals labelled “SFSP Income Eligibility Standards”; a statement that children <PRTPAGE P="146"/>who are members of households receiving food stamp, FDPIR, or TANF benefits are automatically eligible to receive free meal benefits at eligible program sites; and a statement that meals are available without regard to race, color, national origin, sex, age, or handicap.</P> <P>(f) <E T="03">Application for free Program meals.</E>—(1) <E T="03">Purpose of application form.</E> The application is used to determine the eligibility of children attending camps and the eligibility of sites that are not open sites as defined in paragraph (a) of the definition of “areas in which poor economic conditions exist”, in § 225.2. In these situations, parents or guardians of children enrolled in camps or these other sites must be given application forms to provide information described in paragraph (f)(2) or (f)(3) of this section, as applicable. Applications are not necessary if other information sources are available and can be used to determine eligibility of individual children in camps or sites.</P> <P>(2) <E T="03">Application procedures based on household income.</E> The household member completing the application on behalf of the child enrolled in the Program must provide the following information:</P> <P>(i) The names of all children for whom application is made;</P> <P>(ii) The names of all other household members;</P> <P>(iii) The social security number of the adult household member who signs the application or an indication that the household member does not have a social security number;</P> <P>(iv) The income received by each household member identified by source of income;</P> <P>(v) The signature of an adult household member;</P> <P>(vi) The date the application is completed and signed.</P> <P>(3) <E T="03">Application based on the household's receipt of food stamp, FDPIR, or TANF benefits.</E> Households may apply on the basis of receipt of food stamp, FDPIR, or TANF benefits by providing the following information:</P> <P>(i) The name(s) and food stamp, FDPIR, or TANF case number(s) of the child(ren) who are enrolled in the Program; and</P> <P>(ii) The signature of an adult household member.</P> <P>(4) <E T="03">Information or notices required on application forms.</E> Application forms or descriptive materials given to households about applying for free meals must contain the following information:</P> <P>(i) The family-size and income levels for reduced price school meal eligibility with an explanation that households with incomes less than or equal to these values are eligible for free Program meals (<E T="04">Note:</E> The income levels for free school meal eligibility must not be included on the application or in other materials given to the household).</P> <P>(ii) A statement that a child who is a member of a household that receives food stamp, FDPIR, or TANF benefits is automatically eligible to receive free meals in the Program;</P> <P>(iii) A statement that reads, “In certain cases, foster children are eligible for free meals regardless of household income. If such children are living with you and you wish to apply for such meals, please contact us.”;</P> <P>(iv) The following statement that provides notice to the household member whose social security number is disclosed: “Unless you include your child's case number for the Food Stamp Program, the Food Distribution Program on Indian Reservations (or other identifier for the Food Distribution Program on Indian Reservations) or the Temporary Assistance for Needy Families Program, you must include the social security number of the adult household member signing the application or indicate that the household member does not have a social security number. This is required by section 9 of the National School Lunch Act. The social security number is not mandatory, but the application cannot be approved if a social security number is not given or an indication is not made that the signer does not have a social security number. The social security number will be used in the administration and enforcement of the program.”</P> <P>(v) The statement used to inform the household about the use of social security numbers must comply with the Privacy Act of 1974 (Pub. L. 93-579). If a State or local agency plans to use the <PRTPAGE P="147"/>social security numbers for uses not described in paragraph (f)(4)(iv) of this section, the notice must be revised to explain those uses.</P> <P>(vi) Examples of income that should be provided on the application, including: Earnings, wages, welfare benefits, pensions, support payments, unemployment compensation, social security, and other cash income;</P> <P>(vii) A notice placed immediately above the signature block stating that the person signing the application certifies that all information provided is correct, that the household is applying for Federal benefits in the form of free Program meals, that Program officials may verify the information on the application, and that purposely providing untrue or misleading statements may result in prosecution under State or Federal criminal laws; and</P> <P>(viii) A statement that if food stamp, FDPIR, or TANF case numbers are provided, they may be used to verify the current food stamp, FDPIR, or TANF certification for the children for whom free meals benefits are claimed.</P> <P>(5) <E T="03">Verifying information on Program applications.</E> Households selected to verify information on their Program applications must be notified in writing. State agencies must ensure that the notice of information about the use of social security numbers provided on applications complies with section 7 of Pub. L. 93-579 (Privacy Act of 1974). Households must be informed of the following:</P> <P>(i) They must provide a social security number for each adult household member, or indicate that an adult household member does not have a social security number, or provide proof that they are receiving food stamp, FDPIR, or TANF benefits;</P> <P>(ii) They will lose Program benefits or be terminated from participation if they do not cooperate with the verification process;</P> <P>(iii) Social security numbers may be used to determine the correctness of information on applications and continued eligibility for Program benefits;</P> <P>(iv) They will be given the name and phone number of an official who can assist in the verification process;</P> <P>(v) Verification may occur during program reviews, audits, and investigations;</P> <P>(vi) Verification may include contacting employers, food stamp or welfare offices, or State employment offices to determine the accuracy of statements on the application about income, receipt of food stamp, FDPIR, TANF, or unemployment benefits; and</P> <P>(vii) They may lose benefits or face claims or legal action if incorrect information is reported on the application.</P> <P>(g) <E T="03">Disclosure of program eligibility information to State Medicaid (Medicaid) and the State Children's Health Insurance Program (SCHIP).</E> Program eligibility information about children eligible for free and reduced price meals may be disclosed to Medicaid and SCHIP as described in this section.</P> <P>(1) <E T="03">Who decides whether to disclose program eligibility information to Medicaid and/or SCHIP?</E> The State agency may elect to allow sponsors to disclose children's free and reduced price meal eligibility information to Medicaid and SCHIP. Sponsors may then elect to do so. Children's program eligibility information may only be disclosed to Medicaid or SCHIP when both the State agency and the sponsor so elect, the parent/guardian does not decline to have their eligibility information disclosed as described in paragraph (g)(5), and the requirements in this paragraph (g) are met.y</P> <P>(2) <E T="03">What information may we disclose for use by Medicaid and SCHIP?</E> The State agency or sponsor, as appropriate, may disclose children's names, eligibility status (whether they are eligible for free or reduced price meals), and any other eligibility information obtained through the free and reduced price meal application or obtained through direct certification to persons directly connected with the administration of Medicaid or SCHIP.</P> <P>(3) <E T="03">Who are persons “directly connected” with the administration of Medicaid and SCHIP?</E> State employees and persons authorized under Federal and State Medicaid and SCHIP requirements to carry out initial processing of Medicaid or SCHIP applications or to make eligibility determinations are <PRTPAGE P="148"/>persons directly connected with the administration of Medicaid and SCHIP for purposes of disclosure of children's free and reduced price meal eligibility information.</P> <P>(4) <E T="03">What are the restrictions on how Medicaid and SCHIP use children's free and reduced price meal eligibility information?</E> Medicaid and SCHIP agencies and health insurance program operators receiving children's free and reduced price meal eligibility information may only use the information to enroll children in Medicaid or SCHIP. The Medicaid and SCHIP enrollment process may include targeting and identifying children from low-income households who are potentially eligible for Medicaid or SCHIP for the purpose of seeking to enroll them in Medicaid or SCHIP.</P> <P>(5) <E T="03">What are the requirements for notifying households of potential disclosure to Medicaid or SCHIP?</E> The State agency or sponsor, as appropriate, must notify parents/guardians that their children's free or reduced price meal eligibility information will be disclosed to Medicaid and/or SCHIP unless the parent/guardian elects not to have their information disclosed. Additionally, the State agency or sponsor, as appropriate, must give parents/guardians an opportunity to elect not to have their information disclosed to Medicaid or SCHIP. Only the parent or guardian who is a member of the household or family for purposes of the free and reduced price meal or free milk application may decline the disclosure of eligibility information. The notification must inform parents/guardians that they are not required to consent to the disclosure, that the information, if disclosed, will be used to identify children eligible for and seek to enroll children in a health insurance program, and that their decision will not affect their children's eligibility for free or reduced price meals. The notification may be included in the letter/notice to parents/guardians that accompanies the free and reduced price application, on the application itself or in a separate notice provided to parents/guardians. The notice must give parents/guardians adequate time to respond. For children determined eligible through direct certification, the notice of potential disclosure may be included in the document informing parents/guardians of their children's eligibility for free meals through direct certification.</P> <P>(6) <E T="03">May social security numbers be disclosed?</E> The State agency or sponsor, as appropriate, may disclose social security numbers to any programs or persons authorized to receive all program eligibility information under this paragraph (g), provided parents/guardians have not declined to have their information disclosed. However, State agencies and sponsors that plan to disclose social security numbers must give notice of the planned use of the social security number. This notice must be in accordance with section 7(b) of the Privacy Act of 1974 (5 U.S.C. 552a note). The application must include substantially the following language for disclosures of social security numbers to Medicaid or SCHIP: “The social security number may also be disclosed to Medicaid and the State Children's Health Insurance Program for the purpose of identifying and seeking to enroll eligible children in one of these health insurance programs.” This language is in addition to the notice required in paragraph (f)(4)(iv) of this section. State agencies and sponsors are responsible for drafting the appropriate notice for disclosures of social security numbers.</P> <P>(7) <E T="03">Are agreements required before disclosing program eligibility information?</E> The State agency or sponsor, as appropriate, must have a written agreement with the State or local agency or agencies administering Medicaid or SCHIP prior to disclosing children's free and reduced price eligibility information. At a minimum, the agreement must:</P> <P>(i) Identify the health insurance program or health agency receiving children's eligibility information;</P> <P>(ii) Describe the information that will be disclosed;</P> <P>(iii) Require that the Medicaid or SCHIP agency use the information obtained and specify that the information must only be used to seek to enroll children in Medicaid or SCHIP;</P> <P>(iv) Describe how the information will be protected from unauthorized uses and disclosures;</P> <P>(v) Describe the penalties for unauthorized disclosure; and<PRTPAGE P="149"/> </P> <P>(vi) Be signed by both the Medicaid or SCHIP program or agency and the State agency or sponsor, as appropriate.</P> <P>(8) <E T="03">What are the penalties for unauthorized disclosure or misuse of information?</E> In accordance with section 9(b)(2)(C)(v) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1758(b)(2)(C)(v)), any individual who publishes, divulges, discloses or makes known in any manner, or to any extent not authorized by statute or this section, any information obtained under this paragraph (g) will be fined not more than $1,000 or imprisoned for up to 1 year, or both.</P> <P>(9) <E T="03">What are the State agency's responsibilities regarding disclosures?</E> State agencies that elect to allow disclosure of children's free and reduced price meal eligibility information to Medicaid or SCHIP, as provided in this paragraph (g), must ensure that any sponsor acting in accordance with that option:</P> <P>(i) Has a written agreement with the State or local agency or agencies administering health insurance programs for children under titles XIX and XXI of the Social Security Act (42 U.S.C. 1396 <E T="03">et seq.</E> and 1397aa <E T="03">et seq.</E>) that requires the health agencies to use children's free and reduced price meal eligibility information to seek to enroll children in those health insurance programs; and</P> <P>(ii) Notifies each household of the information that will be disclosed, that the information disclosed will be used only to seek to enroll children in Medicaid or SCHIP and provides each parent/guardian with an opportunity to elect not to have the information disclosed.</P> <P>(h) <E T="03">Food service management companies.</E> (1) Failure by a sponsor to comply with the provisions of this section shall be sufficient grounds for the State agency to terminate that sponsor's participation in accordance with § 225.18.</P> <P>(2) Any sponsor may contract with a food service management company to manage the sponsor's food service operations and/or for the preparation of unitized meals with or without milk or juice. Exceptions to the unitizing requirement may only be made in accordance with the provisions set forth at § 225.6(h)(3).</P> <P>(3) Any vended sponsor shall be responsible for ensuring that its food service operation is in conformity with its agreement with the State agency and with all the applicable provisions of this part.</P> <P>(4) In addition to any applicable State or local laws governing bid procedures, and with the exceptions identified in this paragraph, each sponsor which contracts with a food service management company shall comply with the competitive bid procedures described in this paragraph. Sponsors which are schools or school food authorities and which have an exclusive contract with a food service management company for year-round service, and sponsors whose total contracts with food service management companies will not exceed $10,000, shall not be required to comply with these procedures. These exceptions do not relieve the sponsor of the responsibility to ensure that competitive procurement procedures are followed in contracting with any food service management company. Each sponsor whose proposed contract is subject to the specific bid procedures set forth in this paragraph shall ensure, at a minimum, that:</P> <P>(i) All proposed contracts are publicly announced at least once, not less than 14 calendar days prior to the opening of bids, and the announcement includes the time and place of the bid opening;</P> <P>(ii) The bids are publicly opened;</P> <P>(iii) The State agency is notified, at least 14 calendar days prior to the opening of the bids, of the time and place of the bid opening;</P> <P>(iv) The invitation to bid does not specify a minimum price;</P> <P>(v) The invitation to bid contains a cycle menu approved by the State agency upon which the bid is based;</P> <P>(vi) The invitation to bid contains food specifications and meal quality standards approved by the State agency upon which the bid is based;</P> <P>(vii) The invitation to bid does not specify special meal requirements to meet ethnic or religious needs unless such special requirements are necessary to meet the needs of the children to be served;<PRTPAGE P="150"/> </P> <P>(viii) Neither the invitation to bid nor the contract provides for loans or any other monetary benefit or term or condition to be made to sponsors by food service management companies;</P> <P>(ix) Nonfood items are excluded from the invitation to bid, except where such items are essential to the conduct of the food service;</P> <P>(x) Copies of all contracts between sponsors and food service management companies, along with a certification of independent price determination, are submitted to the State agency prior to the beginning of Program operations;</P> <P>(xi) Copies of all bids received are submitted to the State agency, along with the sponsor's reason for choosing the successful bidder; and</P> <P>(xii) All bids in an amount which exceeds the lowest bid and all bids totaling $100,000 or more are submitted to the State agency for approval before acceptance. State agencies shall respond to a request for approval of such bids within 5 working days of receipt.</P> <P>(5) Each food service management company which submits a bid over $100,000 shall obtain a bid bond in an amount not less than five (5) percent nor more than ten (10) percent, as determined by the sponsor, of the value of the contract for which the bid is made. A copy of the bid bond shall accompany each bid.</P> <P>(6) Each food service management company which enters into a food service contract for over $100,000 with a sponsor shall obtain a performance bond in an amount not less than ten (10) percent nor more than twenty-five (25) percent of the value of the contract, as determined by the State agency, of the value of the contract for which the bid is made. Any food service management company which enters into more than one contract with any one sponsor shall obtain a performance bond covering all contracts if the aggregate amount of the contracts exceeds $100,000. Sponsors shall require the food service management company to furnish a copy of the performance bond within ten days of the awarding of the contract.</P> <P>(7) Food service management companies shall obtain bid bonds and performance bonds only from surety companies listed in the current Department of the Treasury Circular 570. No sponsor or State agency shall allow food service management companies to post any “alternative” forms of bid or performance bonds, including but not limited to cash, certified checks, letters of credit, or escrow accounts.</P> <P>(i) <E T="03">Other responsibilities.</E> Sponsors shall comply with all of the meal service requirements set forth in § 225.16.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13470, Apr. 10, 1990; 61 FR 25553, May 22, 1996; 64 FR 72486, Dec. 28, 1999; 64 FR 72898, Dec. 29, 1999; 65 FR 82251, Dec. 28, 2000; 66 FR 2202, Jan. 11, 2001]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.16</SECTNO> <SUBJECT>Meal service requirements.</SUBJECT> <P>(a) <E T="03">Sanitation.</E> Sponsors shall ensure that in storing, preparing, and serving food, proper sanitation and health standards are met which conform with all applicable State and local laws and regulations. Sponsors shall ensure that adequate facilities are available to store food or hold meals. Within two weeks of receiving notification of their approval, but in any case prior to commencement of Program operation, sponsors shall submit to the State agency a copy of their letter advising the appropriate health department of their intention to provide a food service during a specific period at specific sites.</P> <P>(b) <E T="03">Meal services.</E> The meals which may be served under the Program are breakfast, lunch, supper, and supplements, referred to from this point as “snacks”. No sponsor may be approved to provide more than two snacks per day. A sponsor may only be reimbursed for meals served in accordance with this section.</P> <P>(1) <E T="03">Camps.</E> Sponsors of camps shall only be reimbursed for meals served in camps to children from families which meet the eligibility standards for this Program. The sponsor shall maintain a copy of the documentation establishing the eligibility of each child receiving meals under the Program. Meal service at camps shall be subject to the following provisions:</P> <P>(i) Each day a camp may serve up to three meals or two meals and one snack;<PRTPAGE P="151"/> </P> <P>(ii) Residential camps are not subject to the time restrictions for meal service set forth at paragraphs (c) (1) and (2) of this section; and</P> <P>(iii) A camp shall be approved to serve these meals only if it has the administrative capability to do so; if the service period of the different meals does not coincide or overlap; and, where applicable, if it has adequate food preparation and holding facilities.</P> <P>(2) <E T="03">NYSP Sites.</E> Sponsors of NYSP sites shall only be reimbursed for meals served to enrolled NYSP participants at these sites.</P> <P>(3) <E T="03">Restrictions on the number and type of meals served.</E> Food service sites other than camps and sites that primarily serve migrant children may serve either:</P> <P>(i) One meal each day, a breakfast, a lunch, or snack; or</P> <P>(ii) Two meals each day, if one is a lunch and the other is a breakfast or a snack.</P> <P>(4) <E T="03">Sites which serve children of migrant families.</E> Food service sites that primarily serve children from migrant families may be approved to serve each day up to three meals or two meals and one snack. These sites shall serve children in areas where poor economic conditions exist as defined in § 225.2. A sponsor which operates in accordance with this part shall receive reimbursement for all meals served to children at these sites. A site which primarily serves children from migrant families shall only be approved to serve more than one meal each day if it has the administrative capability to do so; if the service period of the different meals does not coincide or overlap; and, where applicable, if it has adequate food preparation and holding facilities.</P> <P>(c) <E T="03">Time restrictions for meal service.</E> (1) Three hours must elapse between the beginning of one meal service, including snacks, and the beginning of another, except that 4 hours must elapse between the service of a lunch and supper when no snack is served between lunch and supper. The service of supper shall begin no later than 7 p.m., unless the State agency has granted a waiver of this requirement due to extenuating circumstances. These waivers shall be granted only when the State agency and the sponsor ensure that special arrangements shall be made to monitor these sites. In no case may the service of supper extend beyond 8 p.m. The time restrictions in this paragraph shall not apply to residential camps.</P> <P>(2) The duration of the meal service shall be limited to two hours for lunch or supper and one hour for all other meals.</P> <P>(3) Meals served outside of the period of approved meal service shall not be eligible for Program payments.</P> <P>(4) Any permanent or planned changes in meal service periods must be approved by the State agency.</P> <P>(5) Meals which are not prepared at the food service site shall be delivered no earlier than one hour prior to the beginning of the meal service (unless the site has adequate facilities for holding hot or cold meals within the temperatures required by State or local health regulations) and no later than the beginning of the meal service.</P> <P>(6) The sponsor shall claim for reimbursement only the type(s) of meals for which it is approved under its agreement with the State agency.</P> <P>(d) <E T="03">Meal patterns.</E> The meal requirements for the Program are designed to provide nutritious and well-balanced meals to each child. Sponsors shall ensure that meals served meet all of the requirements. Except as otherwise provided in this section, the following tables present the minimum requirements for meals served to children in the Program. Children age 12 and up may be served larger portions based on the greater food needs of older boys and girls.</P> <P>(1) <E T="03">Breakfast.</E> The minimum amount of food components to be served as breakfast are as follows:</P> <GPOTABLE CDEF="s100,xs80" COLS="2" OPTS="L2,tp0,i1"> <BOXHD> <CHED H="1">Food components</CHED> <CHED H="1">Minimum amount</CHED> </BOXHD> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Vegetables and Fruits</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Vegetable(s) and/or fruit(s) or</ENT> <ENT> <FR>1/2</FR> cup.<SU>1</SU> </ENT> </ROW> <ROW RUL="s"> <ENT I="01">Full-strength vegetable or fruit juice or an equivalent quantity of any combination of vegetable(s), fruits(s), and juice</ENT> <ENT> <FR>1/2</FR> cup (4 fluid ounces).</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <PRTPAGE P="152"/> <ENT I="21"> <E T="02">Bread and Bread Alternates <SU>2</SU> </E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Bread or</ENT> <ENT>1 slice.</ENT> </ROW> <ROW> <ENT I="01">Cornbread, biscuits, rolls, muffins, etc. or</ENT> <ENT>1 serving.<SU>3</SU> </ENT> </ROW> <ROW> <ENT I="01">Cold dry cereal or</ENT> <ENT> <FR>3/4</FR> cup or 1 ounce.<SU>4</SU> </ENT> </ROW> <ROW> <ENT I="01">Cooked cereal or cereal grains or</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW RUL="s"> <ENT I="01">Cooked pasta or noodle products or an equivalent quantity of any combination of bread/bread alternate</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Milk <SU>5</SU> </E> </ENT> </ROW> <ROW EXPSTB="00" RUL="s"> <ENT I="01">Milk, fluid</ENT> <ENT>1 cup (<FR>1/2</FR> pint, 8 fluid ounces).</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Meat and Meat Alternates (Optional)</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Lean meat or poultry or fish or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Alternate protein product <SU>6</SU> or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Cheese or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Egg (large) or</ENT> <ENT> <FR>1/2</FR>.</ENT> </ROW> <ROW> <ENT I="01">Cooked dry beans or peas or</ENT> <ENT> <FR>1/4</FR> cup.</ENT> </ROW> <ROW> <ENT I="01">Peanut butter or an equivalent quantity of any combination of meat/meat alternate or</ENT> <ENT>2 tablespoons.</ENT> </ROW> <ROW> <ENT I="01">Yogurt, plain or flavored, unsweetened or sweetened</ENT> <ENT>4 ounces or <FR>1/2</FR> cup.</ENT> </ROW> <TNOTE> <SU>1</SU> For the purposes of the requirement outlined in this table, a cup means a standard measuring cup.</TNOTE> <TNOTE> <SU>2</SU> Bread, pasta or noodle products, and cereal grains (such as rice, bulgur, or corn grits) shall be whole-grain or enriched; cornbread, biscuits, rolls, muffins, etc., shall be made with whole-grain or enriched meal or flour; cereal shall be whole-grain, enriched or fortified.</TNOTE> <TNOTE> <SU>3</SU> Serving sizes and equivalents will be in guidance materials to be distributed by FNS to State agencies.</TNOTE> <TNOTE> <SU>4</SU> Either volume (cup) or weight (ounces), whichever is less.</TNOTE> <TNOTE> <SU>5</SU> Milk shall be served as a beverage or on cereal or used in part for each purpose.</TNOTE> <TNOTE> <SU>6</SU> Must meet the requirements in appendix A of this part.</TNOTE> </GPOTABLE> <P>(2) <E T="03">Lunch or supper.</E> The minimum amounts of food components to be served as lunch or supper are as follows:</P> <GPOTABLE CDEF="s100,xs80" COLS="2" OPTS="L2,tp0,i1"> <BOXHD> <CHED H="1">Food components</CHED> <CHED H="1">Minimum amount</CHED> </BOXHD> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Meat and Meat Alternates</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Lean meat or poultry or fish or</ENT> <ENT>2 ounces.</ENT> </ROW> <ROW> <ENT I="01">Alternate protein products <SU>1</SU> or</ENT> <ENT>2 ounces.</ENT> </ROW> <ROW> <ENT I="01">Cheese or</ENT> <ENT>2 ounces.</ENT> </ROW> <ROW> <ENT I="01">Egg (large) or</ENT> <ENT>1.</ENT> </ROW> <ROW> <ENT I="01">Cooked dry beans or peas or</ENT> <ENT> <FR>1/2</FR> cup.<SU>2</SU> </ENT> </ROW> <ROW> <ENT I="01">Peanut butter or soynut butter or other nut or seed butters or</ENT> <ENT>4 tablespoons.</ENT> </ROW> <ROW> <ENT I="01">Peanuts or soynuts or tree nuts or seed <SU>3</SU> or</ENT> <ENT>1 ounce=50%.<SU>4</SU> </ENT> </ROW> <ROW RUL="s"> <ENT I="01">Yogurt, plain or flavored, unsweetened or sweetened or an equivalent quantity of any combination of the above meat/meat alternates</ENT> <ENT>8 ounces or 1 cup.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Vegetables and Fruits</E> </ENT> </ROW> <ROW EXPSTB="00" RUL="s"> <ENT I="01">Vegetable(s) and/or fruit(s) <SU>5</SU> </ENT> <ENT> <FR>3/4</FR> cup total.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Bread and Bread Alternatives <SU>6</SU> </E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Bread or</ENT> <ENT>1 slice.</ENT> </ROW> <ROW> <ENT I="01">Cornbread, biscuits, rolls, muffins, etc. or</ENT> <ENT>1 serving.<SU>7</SU> </ENT> </ROW> <ROW> <ENT I="01">Cooked pasta or noodle products or</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW RUL="s"> <ENT I="01">Cooked cereal grains or an equivalent quantity of any combination of bread/bread alternate</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Milk</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Milk, fluid, served as a beverage</ENT> <ENT>1 cup (<FR>1/2</FR> pint, 8 fluid ounces).</ENT> </ROW> <TNOTE> <SU>1</SU> Must meet the requirements of appendix A of this part.</TNOTE> <TNOTE> <SU>2</SU> For the purposes of the requirement outlined in this table, a cup means a standard measuring cup.</TNOTE> <TNOTE> <SU>3</SU> Tree nuts and seeds that may be used as meat alternate are listed in program guidance.</TNOTE> <TNOTE> <SU>4</SU> No more than 50% of the requirement shall be met with nuts or seeds. Nuts or seeds shall be combined with another meat/meat alternate to fulfill the requirement. For purposes of determining combinations, 1 ounce of nuts or seeds is equal to 1 ounce of cooked lean meat, poultry or fish.</TNOTE> <TNOTE> <SU>5</SU> Serve 2 or more kinds of vegetable(s) and/or fruits or a combination of both. Full strength vegetable or fruit juice may be counted to meet not more than one-half of this requirement.<PRTPAGE P="153"/> </TNOTE> <TNOTE> <SU>6</SU> Bread, pasta or noodle products, and cereal grains (such as rice, bulgur, or corn grits) shall be whole-grain or enriched; cornbread, biscuits, rolls, muffins, etc., shall be made with whole-grain or enriched meal or flour; cereal shall be whole-grain, enriched or fortified.</TNOTE> <TNOTE> <SU>7</SU> Serving sizes and equivalents will be in guidance materials to be distributed by FNS to State agencies.</TNOTE> </GPOTABLE> <P>(3) <E T="03">Snacks.</E> The minimum amounts of food components to be served as snacks are as follows. Select two of the following four components. (Juice may not be served when milk is served as the only other component.)</P> <GPOTABLE CDEF="s100,xs82" COLS="2" OPTS="L2,tp0,i1"> <BOXHD> <CHED H="1">Food components</CHED> <CHED H="1">Minimum amount</CHED> </BOXHD> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Meat and Meat Alternates</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Lean meat or poultry or fish or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Alternate protein products <SU>1</SU> or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Cheese or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW> <ENT I="01">Egg (large) or</ENT> <ENT> <FR>1/2</FR>.</ENT> </ROW> <ROW> <ENT I="01">Cooked dry beans or peas or</ENT> <ENT> <FR>1/4</FR> cup <SU>2</SU>.</ENT> </ROW> <ROW> <ENT I="01">Peanut butter or soynut butter or other nut or seed butters or</ENT> <ENT>2 tablespoons.</ENT> </ROW> <ROW> <ENT I="01">Peanuts or soynuts or tree nuts or seeds <SU>3</SU> or</ENT> <ENT>1 ounce.</ENT> </ROW> <ROW RUL="s"> <ENT I="01">Yogurt, plain or flavored, unsweetened or sweetened or an equivalent quantity of any combination of the above meat/meat alternates</ENT> <ENT>4 ounce or <FR>1/2</FR> cup.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Vegetables and Fruits</E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Vegetable(s) and/or fruit(s) or</ENT> <ENT> <FR>3/4</FR> cup.</ENT> </ROW> <ROW RUL="s"> <ENT I="01">Full-strength vegetable or fruit juice or an equivalent quantity or any combination of vegetable(s), fruits(s) and juice</ENT> <ENT> <FR>3/4</FR> cup (6 fluid ounces).</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Bread and Bread Alternates</E> <SU>4</SU> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Bread or</ENT> <ENT>1 slice.</ENT> </ROW> <ROW> <ENT I="01">Cornbread, biscuits, rolls, muffins, etc. or</ENT> <ENT>1 serving.<SU>5</SU> </ENT> </ROW> <ROW> <ENT I="01">Cold dry cereal or</ENT> <ENT> <FR>3/4</FR> cup or 1 ounce.<SU>6</SU> </ENT> </ROW> <ROW> <ENT I="01">Cooked cereal or</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW RUL="s"> <ENT I="01">Cooked cereal grains or an equivalent quantity of any combination of bread/bread alternate</ENT> <ENT> <FR>1/2</FR> cup.</ENT> </ROW> <ROW EXPSTB="01" RUL="s"> <ENT I="21"> <E T="02">Milk <SU>7</SU> </E> </ENT> </ROW> <ROW EXPSTB="00"> <ENT I="01">Milk, fluid</ENT> <ENT>1 cup (<FR>1/2</FR> pint, 8 fluid ounces).</ENT> </ROW> <TNOTE> <SU>1</SU> Must meet the requirements in appendix A of this part.</TNOTE> <TNOTE> <SU>2</SU> For the purposes of the requirement outlined in this table, a cup means a standard measuring cup.</TNOTE> <TNOTE> <SU>3</SU> Tree nuts and seeds that may be used as meat alternates are listed in program guidance.</TNOTE> <TNOTE> <SU>4</SU> Bread, pasta or noodle products, and cereal grains (such as rice, bulgur, or corn grits) shall be whole-grain or enriched; cornbread, biscuits, rolls, muffins, etc., shall be made with whole-grain or enriched meal or flour; cereal shall be whole-grain, enriched or fortified.</TNOTE> <TNOTE> <SU>5</SU> Serving sizes and equivalents will be in guidance materials to be distributed by FNS to State agencies.</TNOTE> <TNOTE> <SU>6</SU> Either volume (cup) or weight (ounces), whichever is less.</TNOTE> <TNOTE> <SU>7</SU> Milk should be served as a beverage or on cereal, or used in part for each purpose.</TNOTE> </GPOTABLE> <P>(e) <E T="03">Meat or meat alternate.</E> Meat or meat alternates served under the Program are subject to the following requirements and recommendations.</P> <P>(1) The required quantity of meat or meat alternate shall be the quantity of the edible portion as served. These foods must be served in a main dish, or in a main dish and one other menu item.</P> <P>(2) Cooked dry beans or peas may be used as a meat alternate or as a vegetable, but they may not be used to meet both component requirements in a meal.</P> <P>(3) Enriched macaroni with fortified protein may be used to meet part but not all of the meat/meat alternate requirement. The Department will provide guidance to State agencies on the part of the meat/meat alternate requirement which these foods may be used to meet. If enriched macaroni with fortified protein is served as a meat alternate it shall not be counted toward the bread requirement.</P> <P>(4) If the sponsor believes that the recommended portion size of any meat or meat alternate is too large to be appealing to children, the sponsor may reduce the portion size of that meat or meat alternate and supplement it with another meat or meat alternate to meet the full requirement.<PRTPAGE P="154"/> </P> <P>(5) Nuts and seeds and their butters listed in program guidance are nutritionally comparable to meat or other meat alternates based on available nutritional data. Acorns, chestnuts, and coconuts shall not be used as meat alternates due to their low protein content. Nut and seed meals or flours shall not be used as a meat alternate except as defined in this section under paragraph (e)(3) and in this part under Appendix A: Alternate Foods for Meals. As noted in paragraph (d)(2) of this section, nuts or seeds may be used to meet no more than one-half of the meat/meat alternate requirement for lunch or supper. Therefore, nuts or seeds must be combined with another meat/meat alternate to fulfill the requirement. For the supplemental food pattern, nuts or seeds may be used to fulfill all of the meat/meat alternate requirement.</P> <P>(f) <E T="03">Exceptions to and variations from the meal pattern.—</E>(1) <E T="03">Meals provided by school food authorities.—</E>(i) <E T="03">Meal pattern substitution.</E> School food authorities that are Program sponsors and that participate in the National School Lunch or School Breakfast Program during any time of the year may substitute the meal pattern requirements of the regulations governing those programs (Parts 210 and 220 of this chapter, respectively) for the meal pattern requirements in this section.</P> <P>(ii) <E T="03">Offer versus serve.</E> School food authorities that are Program sponsors may permit a child to refuse one or more items that the child does not intend to eat. The school food authority must apply this “offer versus serve” option under the rules followed for the National School Lunch Program, as described in part 210 of this chapter. The reimbursements to school food authorities for Program meals served under the “offer versus serve” must not be reduced because children choose not to take all components of the meals that are offered.</P> <P>(2) <E T="03">Children under 6.</E> The State agency may authorize the sponsor to serve food in smaller quantities than are indicated in paragraph (d) of this section to children under six years of age if the sponsor has the capability to ensure that variations in portion size are in accordance with the age levels of the children served. Sponsors wishing to serve children under one year of age shall first receive approval to do so from the State agency. In both cases, the sponsor shall follow the age-appropriate meal pattern requirements contained in the Child and Adult Care Food Program regulations (7 CFR part 226).</P> <P>(3) <E T="03">Statewide substitutions.</E> In American Samoa, Puerto Rico, Guam, the Virgin Islands, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands, the following variations from the meal requirements are authorized: A serving of a starchy vegetable—such as ufi, tanniers, yams, plantains, or sweet potatoes—may be substituted for the bread requirements.</P> <P>(4) <E T="03">Individual substitutions.</E> Substitutions may be made by sponsors in food listed in paragraph (d) of this section if individual participating children are unable, because of medical or other special dietary needs, to consume such foods. Such substitutions shall be made only when supported by a statement from a recognized medical authority which includes recommended alternate foods. Such statement shall be kept on file by the sponsor.</P> <P>(5) <E T="03">Special variations.</E> FNS may approve variations in the food components of the meals on an experimental or a continuing basis for any sponsor where there is evidence that such variations are nutritionally sound and are necessary to meet ethnic, religious, economic, or physical needs.</P> <P>(6) <E T="03">Temporary unavailability of milk.</E> If emergency conditions prevent a sponsor normally having a supply of milk from temporarily obtaining milk deliveries, the State agency may approve the service of breakfasts, lunches or suppers without milk during the emergency period.</P> <P>(7) <E T="03">Continuing unavailability of milk.</E> The inability of a sponsor to obtain a supply of milk on a continuing basis shall not bar it from participation in the Program. In such cases, the State agency may approve service of meals without milk, provided that an equivalent amount of canned, whole dry or nonfat dry milk is used in the preparation of the milk components set forth in paragraph (d) of this section. In addition, the State agency may approve <PRTPAGE P="155"/>the use of nonfat dry milk in meals served to children participating in activities which make the service of fluid milk impracticable, and in locations which are unable to obtain fluid milk. Such authorization shall stipulate that nonfat dry milk be reconstituted at normal dilution and under sanitary conditions consistent with State and local health regulations.</P> <P>(8) <E T="03">Additional foods.</E> To improve the nutrition of participating children, additional foods may be served with each meal.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 54 FR 27153, June 28, 1989; Amdt. 2, 55 FR 1377, Jan. 14, 1990; 55 FR 13470, Apr. 10, 1990; 61 FR 37672, July 19, 1996; 62 FR 10191, Mar. 6, 1997; 64 FR 72487, Dec. 28, 1999; 64 FR 72487, Dec. 28, 1999; 65 FR 12437, Mar. 9, 2000; 65 FR 82251, Dec. 28, 2000]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—General Administrative Provisions</HD> <SECTION> <SECTNO>§ 225.17</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <P>(a) State agencies and sponsors shall comply with the standards prescribed in the Department's Uniform Federal Assistance Regulations at 7 CFR part 3015, subpart S, in the procurement of food, supplies, goods, and other services with Program payments.</P> <P>(b) The State agency shall make available to sponsors information on 7 CFR part 3015.</P> <P>(c) Sponsors may use their own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with Program funds conform with provisions of this section, as well as with procurement requirements which may be established by the State agency, with approval of FNS, to prevent fraud, waste, and Program abuse.</P> <P>(d) The State agency shall ensure that all sponsors are aware of the following practices specified in 7 CFR part 3015, with respect to minority business enterprises:</P> <P>(1) Including qualified minority business enterprises on solicitation lists,</P> <P>(2) Soliciting minority business enterprises whenever they are potential sources,</P> <P>(3) When economically feasible, dividing total requirements into smaller tasks or quantities so as to permit maximum participation by minority business enterprises,</P> <P>(4) Establishing delivery schedules which will assist minority business enterprises to meet deadlines, and</P> <P>(5) Using the services and assistance of the Small Business Administration, and the Office of Minority Business Enterprise of the Department of Commerce as required.</P> </SECTION> <SECTION> <SECTNO>§ 225.18</SECTNO> <SUBJECT>Miscellaneous administrative provisions.</SUBJECT> <P>(a) <E T="03">Grant closeout procedures</E>. Grant closeout procedures for the Program shall be in accordance with the Department's Uniform Federal Assistance Regulations (7 CFR part 3015), subpart N.</P> <P>(b) <E T="03">Termination for cause</E>. (1) FNS may terminate a State agency's participation in the Program in whole, or in part, whenever it is determined that the State agency has failed to comply with the conditions of the Program. FNS shall promptly notify the State agency in writing of the termination and reason for the termination, together with the effective date, and shall allow the State 30 calendar days to respond. In instances where the State does respond, FNS shall inform the State of its final determination no later than 30 calendar days after the State responds.</P> <P>(2) A State agency shall terminate a sponsor's participation in the Program by written notice whenever it is determined by the State agency that the sponsor has failed to comply with the conditions of the Program.</P> <P>(3) When participation in the Program has been terminated for cause, any funds paid to the State agency or a sponsor or any recoveries by FNS from the State agency or by the State agency from a sponsor shall be in accordance with the legal rights and liabilities of the parties.</P> <P>(c) <E T="03">Termination for convenience</E>. FNS and the State agency may agree to terminate the State agency's participation in the Program in whole, or in part, when both parties agree that the continuation of the Program would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, including <PRTPAGE P="156"/>the effective date, and in the case of partial termination, the portion to be terminated. The State agency shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the State agency for the Federal share of the noncancellable obligation properly incurred by the State agency prior to termination. A State agency may terminate a sponsor's participation in the manner provided for in this paragraph.</P> <P>(d) <E T="03">Maintenance of effort</E>. Expenditure of funds from State and local sources for the maintenance of food programs for children shall not be diminished as a result of funds received under the Act and a certification to this effect shall become part of the agreement provided for in § 225.3(c).</P> <P>(e) <E T="03">Program benefits</E>. The value of benefits and assistance available under the Program shall not be considered as income or resources of recipients and their families for any purpose under Federal, State or local laws, including, but not limited to, laws relating to taxation, welfare, and public assistance programs.</P> <P>(f) <E T="03">State requirements</E>. Nothing contained in this part shall prevent a State agency from imposing additional operating requirements which are not inconsistent with the provisions of this part, provided that such additional requirements shall not deny the Program to an area in which poor economic conditions exist, and shall not result in a significant number of needy children not having access to the Program. Prior to imposing any additional requirements, the State agency must receive approval from FNSRO.</P> <P>(g) <E T="03">Fraud penalty</E>. Whoever embezzles, willfully misapplies, steals, or obtains by fraud any funds, assets, or property that are the subject of a grant or other form of assistance under this part, whether received directly or indirectly from the Department, or whoever receives, conceals, or retains such funds, assets, or property to his use or gain, knowing such funds, assets, or property have been embezzled, willfully misapplied, stolen or obtained by fraud shall, if such funds, assets, or property are of the value of $100 or more, be fined not more than $100,000 or imprisoned not more than five years, or both, or if such funds, assets, or property are of a value of less than $100, shall be fined not more than $1,000 or imprisoned for not more than one year, or both.</P> <P>(h) <E T="03">Claims adjustment authority</E>. The Secretary shall have the authority to determine the amount of, to settle, and to adjust any claim arising under the Program, and to compromise or deny such claim or any part thereof. The Secretary shall also have the authority to waive such claims if the Secretary determines that to do so would serve the purposes of the Program. This provision shall not diminish the authority of the Attorney General of the United States under section 516 of title 28, U.S. Code, to conduct litigation on behalf of the United States.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13471, Apr. 10, 1990; 64 FR 72488, Dec. 28, 1999]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.19</SECTNO> <SUBJECT>Regional office addresses.</SUBJECT> <P>Persons desiring information concerning the Program may write to the appropriate State agency or Regional Office of FNS as indicated below:</P> <P>(a) In the States of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont: Northeast Regional Office, FNS, U.S. Department of Agriculture, 10 Causeway Street, Room 501, Boston, MA 02222-1065.</P> <P>(b) In the States of Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Puerto Rico, Virginia, Virgin Islands, and West Virginia: Mid-Atlantic Regional Office, FNS, U.S. Department of Agriculture, Mercer Corporate Park, 300 Corporate Boulevard, Robbinsville, NJ 08691-1598.</P> <P>(c) In the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee: Southeast Regional Office, FNS, U.S. Department of Agriculture, 61 Forsyth Street, SW., Room 8T36, Atlanta, GA 30303-3415.</P> <P>(d) In the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin: Midwest Regional Office, FNS, U.S. Department of Agriculture, 77 West Jackson Boulevard, 20th Floor, Chicago, IL 60604-3507.<PRTPAGE P="157"/> </P> <P>(e) In the States of Arkansas, Louisiana, New Mexico, Oklahoma and Texas: Southwest Regional Office, FNS, U.S. Department of Agriculture, 1100 Commerce Street, Room 5-C-30, Dallas, TX 75242-9980.</P> <P>(f) In the States of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, North Dakota, South Dakota, Utah and Wyoming: Mountain Plains Regional Office, FNS, U.S. Department of Agriculture, 1244 Speer Boulevard, Suite 903, Denver, CO 80204-3581.</P> <P>(g) In the States of Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, the Commonwealth of the Northern Mariana Islands, and Washington: Western Regional Office, FNS, U.S. Department of Agriculture, 550 Kearney Street, Room 400, San Francisco, CA 94108-2518.</P> <CITA>[54 FR 18208, Apr. 27, 1989, as amended at 55 FR 13471, Apr. 10, 1990; 65 FR 12439, Mar. 9, 2000; 65 FR 82251, Dec. 28, 2000]</CITA> </SECTION> <SECTION> <SECTNO>§ 225.20</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <GPOTABLE CDEF="s25,10" COLS="2" OPTS="L2,i1"> <BOXHD> <CHED H="1">7 CFR section where requirements are described</CHED> <CHED H="1">Current OMB control No.</CHED> </BOXHD> <ROW> <ENT I="01">225.3-225.4.</ENT> <ENT>0584-0280</ENT> </ROW> <ROW> <ENT I="01">225.6-225.10</ENT> <ENT>0584-0280</ENT> </ROW> <ROW> <ENT I="01">225.12-225.13</ENT> <ENT>0584-0280</ENT> </ROW> <ROW> <ENT I="01">225.15-225.18</ENT> <ENT>0584-0280</ENT> </ROW> </GPOTABLE> <CITA>[61 FR 25554, May 22, 1996]</CITA> </SECTION> <APPENDIX> <EAR>Pt. 225, App. A</EAR> <HD SOURCE="HED">Appendix A to Part 225—Alternate Foods for Meals</HD> <HD SOURCE="HD1">Alternate Protein Products</HD> <HD SOURCE="HD2">A. What Are the Criteria for Alternate Protein Products Used in the Summer Food Service Program?</HD> <P>1. An alternate protein product used in meals planned under the provisions in § 225.16 must meet all of the criteria in this section.</P> <P>2. An alternate protein product whether used alone or in combination with meat or other meat alternates must meet the following criteria:</P> <P>a. The alternate protein product must be processed so that some portion of the non-protein constituents of the food is removed. These alternate protein products must be safe and suitable edible products produced from plant or animal sources.</P> <P>b. The biological quality of the protein in the alternate protein product must be at least 80 percent that of casein, determined by performing a Protein Digestibility Corrected Amino Acid Score (PDCAAS).</P> <P>c. The alternate protein product must contain at least 18 percent protein by weight when fully hydrated or formulated. (“When hydrated or formulated” refers to a dry alternate protein product and the amount of water, fat, oil, colors, flavors or any other substances which have been added).</P> <P>d. Manufacturers supplying an alternate protein product to participating schools or institutions must provide documentation that the product meets the criteria in paragraphs A. 2. a through c of this appendix.</P> <P>e. Manufacturers should provide information on the percent protein contained in the dry alternate protein product and on an as prepared basis.</P> <P>f. For an alternate protein product mix, manufacturers should provide information on:</P> <P>(1) The amount by weight of dry alternate protein product in the package;</P> <P>(2) Hydration instructions; and</P> <P>(3) Instructions on how to combine the mix with meat or other meat alternates.</P> <HD SOURCE="HD2">B. How Are Alternate Protein Products Used in the Summer Food Service Program?</HD> <P>1. Schools, institutions, and service institutions may use alternate protein products to fulfill all or part of the meat/meat alternate component discussed in § 225.20.</P> <P>2. The following terms and conditions apply:</P> <P>a. The alternate protein product may be used alone or in combination with other food ingredients. Examples of combination items are beef patties, beef crumbles, pizza topping, meat loaf, meat sauce, taco filling, burritos, and tuna salad.</P> <P>b. Alternate protein products may be used in the dry form (nonhydrated), partially hydrated or fully hydrated form. The moisture content of the fully hydrated alternate protein product (if prepared from a dry concentrated form) must be such that the mixture will have a minimum of 18 percent protein by weight or equivalent amount for the dry or partially hydrated form (based on the level that would be provided if the product were fully hydrated).</P> <HD SOURCE="HD2">C. How Are Commercially Prepared Products Used in the Summer Food Service Program?</HD> <P>Schools, institutions, and service institutions may use a commercially prepared meat or meat alternate products combined with alternate protein products or use a commercially prepared product that contains only alternate protein products.</P> <CITA>[65 FR 12439, Mar. 9, 2000]</CITA> </APPENDIX> <APPENDIX> <PRTPAGE P="158"/> <RESERVED>Appendix B to Part 225 [Reserved]</RESERVED> </APPENDIX> <APPENDIX> <EAR>Pt. 225, App. C</EAR> <HD SOURCE="HED">Appendix C to Part 225—Child Nutrition (CN) Labeling Program</HD> <P>1. The Child Nutrition (CN) Labeling Program is a voluntary technical assistance program administered by the Food and Nutrition Service (FNS) in conjunction with the Food Safety and Inspection Service (FSIS) and Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA), and National Marine Fisheries Service of the U.S. Department of Commerce (USDC) for the Child Nutrition Programs. This program essentially involves the review of a manufacturer's recipe or product formulation to determine the contribution a serving of a commercially prepared product makes toward meal pattern requirements and a review of the CN label statement to ensure its accuracy. CN labeled products must be produced in accordance with all requirements set forth in this rule.</P> <P>2. Products eligible for CN labels are as follows:</P> <P>(a) Commercially prepared food products that contribute significantly to the meat/meat alternate component of meal pattern requirements of 7 CFR 210.10, 225.16, and 226.20 and are served in the main dish.</P> <P>(b) Juice drinks and juice drink products that contain a minimum of 50 percent full strength juice by volume.</P> <P>3. For the purpose of this appendix the following definitions apply:</P> <P>(a) <E T="03">CN label</E> is a food product label that contains a CN label statement and CN logo as defined in paragraph 3(b) and (c) below.</P> <P>(b) The <E T="03">CN logo</E> (as shown below) is a distinct border which is used around the edges of a “CN label statement” as defined in paragraph 3(c).</P> <GPH DEEP="83" SPAN="2"> <GID>EC17SE91.006</GID> </GPH> <P>(c) The <E T="03">CN label statement</E> includes the following:</P> <P>(1) The product identification number (assigned by FNS);</P> <P>(2) The statement of the product's contribution toward meal pattern requirements of 7 CFR 210.10, 220.8, 225.16, and 226.20. The statement shall identify the contribution of a specific portion of a meat/meat alternate product toward the meat/meat alternate, bread/bread alternate, and/or vegetable/fruit component of the meal pattern requirements. For juice drinks and juice drink products the statement shall identify their contribution toward the vegetable/fruit component of the meal pattern requirements.</P> <P>(3) Statement specifying that the use of the CN logo and CN statement was authorized by FNS, and</P> <P>(4) The approval date.</P> <P>For example:</P> <GPH DEEP="64" SPAN="2"> <GID>EC17SE91.007</GID> </GPH> <P>(d) <E T="03">Federal inspection</E> means inspection of food products by FSIS, AMS or USDC.</P> <P>4. Food processors or manufacturers may use the CN label statement and CN logo as defined in paragraph 3 (b) and (c) under the following terms and conditions:</P> <P>(a) The CN label must be reviewed and approved at the national level by the Food and Nutrition Service and appropriate USDA or <PRTPAGE P="159"/>USDC Federal agency responsible for the inspection of the product.</P> <P>(b) The CN labeled product must be produced under Federal inspection by USDA or USDC. The Federal inspection must be performed in accordance with an approved partial or total quality control program or standards established by the appropriate Federal inspection service.</P> <P>(c) The CN label statement must be printed as an integral part of the product label along with the product name, ingredient listing, the inspection shield or mark for the appropriate inspection program, the establishment number where appropriate and the manufacturer's or distributor's name and address.</P> <P>(1) The inspection marking for CN labeled non-meat, non-poultry, and non-seafood products with the exception of juice drinks and juice drink products is established as follows:</P> <GPH DEEP="42" SPAN="1"> <GID>EC17SE91.008</GID> </GPH> <P>(d) Yields for determining the product's contribution toward meal pattern requirements must be calculated using the Food Buying Guide for Child Nutrition Programs (Program Aid Number 1331).</P> <P>5. In the event a company uses the CN logo and CN label statement inappropriately, the company will be directed to discontinue the use of the logo and statement and the matter will be referred to the appropriate agency for action to be taken against the company.</P> <P>6. Products that bear a CN label statement as set forth in paragraph 3(c) carry a warranty. This means that if a food service authority participating in the child nutrition programs purchases a CN labeled product and uses it in accordance with the manufacturer's directions, the school or institution will not have an audit claim filed against it for the CN labeled product for noncompliance with the meal pattern requirements of 7 CFR 210.10, 220.8, 225.16, and 226.20. If a State or Federal auditor finds that a product that is CN labeled does not actually meet the meal pattern requirements claimed on the label, the auditor will report this finding to FNS. FNS will prepare a report on the findings and send it to the appropriate divisions of FSIS and AMS of the USDA, National Marine Fisheries Service of the USDC, Food and Drug Administration, or the Department of Justice for action against the company. Any or all of the following courses of action may be taken: (a) The company's CN label may be revoked for a specific period of time; (b) The appropriate agency may pursue a misbranding or mislabeling action against the company producing the product; (c) The company's name will be circulated to regional FNS offices; and (d) FNS will require the food service program involved to notify the State agency of the labeling violation.</P> <P>7. FNS is authorized to issue operational policies, procedures, and instructions for the CN Labeling Program. To apply for a CN label and to obtain additional information on CN label application procedures, write to: CN Labels, U.S. Department of Agriculture, Food and Nutrition Service, Nutrition and Technical Services Division, 3101 Park Center Drive, Alexandria, Virginia 22302.</P> </APPENDIX> </SUBPART> </PART> <PART> <EAR>Pt. 226</EAR> <HD SOURCE="HED">PART 226—CHILD AND ADULT CARE FOOD PROGRAM</HD> <CONTENTS> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECHD>Sec.</SECHD> <SECTNO>226.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <SECTNO>226.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <SECTNO>226.3</SECTNO> <SUBJECT>Administration.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Assistance to States</HD> <SECTNO>226.4</SECTNO> <SUBJECT>Payments to States and use of funds.</SUBJECT> <SECTNO>226.5</SECTNO> <SUBJECT>Donation of commodities.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—State Agency Provisions</HD> <SECTNO>226.6</SECTNO> <SUBJECT>State agency administrative responsibilities.</SUBJECT> <SECTNO>226.7</SECTNO> <SUBJECT>State agency responsibilities for financial management.</SUBJECT> <SECTNO>226.8</SECTNO> <SUBJECT>Audits.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Payment Provisions</HD> <SECTNO>226.9</SECTNO> <SUBJECT>Assignment of rates of reimbursement for centers.</SUBJECT> <SECTNO>226.10</SECTNO> <SUBJECT>Program payment procedures.</SUBJECT> <SECTNO>226.11</SECTNO> <SUBJECT>Program payments for child care centers, adult day care centers and outside-school-hours care centers.</SUBJECT> <SECTNO>226.12</SECTNO> <SUBJECT>Administrative payments to sponsoring organizations for day care homes.</SUBJECT> <SECTNO>226.13</SECTNO> <SUBJECT>Food service payments to sponsoring organizations for day care homes.</SUBJECT> <SECTNO>226.14</SECTNO> <SUBJECT>Claims against institutions.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Operational Provisions</HD> <SECTNO>226.15</SECTNO> <SUBJECT>Institution provisions.</SUBJECT> <SECTNO>226.16</SECTNO> <SUBJECT>Sponsoring organization provisions.</SUBJECT> <SECTNO>226.17</SECTNO> <SUBJECT>Child care center provisions.</SUBJECT> <SECTNO>226.18</SECTNO> <SUBJECT>Day care home provisions.</SUBJECT> <SECTNO>226.19</SECTNO> <SUBJECT>Outside-school-hours care center provisions.</SUBJECT> <SECTNO>226.19a</SECTNO> <SUBJECT>Adult day care center provisions.</SUBJECT> <SECTNO>226.20</SECTNO> <SUBJECT>Requirements for meals.</SUBJECT> <SECTNO>226.21</SECTNO> <SUBJECT>Food service management companies.</SUBJECT> <SECTNO>226.22</SECTNO> <SUBJECT>Procurement standards.</SUBJECT> <SECTNO>226.23</SECTNO> <SUBJECT>Free and reduced-price meals.</SUBJECT> </SUBPART> <SUBPART> <PRTPAGE P="160"/> <HD SOURCE="HED">Subpart F—Food Service Equipment Provisions</HD> <SECTNO>226.24</SECTNO> <SUBJECT>Property management requirements.</SUBJECT> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart G—Other Provisions</HD> <SECTNO>226.25</SECTNO> <SUBJECT>Other provisions.</SUBJECT> <SECTNO>226.26</SECTNO> <SUBJECT>Program information.</SUBJECT> <SECTNO>226.27</SECTNO> <SUBJECT>Information collection/recordkeeping—OMB assigned control numbers.</SUBJECT> <APP>Appendix A to Part 226—Alternate Foods for Meals</APP> <APP>Appendix B to Part 226 [Reserved]</APP> <APP>Appendix C to Part 226—Child Nutrition (CN) Labeling Program</APP> </SUBPART> </CONTENTS> <AUTH> <HD SOURCE="HED">Authority:</HD> <P>Secs. 9, 11, 14, 16, and 17, Richard B. Russell National School Lunch Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 1765 and 1766).</P> </AUTH> <SOURCE> <HD SOURCE="HED">Source:</HD> <P>47 FR 36527, Aug. 20, 1982, unless otherwise noted.</P> </SOURCE> <SUBPART> <HD SOURCE="HED">Subpart A—General</HD> <SECTION> <SECTNO>§ 226.1</SECTNO> <SUBJECT>General purpose and scope.</SUBJECT> <P>This part announces the regulations under which the Secretary of Agriculture will carry out the Child and Adult Care Food Program. Section 17 of the National School Lunch Act, as amended, authorizes assistance to States through grants-in-aid and other means to initiate, maintain, and expand nonprofit food service programs for children or adult participants in nonresidential institutions which provide care. The Program is intended to enable such institutions to integrate a nutritious food service with organized care services for enrolled participants. Payments will be made to State agencies or FNS Regional Offices to enable them to reimburse institutions for food service to enrolled participants.</P> <CITA>[53 FR 52587, Dec. 28, 1988, as amended by Amdt. 22, 55 FR 1377, Jan. 14, 1990]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.2</SECTNO> <SUBJECT>Definitions.</SUBJECT> <P> <E T="03">AFDC assistance unit</E> means any individual or group of individuals which is currently certified to receive assistance under the Aid to Families with Dependent Children Program in a State where the standard of eligibility for AFDC benefits does not exceed the income eligibility guidelines for free meals under this part.</P> <P> <E T="03">Act</E> means the National School Lunch Act, as amended.</P> <P> <E T="03">Administrative costs</E> means costs incurred by an institution related to planning, organizing, and managing a food service under the Program, and allowed by the State agency financial management instruction. These administrative costs may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.</P> <P> <E T="03">Administrative review</E> means the fair hearing provided upon request to:</P> <P>(a) An institution that has been given notice by the State agency of any action or proposed action that will affect their participation or reimbursement under the Program, in accordance with § 226.6(k);</P> <P>(b) A principal or individual responsible for an institution's serious deficiency after the responsible principal or responsible individual has been given a notice of intent to disqualify them from the Program; and</P> <P>(c) A day care home that has been given a notice of proposed termination for cause.</P> <P> <E T="03">Administrative review official</E> means the independent and impartial official who conducts the administrative review held in accordance with § 226.6(k).</P> <P> <E T="03">Adult</E> means, for the purposes of the collection of social security numbers as a condition of eligibility for free or reduced-price meals, any individual 21 years of age or older.</P> <P> <E T="03">Adult day care center</E> means any public or private nonprofit organization or any proprietary title XIX or title XX center (as defined in this section) which (a) is licensed or approved by Federal, State or local authorities to provide nonresidential adult day care services to functionally impaired adults (as defined in this section) or persons 60 years of age or older in a group setting outside their homes or a group living arrangement on a less than 24-hour basis and (b) provides for such care and services directly or under arrangements made by the agency or organization whereby the agency or organization maintains professional management responsibility for all such services. Such centers shall provide a structured, comprehensive program that provides a variety of health, social <PRTPAGE P="161"/>and related support services to enrolled adult participants through an individual plan of care.</P> <P> <E T="03">Adult day care facility</E> means a licensed or approved adult day care center under the auspices of a sponsoring organization.</P> <P> <E T="03">Adult participant</E> means a person enrolled in an adult day care center who is functionally impaired (as defined in this section) or 60 years of age or older.</P> <P> <E T="03">Advanced payments</E> means financial assistance made available to an institution for its Program costs prior to the month in which such costs will be incurred.</P> <P> <E T="03">CACFP child care standards</E> means the Child and Adult Care Food Program child care standards developed by the Department for alternate approval of child care centers, outside-school-hours care centers, and day care homes by the State agency under the provisions of § 226.6(d)(2) and (3).</P> <P> <E T="03">Center</E> means a child care center, an adult day care center, or an outside-school-hours care center.</P> <P> <E T="03">Child care center</E> means any public or private nonprofit organization, or any proprietary title XX center, as defined in this section (“Proprietary title XX center”), licensed or approved to provide nonresidential child care services to enrolled children, primarily of preschool age, including but not limited to day care centers, settlement houses, neighborhood centers, Head Start centers and organizations providing day care services for children with handicaps. Child care centers may participate in the Program as independent centers or under the auspices of a sponsoring organization.</P> <P> <E T="03">Child care facility</E> means a licensed or approved child care center, day care home, or outside-school-hours care center under the auspices of a sponsoring organization.</P> <P> <E T="03">Children</E> means (a) persons 12 years of age and under, (b) children of migrant workers 15 years of age and under, and (c) persons with mental or physical handicaps, as defined by the State, enrolled in an institution or a child care facility serving a majority of persons 18 years of age and under.</P> <P> <E T="03">Claiming percentage</E> means the ratio of the number of enrolled participants in an institution in each reimbursement category (free, reduced-price or paid) to the total of enrolled participants in the institution.</P> <P> <E T="03">Current income</E> means income received during the month prior to application for free or reduced-price meals. If such income does not accurately reflect the household's annual income, income shall be based on the projected annual household income. If the prior year's income provides an accurate reflection of the household's current annual income, the prior year may be used as a base for the projected annual income.</P> <P> <E T="03">Day care home</E> means an organized nonresidential child care program for children enrolled in a private home, licensed or approved as a family or group day care home and under the auspices of a sponsoring organization.</P> <P> <E T="03">Days</E> means calendar days unless otherwise specified. </P> <P> <E T="03">Department</E> means the U.S. Department of Agriculture.</P> <P> <E T="03">Disclosure</E> means individual children's program eligibility information obtained through the free and reduced price meal eligibility process that is revealed or used for a purpose other than for the purpose for which the information was obtained. The term refers to access, release, or transfer of personal data about children by means of print, tape, microfilm, microfiche, electronic communication or any other means.</P> <P> <E T="03">Disqualified</E> means the status of an institution, a responsible principal or responsible individual, or a day care home that is ineligible for participation. </P> <P> <E T="03">Documentation</E> means:</P> <P>(a) The completion of the following information on a free and reduced-price application:</P> <P>(1) Names of all household members;</P> <P>(2) Income received by each household member, identified by source of income (such as earnings, wages, welfare, pensions, support payments, unemployment compensation, social security and other cash income);</P> <P>(3) The signature of an adult household member; and</P> <P>(4) The social security number of the adult household member who signs the application, or an indication that he/<PRTPAGE P="162"/>she does not possess a social security number; or</P> <P>(b) For a child who is a member of a food stamp or FDPIR household or an AFDC assistance unit, “documentation” means the completion of only the following information on a free and reduced price application:</P> <P>(1) The name(s) and appropriate food stamp, FDPIR or AFDC case number(s) for the child(ren); and</P> <P>(2) The signature of an adult member of the household; or</P> <P>(c) For a child in a tier II day care home who is a member of a household participating in a Federally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility standard for free or reduced price meals:</P> <P>(1) The name(s), appropriate case number(s) (if the program utilizes case numbers), and name(s) of the qualifying program(s) for the child(ren), and the signature of an adult member of the household; or</P> <P>(2) If the sponsoring organization or day care home possesses it, official evidence of the household's participation in a qualifying program (submission of a free and reduced price application by the household is not required in this case); or</P> <P>(d) For an adult participant who is a member of a food stamp or FDPIR household or is an SSI or Medicaid participant, as defined in this section, “documentation” means the completion of only the following information on a free and reduced price application:</P> <P>(1) The name(s) and appropriate food stamp or FDPIR case number(s) for the participant(s) or the adult participant's SSI or Medicaid identification number, as defined in this section; and</P> <P>(2) The signature of an adult member of the household; or</P> <P>(e) For a child who is a Head Start participant, the Head Start statement of income eligibility issued upon initial enrollment in the Head Start Program or, if such statement is unavailable, other documentation from Head Start officials that the child's family meets the Head Start Program's low-income criteria.</P> <P> <E T="03">Emergency shelter</E> means a public or private nonprofit organization whose primary purpose is to provide temporary shelter and food services to homeless families with children.</P> <P> <E T="03">Enrolled child</E> means a child whose parent or guardian has submitted to an institution a signed document which indicates that the child is enrolled for child care. In addition, for the purposes of calculations made by sponsoring organizations of family day care homes in accordance with §§ 226.13(d)(3)(ii) and 226.13(d)(3)(iii), “enrolled child” (or “child in attendance”) means a child whose parent or guardian has submitted a signed document which indicates that the child is enrolled for child care; who is present in the day care home for the purpose of child care; and who has eaten at least one meal during the claiming period.</P> <P> <E T="03">Enrolled participant</E> means an “Enrolled child” (as defined in this section) or “Adult participant” (as defined in this section).</P> <P> <E T="03">Expansion payments</E> means financial assistance made available to a sponsoring organization for its administrative expenses associated with expanding a food service program to day care homes located in low-income or rural areas. These expansion payments may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.</P> <P> <E T="03">Facility</E> means a sponsored center or a family day care home.</P> <P> <E T="03">Family</E> means, in the case of children, a group of related or nonrelated individuals, who are not residents of an institution or boarding house, but who are living as one economic unit or, in the case of adult participants, the adult participant, and if residing with the adult participant, the spouse and dependent(s) of the adult participant.</P> <P> <E T="03">FDPIR household</E> means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Distribution Program on Indian Reservations.</P> <P> <E T="03">Fiscal Year</E> means a period of 12 calendar months beginning October 1 of any year and ending with September 30 of the following year.</P> <P> <E T="03">FNS</E> means the Food and Nutrition Service of the Department.<PRTPAGE P="163"/> </P> <P> <E T="03">FNSRO</E> means the appropriate Regional Office of the Food and Nutrition Service.</P> <P> <E T="03">Food service equipment assistance</E> means Federal financial assistance formerly made available to State agencies to assist institutions in the purchase or rental of equipment to enable institutions to establish, maintain or expand food service under the Program.</P> <P> <E T="03">Food service management company</E> means an organization other than a public or private nonprofit school, with which an institution may contract for preparing and, unless otherwise provided for, delivering meals, with or without milk for use in the Program.</P> <P> <E T="03">Food Stamp household</E> means any individual or group of individuals which is currently certified to receive assistance as a household under the Food Stamp Program.</P> <P> <E T="03">Free meal</E> means a meal served under the Program to a participant from a family which meets the income standards for free school meals; or to a child who is automatically eligible for free meals by virtue of food stamp, FDPIR, or AFDC recipiency; or to a child who is a Head Start participant; or to an adult participant who is automatically eligible for free meals by virtue of food stamp or FDPIR recipiency or is a SSI or Medicaid participant. Regardless of whether the participant qualified for free meals by virtue of meeting one of the criteria of this definition, neither the participant nor any member of their family shall be required to pay or to work in the food service program in order to receive a free meal.</P> <P> <E T="03">Functionally impaired adult</E> means chronically impaired disabled persons 18 years of age or older, including victims of Alzheimer's disease and related disorders with neurological and organic brain dysfunction, who are physically or mentally impaired to the extent that their capacity for independence and their ability to carry out activities of daily living is markedly limited. Activities of daily living include, but are not limited to, adaptive activities such as cleaning, shopping, cooking, taking public transportation, maintaining a residence, caring appropriately for one's grooming or hygiene, using telephones and directories, or using a post office. Marked limitations refer to the severity of impairment, and not the number of limited activities, and occur when the degree of limitation is such as to seriously interfere with the ability to function independently.</P> <P> <E T="03">Group living arrangement</E> means residential communities which may or may not be subsidized by federal, State or local funds but which are private residences housing an individual or a group of individuals who are primarily responsible for their own care and who maintain a presence in the community but who may receive on-site monitoring.</P> <P> <E T="03">Household</E> means “family”, as defined in § 226.2 (“Family”).</P> <P> <E T="03">Head Start participant</E> means a child currently receiving assistance under a Federally-funded Head Start Program who is categorically eligible for free meals in the CACFP by virtue of meeting Head Start's low-income criteria.</P> <P> <E T="03">Income standards</E> means the family-size and income standards prescribed annually by the Secretary for determining eligibility for free and reduced-price meals under the National School Lunch Program and the School Breakfast Program.</P> <P> <E T="03">Income to the program</E> means any funds used in an institution's food service program, including, but not limited to all monies, other than Program payments, received from other Federal, State, intermediate, or local government sources; participant's payments for meals and food service fees; income from any food sales to adults; and other income, including cash donations or grants from organizations or individuals.</P> <P> <E T="03">Independent center</E> means a child care center, outside-school-hours care center or adult day care center which enters into an agreement with the State agency to assume final administrative and financial responsibility for Program operations.</P> <P> <E T="03">Infant cereal</E> means any iron-fortified dry cereal specially formulated for and generally recognized as cereal for infants that is routinely mixed with breast milk or iron-fortified infant formula prior to consumption.</P> <P> <E T="03">Infant formula</E> means any iron-fortified formula intended for dietary use <PRTPAGE P="164"/>solely as a food for normal, healthy infants; excluding those formulas specifically formulated for infants with inborn errors of metabolism or digestive or absorptive problems. Infant formula, as served, must be in liquid state at recommended dilution.</P> <P> <E T="03">Institution</E> means a sponsoring organization, child care center, outside-school-hours care center, emergency shelter or adult day care center which enters into an agreement with the State agency to assume final administrative and financial responsibility for Program operations.</P> <P> <E T="03">Internal controls</E> means the policies, procedures, and organizational structure of an institution designed to reasonably assure that:</P> <P>(a) The Program achieves its intended result;</P> <P>(b) Program resources are used in a manner that protects against fraud, abuse, and mismanagement and in accordance with law, regulations, and guidance; and</P> <P>(c) Timely and reliable Program information is obtained, maintained, reported, and used for decision-making.</P> <P> <E T="03">Key Element Reporting System</E> (KERS) means a comprehensive national system for reporting critical key element performance data on the operation of the program in institutions.</P> <P> <E T="03">Low-income area</E> means a geographical area in which at least 50 percent of the children are eligible for free or reduced price school meals under the National School Lunch Program and the School Breakfast Program, as determined in accordance with paragraphs (b) and (c), definition of tier I day care home.</P> <P> <E T="03">Meals</E> means food which is served to enrolled participants at an institution, child care facility or adult day care facility and which meets the nutritional requirements set forth in this part.</P> <P> <E T="03">Medicaid</E> means <E T="03">Title XIX</E> of the Social Security Act.</P> <P> <E T="03">Medicaid participant</E> means an adult participant who receives assistance under title XIX of the Social Security Act, the Grant to States for Medical Assistance Programs—Medicaid.</P> <P> <E T="03">Milk</E> means pasteurized fluid types of unflavored or flavored whole milk, lowfat milk, skim milk, or cultured buttermilk which meet State and local standards for such milk, except that, in the meal pattern for infants (0 to 1 year of age), milk means breast milk or iron-fortified infant formula. In Alaska, Hawaii, American Samoa, Guam, Puerto Rico, the Trust Territory of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands if a sufficient supply of such types of fluid milk cannot be obtained, “milk” shall include reconstituted or recombined milk. All milk should contain vitamins A and D at levels specified by the Food and Drug Administration and be consistent with State and local standards for such milk.</P> <P> <E T="03">National disqualified list</E> means the list, maintained by the Department, of institutions, responsible principals and responsible individuals, and day care homes disqualified from participation in the Program.</P> <P> <E T="03">New institution</E> means an institution applying to participate in the Program for the first time, or an institution applying to participate in the Program after a lapse in participation. </P> <P> <E T="03">Nonpricing program</E> means an institution in which there is no separate identifiable charge made for meals served to participants.</P> <P> <E T="03">Nonprofit food service</E> means all food service operations conducted by the institution principally for the benefit of enrolled participants, from which all of the Program reimbursement funds are used solely for the operations or improvement of such food service.</P> <P> <E T="03">Nonresidential</E> means that the same participants are not maintained in care for more than 24 hours on a regular basis.</P> <P> <E T="03">Notice</E> means a letter sent by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email, that describes an action proposed or taken by a State agency or FNS with regard to an institution's Program reimbursement or participation. Notice also means a letter sent by certified mail, return receipt (or the equivalent private delivery service), by facsimile, or by email, that describes an action proposed or taken by a sponsoring organization with regard to a day care home's participation. The notice must specify the action being proposed or taken and the basis for the action, and is considered <PRTPAGE P="165"/>to be received by the institution or day care home when it is delivered, sent by facsimile, or sent by email. If the notice is undeliverable, it is considered to be received by the institution, responsible principal or responsible individual, or day care home five days after being sent to the addressee's last known mailing address, facsimile number, or email address.</P> <P> <E T="03">OIG</E> means the Office of the Inspector General of the Department.</P> <P> <E T="03">Operating costs</E> means expenses incurred by an institution in serving meals to participants under the Program, and allowed by the State agency financial management instruction.</P> <P> <E T="03">Outside-school-hours care center</E> means a public or private nonprofit organization, or a proprietary title XX center, as defined in this section (“Proprietary title XX center”), licensed or approved to provide organized nonresidential child care services to enrolled children outside of school hours. Outside-school-hours care centers may participate in the Program as independent centers or under the auspices of a sponsoring organization.</P> <P> <E T="03">Participants</E> means “Children” or “Adult participants” as defined in this section.</P> <P> <E T="03">Personal property</E> means property of any kind except real property. It may be tangible—having physical existence—or intangible—having no physical existence such as patents, inventions, and copyrights.</P> <P> <E T="03">Pricing program</E> means an institution in which a separate identifiable charge is made for meals served to participants.</P> <P> <E T="03">Principal</E> means any individual who holds a management position within, or is an officer of, an institution or a sponsored center, including all members of the institution's board of directors or the sponsored center's board of directors.</P> <P> <E T="03">Program</E> means the Child and Adult Care Food Program authorized by section 17 of the National School Lunch Act, as amended.</P> <P> <E T="03">Program payments</E> means financial assistance in the form of start-up payments, expansion payments, advance payments, or reimbursement paid or payable to institutions for operating costs and administrative costs.</P> <P> <E T="03">Proprietary title XIX center</E> means any private, for profit center (a) providing nonresidential adult day care services for which it receives compensation from amounts granted to the States under title XIX of the Social Security Act and (b) in which title XIX beneficiaries were not less than 25 percent of enrolled eligible participants in the calendar month preceding initial application or annual reapplication for Program participation.</P> <P> <E T="03">Proprietary title XX center</E> means any private, for profit center:</P> <P>(a) Providing nonresidential child care services for which it receives compensation from amounts granted to the States under title XX of the Social Security Act, and in which title XX child care beneficiaries constitute no less than 25 percent of enrolled eligible participants or licensed capacity, whichever is less, during the calendar month preceding initial application or annual reapplication for Program participation; or,</P> <P>(b) Providing nonresidential adult day care services for which it receives compensation from amounts granted to the States under title XX of the Social Security Act and in which adult beneficiaries were not less than 25 percent of enrolled eligible participants during the calendar month preceding initial application or annual reapplication for Program participation.</P> <P> <E T="03">Reduced-price meal</E> means a meal served under the Program to a participant from a family which meets the income standards for reduced-price school meals. Any separate charge imposed shall be less than the full price of the meal, but in no case more than 40 cents for a lunch or supper, 30 cents for a breakfast, and 15 cents for a supplement, and for which neither the participant nor any member of his family is required to work in the food service program.</P> <P> <E T="03">Reimbursement</E> means Federal financial assistance paid or payable to institutions for Program costs within the rates assigned by the State agency.</P> <P> <E T="03">Renewing institution</E> means an institution that is participating in the Program at the time it submits a renewal application.</P> <P> <E T="03">Responsible principal or responsible individual</E> means:<PRTPAGE P="166"/> </P> <P>(a) A principal, whether compensated or uncompensated, who the State agency or FNS determines to be responsible for an institution's serious deficiency;</P> <P>(b) Any other individual employed by, or under contract with, an institution or sponsored center, who the State agency or FNS determines to be responsible for an institution's serious deficiency; or</P> <P>(c) An uncompensated individual who the State agency or FNS determines to be responsible for an institution's serious deficiency. </P> <P> <E T="03">Rural area</E> means any geographical area in a county which is not a part of a Metropolitan Statistical Area or any “pocket” within a Metropolitan Statistical Area which, at the option of the State agency and with FNSRO concurrence, is determined to be geographically isolated from urban areas.</P> <P> <E T="03">SSI participant</E> means an adult participant who receives assistance under title XVI of the Social Security Act, the Supplemental Security Income (SSI) for the Aged, Blind and Disabled Program.</P> <P> <E T="03">School year</E> means a period of 12 calendar months beginning July 1 of any year and ending June 30 of the following year.</P> <P> <E T="03">Seriously deficient</E> means the status of an institution or a day care home that has been determined to be non-compliant in one or more aspects of its operation of the Program.</P> <P> <E T="03">Sponsoring organization</E> means a public or nonprofit private organization which is entirely responsible for the administration of the food program in: (a) One or more day care homes; (b) a child care center, outside-school-hours care centers, or adult day care center which is a legally distinct entity from the sponsoring organization; (c) two or more child care centers, outside-school-hours care centers, or adult day care centers; or (d) any combination of child care centers, adult day care centers, day care homes, and outside-school-hours care centers. The term “sponsoring organization” also includes a for-profit organization which is entirely responsible for administration of the Program in any combination of two or more child care centers, adult day care centers and outside-school-hours care centers which are part of the same legal entity as the sponsoring organization, and which are proprietary title XIX or XX centers, as defined in this section (“Proprietary Title XIX center”, “Proprietary Title XX center”).</P> <P> <E T="03">Start-up payments</E> means financial assistance made available to a sponsoring organization for its administrative expenses associated with developing or expanding a food service program in day care homes and initiating successful Program operations. These start-up payments may include administrative expenses associated with outreach and recruitment of unlicensed family or group day care homes and the allowable licensing-related expenses of such homes.</P> <P> <E T="03">State</E> means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands.</P> <P> <E T="03">State agency</E> means the State educational agency or any other State agency that has been designated by the Governor or other appropriate executive, or by the legislative authority of the State, and has been approved by the Department to administer the Program within the State or in States in which FNS administers the Program, FNSRO. This also may include a State agency other than the existing CACFP State Agency, when such agency is designated by the Governor of the State to administer only the adult day care component of the CACFP.</P> <P> <E T="03">State agency list</E> means an actual paper or electronic list, or the retrievable paper records, maintained by the State agency, that includes a synopsis of information concerning seriously deficient institutions and providers terminated for cause in that State. The list must be made available to FNS upon request, and must include the following information:</P> <P>(a) Institutions determined to be seriously deficient by the State agency, including the names and mailing addresses of the institutions, the basis for each serious deficiency determination, and the status of the institutions as <PRTPAGE P="167"/>they move through the possible subsequent stages of corrective action, proposed termination, suspension, agreement termination, and/or disqualification, as applicable;</P> <P>(b) Responsible principals and responsible individuals who have been disqualified from participation by the State agency, including their names, mailing addresses, and dates of birth; and</P> <P>(c) Day care home providers whose agreements have been terminated for cause by a sponsoring organization in the State, including their names, mailing addresses, and dates of birth.</P> <P> <E T="03">State Children's Health Insurance Program (SCHIP)</E> means the State medical assistance program under title XXI of the Social Security Act ( 42 U.S.C. 1397aa et seq.).</P> <P> <E T="03">Suspended</E> means the status of an institution or day care home that is temporarily ineligible for participation (including Program payments).</P> <P> <E T="03">Suspension review</E> means the review provided, upon the institution's request, to an institution that has been given a notice of intent to suspend participation (including Program payments), based on a determination that the institution has knowingly submitted a false or fraudulent claim.</P> <P> <E T="03">Suspension review official</E> means the independent and impartial official who conducts the suspension review.</P> <P> <E T="03">Termination for cause</E> means the termination of a day care home's Program agreement by the sponsoring organization due to the day care home's violation of the agreement.</P> <P> <E T="03">Termination for convenience</E> means termination of a day care home's Program agreement by either the sponsoring organization or the day care home, due to considerations unrelated to either party's performance of Program responsibilities under the agreement.</P> <P> <E T="03">Tier I day care home</E> means (a) a day care home that is operated by a provider whose household meets the income standards for free or reduced-price meals, as determined by the sponsoring organization based on a completed free and reduced price application, and whose income is verified by the sponsoring organization of the home in accordance with § 226.23(h)(6);</P> <P>(b) A day care home that is located in an area served by a school enrolling elementary students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price meals; or</P> <P>(c) A day care home that is located in a geographic area, as defined by FNS based on census data, in which at least 50 percent of the children residing in the area are members of households which meet the income standards for free or reduced price meals.</P> <P> <E T="03">Tier II day care home</E> means a day care home that does not meet the criteria for a <E T="03">Tier I day care home.</E> </P> <P> <E T="03">Title XVI</E> means Title XVI of the Social Security Act which authorizes the Supplemental Security Income for the Aged, Blind, and Disabled Program—SSI.</P> <P> <E T="03">Title XIX</E> means Title XIX of the Social Security Act which authorizes the Grants to States for Medical Assistance Programs—Medicaid.</P> <P> <E T="03">Title XX</E> means Title XX of the Social Security Act.</P> <P> <E T="03">Unannounced review</E> means an on-site review for which no prior notification is given to the facility or institution.</P> <P> <E T="03">Uniform Federal Assistance Regulations</E> means the Department's regulations, 7 CFR part 3015, establishing Department-wide policies and standards for administration of grants and cooperative agreements.</P> <P> <E T="03">Verification</E> means a review of the information reported by institutions to the State agency regarding the eligibility of participants for free or reduced-price meals, and, in addition, for a pricing program, confirmation of eligibility for free or reduced-price benefits under the program. Verification for a pricing program shall include confirmation of income eligibility and, at State discretion, any other information required on the application which is defined as documentation in § 226.2. Such verification may be accomplished by examining information (e.g., wage stubs, etc.) provided by the household or other sources of information as specified in § 226.23(h)(2)(iv). However, if a food stamp, FDPIR or AFDC case number is provided for a child, verification for such child shall include only confirmation that the child is included in a currently certified food stamp or <PRTPAGE P="168"/>FDPIR household or AFDC assistance unit. If a Head Start statement of income eligibility is provided for a child, verification for such child shall include only confirmation that the child is a Head Start participant. For an adult participant, if a food stamp or FDPIR case number or SSI or Medicaid assistance identification number is provided, verification for such participant shall include only confirmation that the participant is included in a currently certified food stamp or FDPIR household or is a current SSI or Medicaid participant.</P> <P> <E T="03">Yogurt</E> means commercially coagulated milk products obtained by the fermentation of specific bacteria, that meet milk fat or milk solid requirements to which flavoring foods or ingredients may be added. These products are covered by the Food and Drug Administration's Standard of Identity for yogurt, lowfat yogurt, and nonfat yogurt, (21 CFR 131.200), (21 CFR 131.203), (21 CFR 131.206), respectively.</P> <CITA>[47 FR 36527, Aug. 20, 1982; 47 FR 46072, Oct. 15, 1982, as amended at 48 FR 21529, May 13, 1983; 48 FR 41142, Sept. 14, 1983; 50 FR 19310, May 8, 1985; 51 FR 31316, Sept. 3, 1986; 52 FR 36906, Oct. 2, 1987; 53 FR 52587, Dec. 28, 1988; 54 FR 27153, June 28, 1989; Amdt. 22, 55 FR 1377, Jan. 14, 1990; 61 FR 25554, May 22, 1996; 62 FR 901, Jan. 7, 1997; 62 FR 23617, May 1, 1997; 63 FR 9104, Feb. 24, 1998; 63 FR 9727, Feb. 26, 1998; 64 FR 61775, Nov. 15, 1999; 66 FR 2203, Jan. 11, 2001; 67 FR 43476, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.3</SECTNO> <SUBJECT>Administration.</SUBJECT> <P>(a) Within the Department, FNS shall act on behalf of the Department in the administration of the Program.</P> <P>(b) Within the States, responsibility for the administration of the Program shall be in the State agency, except that if FNS has continuously administered the Program in any State since October 1, 1980, FNS shall continue to administer the Program in that State. A State in which FNS administers the Program may, upon request to FNS, assume administration of the Program.</P> <P>(c) Each State agency desiring to take part in the Program shall enter into a written agreement with the Department for the administration of the Program in the State in accordance with the provisions of this part. This agreement shall cover the operation of the Program during the period specified therein and may be extended by consent of both parties.</P> <P>(d) FNSRO shall, in each State in which it administers the Program, have available all funds and assume all responsibilities of a State agency as set forth in this part.</P> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart B—Assistance to States</HD> <SECTION> <SECTNO>§ 226.4</SECTNO> <SUBJECT>Payments to States and use of funds.</SUBJECT> <P>(a) <E T="03">Availability of funds.</E> For each fiscal year based on funds provided to the Department, FNS shall make funds available to each State agency to reimburse institutions for their costs in connection with food service operations, including administrative expenses, under this part. Funds shall be made available in an amount no less than the sum of the totals obtained under paragraphs (b), (c), (d), (e) and (h) of this section. However, in any fiscal year, the aggregate amount of assistance provided to a State under this part shall not exceed the sum of the Federal funds provided by the State to participating institutions within the State for that fiscal year and any funds used by the State under paragraphs (h) and (j) of this section.</P> <P>(b) <E T="03">Center funds.</E> For meals served to participants in child care centers, adult day care centers and outside-school-hours care centers, funds shall be made available to each State agency in an amount no less than the sum of the products obtained by multiplying:</P> <P>(1) The number of breakfasts served in the Program within the State to participants from families that do not satisfy the eligibilty standards for free and reduced-price school meals enrolled in institutions by the national average payment rate for breakfasts for such participants under section 4 of the Child Nutrition Act of 1966;</P> <P>(2) The number of breakfasts served in the Program within the State to participants from families that satisfy the eligibilty standards for free school meals enrolled in institutions by the national average payment rate for free breakfasts under section 4 of the Child Nutrition Act of 1966;</P> <P>(3) The number of breakfasts served to participants from families that satisfy the eligibilty standard for reduced-<PRTPAGE P="169"/>price school meals enrolled in institutions by the national average payment rate for reduced-price school breakfasts under section 4 of the Child Nutrition Act of 1966;</P> <P>(4) The number of lunches and suppers served in the Program within the State by the national average payment rate for lunches under section 4 of the National School Lunch Act. (All lunches and suppers served in the State are funded under this provision);</P> <P>(5) The number of lunches and suppers served in the Program within the State to participants from families that satisfy the eligibilty standard for free school meals enrolled in institutions by the national average payment rate for free lunches under section 11 of the National School Lunch Act;</P> <P>(6) The number of lunches and suppers served in the Program within the State to participants from families that satisfy the eligibilty standard for reduced-price school meals enrolled in institutions by the national average payment rate for reduced-price lunches under section 11 of the National School Lunch Act;</P> <P>(7) The number of supplements served in the Program within the State to participants from families that do not satisfy the eligibilty standards for free and reduced-price school meals enrolled in institutions by 2.75 cents;</P> <P>(8) The number of supplements served in the Program within the State to participants from families that satisfy the eligibilty standard for free school meals enrolled in institutions by 30 cents;</P> <P>(9) The number of supplements served in the Program within the State to participants from families that satisfy the eligibilty standard for reduced-price school meals enrolled in institutions by 15 cents.</P> <P>(c) <E T="03">Day care home funds.</E> For meals served to children in day care homes, funds shall be made available to each State agency in an amount no less than the sum of products obtained by multiplying:</P> <P>(1) The number of breakfasts served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for breakfasts;</P> <P>(2) The number of breakfasts served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for breakfasts;</P> <P>(3) The number of breakfasts served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for breakfasts;</P> <P>(4) The number of lunches and suppers served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for lunches/suppers;</P> <P>(5) The number of lunches and suppers served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for lunches/suppers;</P> <P>(6) The number of lunches and suppers served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for lunches/suppers;</P> <P>(7) The number of supplements served in the Program within the State to children enrolled in tier I day care homes by the current tier I day care home rate for supplements;</P> <P>(8) The number of supplements served in the Program within the State to children enrolled in tier II day care homes that have been determined eligible for free or reduced price meals by the current tier I day care home rate for supplements; and</P> <P>(9) The number of supplements served in the Program within the State to children enrolled in tier II day care homes that do not satisfy the eligibility standards for free or reduced price meals, or to children from whose households applications were not collected, by the current tier II day care home rate for supplements.<PRTPAGE P="170"/> </P> <P>(d) <E T="03">Administrative funds.</E> For administrative payments to day care home sponsoring organizations, funds shall be made available to each State agency in an amount not less than the product obtained each month by multiplying the number of day care homes participating under each sponsoring organization within the State by the applicable rates specified in § 226.12(a)(3).</P> <P>(e) <E T="03">Start-up and expansion funds.</E> For start-up and expansion payments to eligible sponsoring organizations, funds shall be made available to each State agency in an amount equal to the total amount of start-up and expansion payments made in the most recent period for which reports are available for that State or on the basis of estimates by FNS.</P> <P>(f) <E T="03">Funding assurance.</E> FNS shall ensure that, to the extent funds are appropriated, each State has sufficient Program funds available for providing start-up, expansion and advance payments in accordance with this part.</P> <P>(g) <E T="03">Rate adjustments.</E> FNS shall publish a notice in the <E T="04">Federal Register</E> to announce each rate adjustment. FNS shall adjust the following rates on the specified dates:</P> <P>(1) The rates for meals served in tier I and tier II day care homes shall be adjusted annually, on July 1 (beginning July 1, 1997), on the basis of changes in the series for food at home of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustments shall be rounded to the nearest lower cent based on changes measured over the most recent twelve-month period for which data are available. The adjustments shall be computed using the unrounded rate in effect for the preceding school year.</P> <P>(2) The rate for supplements served in child care centers, adult day care centers and outside-school-hours care centers shall be adjusted annually, on July 1, on the basis of changes in the series for food away from home of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustments shall be made to the nearest $.0025 based on changes measured over the most recent twelve-month period for which data are available.</P> <P>(3) The rate for administrative payments to day care home sponsoring organizations shall be adjusted annually, on July 1, on the basis of changes in the series for all items of the Consumer Price Index for All Urban Consumers published by the Department of Labor. Such adjustments shall be made to the nearest dollar based on changes measured over the most recent twelve-month period for which data are available.</P> <P>(h) <E T="03">Audit funds.</E> For the expense of conducting audits and reviews under § 226.8, funds shall be made available to each State agency in an amount equal to two percent of the Program reimbursement provided to institutions within the State during the second fiscal year preceding the fiscal year for which these funds are to be made available. The amount of assistance provided to a State under this paragraph in any fiscal year may not exceed the State's expenditures under § 226.8 during such fiscal year.</P> <P>(i) <E T="03">Method of funding.</E> FNS shall authorize funds for State agencies in accordance with the Uniform Federal Assistance Regulations.</P> <P>(j) <E T="03">Special developmental projects.</E> The State agency may use in carrying out special developmental projects an amount not to exceed one percent of Program funds used in the second prior fiscal year. Special developmental projects shall conform to FNS guidance and be approved in writing by FNS.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 52 FR 36906, Oct. 2, 1987; 53 FR 52588, Dec. 28, 1988; 62 FR 902, Jan. 7, 1997; 63 FR 9728, Feb. 26, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.5</SECTNO> <SUBJECT>Donation of commodities.</SUBJECT> <P>(a) USDA foods available under section 6 of this Act, section 416 of the Agricultural Act of 1949 (7 U.S.C. 1431) or purchased under section 32 of the Act of August 24, 1935 (7 U.S.C. 1431), section 709 of the Food and Agriculture Act of 1965 (7 U.S.C. 1446a-1), or other authority, and donated by the Department shall be made available to each State.</P> <P>(b) The value of such commodities donated to each State for each school year shall be, at a minimum, the amount obtained by multiplying the number of reimbursable lunches and <PRTPAGE P="171"/>suppers served in participating institutions in that State during the preceding school year by the rate for commodities established under section 6(e) of the Act for the current school year. Adjustments shall be made at the end of each school year to reflect the difference between the number of reimbursable lunches and suppers served during the preceding year and the number served during the current year, and subsequent commodity entitlement shall be based on the adjusted meal counts. At the discretion of FNS, current-year adjustments may be made for significant variations in the number of reimbursable meals served. Such current-year adjustments will not be routine and will only be made for unusual problems encountered in a State, such as a disaster that necessitates institutional closures for a prolonged period of time. CACFP State agencies electing to receive cash-in-lieu of commodities will receive payments based on the number of reimbursable meals actually served during the current school year.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 62 FR 23618, May 1, 1997]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart C—State Agency Provisions</HD> <SECTION> <SECTNO>§ 226.6</SECTNO> <SUBJECT>State agency administrative responsibilities.</SUBJECT> <P>(a) <E T="03">State agency personnel.</E> Each State agency shall provide sufficient consultative, technical and managerial personnel to administer the Program, provide sufficient training and technical assistance to institutions and monitor performance to facilitate expansion and effective operation of the Program.</P> <P>(b) <E T="03">Application Approval.</E> Each State agency must establish an application procedure to determine the eligibility under this part of applicant institutions, and facilities for which applications are submitted by sponsoring organizations. Any institution applying for participation in the Program must be notified of approval or disapproval by the State agency in writing within 30 days of filing a complete and correct application. If an institution submits an incomplete application, the State agency must notify the institution within 15 days of receipt of the application and must provide technical assistance, if necessary, to the institution for the purpose of completing its application. Any disapproved applicant must be notified of the procedures for seeking an administrative review (in accordance with paragraphs (k) or (l) of this section, as appropriate). The application procedures must include or conform to the following requirements:</P> <P>(1) <E T="03">Agreements.</E> The State agency, by written consent of the State agency and the institutions, must renew agreements with institutions not less frequently than annually. The State agency is prohibited from entering into an agreement that is effective during two fiscal years, but may nevertheless establish an ongoing renewal process for the purpose of reviewing and approving applications from participating institutions throughout the fiscal year;</P> <P>(2) <E T="03">Participant eligibility information.</E> Centers must submit current information on the number of enrolled participants who are eligible for free, reduced price, and paid meals;</P> <P>(3) <E T="03">Enrollment information.</E> Sponsoring organizations of day care homes must submit the current total number of children enrolled, with an assurance that day care home providers' own children enrolled in the Program are eligible for free or reduced price meals;</P> <P>(4) <E T="03">Nondiscrimination statement.</E> Institutions must issue a non-discrimination policy statement and media release;</P> <P>(5) <E T="03">Management plan.</E> Sponsoring organizations must submit a management plan;</P> <P>(6) <E T="03">Administrative budget.</E> Institutions must submit an administrative budget;</P> <P>(7) <E T="03">Licensing/approval.</E> Institutions must document that each facility for which application is made meets Program licensing/approval requirements;</P> <P>(8) <E T="03">Proprietary centers.</E> Institutions must document that each proprietary center for which application is made meets the definition of a proprietary title XIX center or a proprietary title XX center, as applicable and as set forth at § 226.2;</P> <P>(9) <E T="03">Commodites/Cash-in-lieu of commodities.</E> Institutions must state their preference to receive cash or cash-in-lieu of commodities;</P> <P>(10) <E T="03">Advance payments.</E> Institutions must state their preference to receive <PRTPAGE P="172"/>all, part, or none of the advance payment;</P> <P>(11) <E T="03">Unserved facilities or participants.</E> </P> <P>(i) <E T="03">Criteria.</E> The State agency must develop criteria for determining whether a new sponsoring organization's participation will help ensure the delivery of benefits to otherwise unserved facilities or participants, and must disseminate these criteria to new sponsoring organizations when they request information about applying to the Program; and</P> <P>(ii) <E T="03">Documentation.</E> The new sponsoring organization must submit documentation that its participation will help ensure the delivery of benefits to otherwise unserved facilities or participants in accordance with the State agency's criteria.</P> <P>(12) <E T="03">National disqualified list.</E> A State agency is prohibited from approving an institution's application if the institution or any of its principals is on the National disqualified list, and is prohibited from approving an application submitted by a sponsoring organization on behalf of a facility if the facility or any of its principals is on the National disqualified list;</P> <P>(13) <E T="03">Other publicly funded programs.</E> (i) <E T="03">General.</E> A State agency is prohibited from approving an institution's application if, during the past seven years, the institution or any of the institution's principals have been declared ineligible for any other publicly funded program by reason of violating that program's requirements. However, this prohibition does not apply if the institution or the principal has been fully reinstated in, or determined eligible for, that program, including the payment of any debts owed;</P> <P>(ii) <E T="03">Certification.</E> As part of an application, institutions must submit a certification regarding their past performance in other publicly funded programs. The certification shall include language stating that institutions and individuals providing false certifications will be placed on the National disqualified list and will be subject to any other applicable civil or criminal penalties. This certification will include:</P> <P>(A) A statement listing the publicly funded programs in which the institution and its principals have participated in the past seven years; and</P> <P>(B) A certification that, during the past seven years, neither the institution nor any of its principals have been declared ineligible to participate in any other publicly funded program by reason of violating that program's requirements; or</P> <P>(C) In lieu of the certification, documentation that the institution or the principal previously declared ineligible was later fully reinstated in, or determined eligible for, the program, including the payment of any debts owed; and</P> <P>(iii) <E T="03">Follow-up.</E> If the State agency has reason to believe that the institution or its principals were determined ineligible to participate in another publicly funded program by reason of violating that program's requirements, the State agency must follow up with the entity administering the publicly funded program to gather sufficient evidence to determine whether the institution or its principals were, in fact, determined ineligible;</P> <P>(14) <E T="03">Criminal convictions.</E>—(i) <E T="03">General.</E> A State agency is prohibited from approving an institution's application if the institution or any of its principals has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; and</P> <P>(ii) <E T="03">Certification.</E> As part of an application, institutions must submit a certification regarding any criminal convictions. The certification shall include language stating that institutions and individuals providing false certifications will be placed on the National disqualified list and will be subject to any other applicable civil or criminal penalties. This certification will state that neither the institution nor any of its principals has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. <PRTPAGE P="173"/>A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;</P> <P>(15) <E T="03">Truth of applications and names and addresses.</E> Institutions must submit a certification that all information on the application is true and correct, along with the name, mailing address, and date of birth of the institution's executive director and chairman of the board of directors;</P> <P>(16) <E T="03">Outside employment policy.</E> Sponsoring organizations must submit an outside employment policy. The policy must restrict other employment by employees that interferes with an employee's performance of Program-related duties and responsibilities, including outside employment that constitutes a real or apparent conflict of interest. Sponsoring organizations that are participating on July 29, 2002 must submit an outside employment policy not later than September 27, 2002. The policy shall be effective unless disapproved by the State agency;</P> <P>(17) <E T="03">Bond.</E> Sponsoring organizations applying for initial participation on or after June 20, 2000, must submit a bond, if such bond is required by State law, regulation, or policy. If the State agency requires a bond for sponsoring organizations pursuant to State law, regulation, or policy, the State agency must submit a copy of that requirement and a list of sponsoring organizations posting a bond to the appropriate FNSRO on an annual basis; and</P> <P>(18) Each new or renewing institution must submit information sufficient to document that it is financially viable, is administratively capable of operating the Program in accordance with this part, and has internal controls in effect to ensure accountability. To document this, any new institution must demonstrate in its application that it is capable of operating in conformance with the following performance standards, and any renewing institution must demonstrate in its application that it currently operates in conformance with the following performance standards. The State agency must only approve the applications of those institutions that meet these performance standards, and must deny the applications of those institutions that do not meet the standards.</P> <P>(i) <E T="03">Performance Standard 1—Financial viability and financial management.</E> The new or renewing institution must be financially viable. Program funds must be expended and accounted for in accordance with the requirements of this part, FNS Instruction 796-2 (“Financial Management in the Child and Adult Care Food Program”), and 7 CFR Parts 3015 and 3016. To demonstrate financial viability, the new or renewing institution must document that it meets the following criteria:</P> <P>(A) <E T="03">Description of Need/Recruitment.</E> A new sponsoring organization must demonstrate in its management plan that its participation will help ensure the delivery of Program benefits to otherwise unserved facilities or participants, in accordance with criteria developed by the State agency pursuant to paragraph (b)(11) of this section. All sponsoring organizations must demonstrate that they will use appropriate practices for recruiting facilities, consistent with paragraph (p) of this section and any State agency requirements;</P> <P>(B) <E T="03">Fiscal Resources and Financial History.</E> An institution must demonstrate that it has adequate financial resources to operate the CACFP on a daily basis, has adequate sources of funds to withstand temporary interruptions in Program payments and/or fiscal claims against the institution, and can document financial viability (for example, through audits, financial statements, etc.); and</P> <P>(C) <E T="03">Administrative Budgets.</E> Costs in the institution's administrative budget must be necessary, reasonable, allowable, and appropriately documented;</P> <P>(ii) <E T="03">Performance Standard 2—Administrative capability.</E> The new or renewing institution must be administratively capable. Appropriate and effective management practices must be in effect to ensure that the Program operates in accordance with this part. To demonstrate administrative capability, the new or renewing institution must <PRTPAGE P="174"/>document that it meets the following criteria:</P> <P>(A) Has an adequate number and type of qualified staff to ensure the operation of the Program in accordance with this part;</P> <P>(B) If a sponsoring organization, documents in its management plan that it employs staff sufficient to meet the ratio of monitors to facilities set forth in § 226.16(b)(1), and the factors established by the State agency in accordance with § 226.6(f)(2); and</P> <P>(C) If a sponsoring organization, has Program policies and procedures in writing that assign Program responsibilities and duties, and ensure compliance with civil rights requirements; and</P> <P>(iii) <E T="03">Performance Standard 3—Program accountability.</E> The new or renewing institution must have internal controls and other management systems in effect to ensure fiscal accountability and to ensure that the Program operates in accordance with the requirements of this part. To demonstrate Program accountability, the new or renewing institution must document that it meets the following criteria:</P> <P>(A) <E T="03">Board of directors.</E> Has adequate oversight of the Program by its governing board of directors;</P> <P>(B) <E T="03">Fiscal accountability.</E> Has a financial system with management controls specified in writing. For sponsoring organizations, these written operational policies must assure:</P> <P>(<E T="03">1</E>) Fiscal integrity and accountability for all funds and property received, held, and disbursed;</P> <P>(<E T="03">2</E>) The integrity and accountability of all expenses incurred;</P> <P>(<E T="03">3</E>) That claims are processed accurately, and in a timely manner;</P> <P>(<E T="03">4</E>) That funds and property are used, and expenses incurred, for authorized Program purposes; and</P> <P>(<E T="03">5</E>) That a system of safeguards and controls is in place to prevent and detect improper financial activities by employees;</P> <P>(C) <E T="03">Recordkeeping.</E> Maintains appropriate records to document compliance with Program requirements, including budgets, approved budget amendments, and, if applicable, management plans and appropriate records on facility operations;</P> <P>(D) <E T="03">Sponsoring organization operations.</E> A sponsoring organization must document in its management plan that it will:</P> <P>(<E T="03">1</E>) Provide adequate and regular training of sponsoring organization staff and sponsored facilities in accordance with §§ 226.15(e)(13) and 226.16(d);</P> <P>(<E T="03">2</E>) Perform monitoring in accordance with § 226.16(d), to ensure that sponsored facilities accountably and appropriately operate the Program;</P> <P>(<E T="03">3</E>) If applicable, accurately classify day care homes as tier I or tier II in accordance with § 226.15(f); and</P> <P>(<E T="03">4</E>) Have a system in place to ensure that administrative costs funded from Program reimbursements do not exceed regulatory limits set forth at §§ 226.12(a) and 226.16(b)(1); and</P> <P>(E) <E T="03">Facility level operations.</E> All independent centers and sponsored facilities must follow practices which result in the operation of the Program in accordance with the meal service, recordkeeping, and other operational requirements of this part. These practices must be documented in the independent center's application or in the sponsoring organization's management plan and must demonstrate that independent centers or sponsored facilities will:</P> <P>(<E T="03">1</E>) Provide meals that meet the meal patterns set forth in § 226.20;</P> <P>(<E T="03">2</E>) Comply with licensure or approval requirements set forth in paragraph (d) of this section;</P> <P>(<E T="03">3</E>) Have a food service that complies with applicable State and local health and sanitation requirements;</P> <P>(<E T="03">4</E>) Comply with civil rights requirements;</P> <P>(<E T="03">5</E>) Maintain complete and appropriate records on file; and</P> <P>(<E T="03">6</E>) Claim reimbursement only for eligible meals.</P> <P>(c) <E T="03">Denial of applications and termination of agreements.</E> (1) <E T="03">Denial of a new institution's application</E>.</P> <P>(i) <E T="03">General.</E> If a new institution's application does not meet all of the requirements in paragraph (b) of this section and in §§ 226.15(b) and 226.16(b), the State agency must deny the application. If, in reviewing a new institution's application, the State agency determines that the institution has committed one or more serious deficiency <PRTPAGE P="175"/>listed in paragraph (c)(1)(ii) of this section, the State agency must initiate action to:</P> <P>(A) Deny the new institution's application; and</P> <P>(B) Disqualify the new institution and the responsible principals and responsible individuals (e.g., the person who signs the application).</P> <P>(ii) <E T="03">List of serious deficiencies for new institutions.</E> The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution's application or is conducting a review of a participating institution. Serious deficiencies for new institutions are:</P> <P>(A) Submission of false information on the institution's application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; or</P> <P>(B) Any other action affecting the institution's ability to administer the Program in accordance with Program requirements.</P> <P>(iii) <E T="03">Serious deficiency notification procedures for new institutions.</E> If the State agency determines that a new institution has committed one or more serious deficiency listed in paragraph (c)(1)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals with notice of the serious deficiency(ies) and an opportunity to take corrective action.</P> <P>(A) <E T="03">Notice of serious deficiency.</E> The State agency must notify the institution's executive director and chairman of the board of directors that the institution has been determined to be seriously deficient. The notice must identify the responsible principals and responsible individuals (e.g., for new institutions, the person who signed the application) and must be sent to those persons as well. The State agency may specify in the notice different corrective action, and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) The serious deficiency(ies);</P> <P>(<E T="03">2</E>) The actions to be taken to correct the serious deficiency(ies);</P> <P>(<E T="03">3</E>) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section.</P> <P>(<E T="03">4</E>) That the serious deficiency determination is not subject to administrative review;</P> <P>(<E T="03">5</E>) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in denial of the institution's application and the disqualification of the institution and the responsible principals and responsible individuals; and</P> <P>(<E T="03">6</E>) That the State agency will not pay any claims for reimbursement for eligible meals served or allowable administrative expenses incurred until the State agency has approved the institution's application and the institution has signed a Program agreement.</P> <P>(B) <E T="03">Successful corrective action.</E> </P> <P>(<E T="03">1</E>) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to the State agency's satisfaction, the State agency must:</P> <P>(<E T="03">i</E>) notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has rescinded its serious deficiency determination; and</P> <P>(<E T="03">ii</E>) offer the new institution the opportunity to resubmit its application. If the new institution resubmits its application, the State agency must complete its review of the application <PRTPAGE P="176"/>within 30 days after receiving a complete and correct application.</P> <P>(<E T="03">2</E>) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:</P> <P>(<E T="03">i</E>) continue with the actions (as set forth in paragraph (c)(1)(iii)(C) of this section) against the remaining parties;</P> <P>(<E T="03">ii</E>) at the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and</P> <P>(<E T="03">iii</E>) if the new institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the new institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.</P> <P>(C) <E T="03">Application denial and proposed disqualification.</E> If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution's application has been denied. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) That the institution's application has been denied and the State agency is proposing to disqualify the institution and the responsible principals and responsible individuals;</P> <P>(<E T="03">2</E>) The basis for the actions; and</P> <P>(<E T="03">3</E>) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications.</P> <P>(D) <E T="03">Program payments.</E> The State agency is prohibited from paying any claims for reimbursement from a new institution for eligible meals served or allowable administrative expenses incurred until the State agency has approved its application and the institution and State agency have signed a Program agreement.</P> <P>(E) <E T="03">Disqualification.</E> When the time for requesting an administrative review expires or when the administrative review official upholds the State agency's denial and proposed disqualifications, the State agency must notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals that the institution and the responsible principal and responsible individuals have been disqualified. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.</P> <P>(2) <E T="03">Denial of a renewing institution's application.</E> </P> <P>(i) <E T="03">General.</E> If a renewing institution's application does not meet all of the requirements in paragraph (b) of this section and in §§ 226.15(b) and 226.16(b), the State agency must deny the application. If, in reviewing a renewing institution's application, the State agency determines that the institution has committed one or more serious deficiency listed in paragraph (c)(2)(ii) of this section, the State agency must <E T="03">initiate</E> action to deny the renewing institution's application and <E T="03">initiate</E> action to disqualify the renewing institution and the responsible principals and responsible individuals.</P> <P>(ii) <E T="03">List of serious deficiencies for renewing institutions.</E> The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution's application or is conducting a review of a participating institution. Serious deficiencies for renewing institutions are:</P> <P>(A) Submission of false information on the institution's application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and <PRTPAGE P="177"/>that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;</P> <P>(B) Failure to operate the Program in conformance with the performance standards set forth in paragraph (b)(18) of this section;</P> <P>(C) Failure to comply with the bid procedures and contract requirements of applicable Federal procurement regulations;</P> <P>(D) Use of a food service management company that is in violation of health codes;</P> <P>(E) Failure by a sponsoring organization of day care homes to properly classify day care homes as tier I or tier II in accordance with § 226.15(f);</P> <P>(F) Failure by a sponsoring organization to properly train or monitor sponsored facilities in accordance with § 226.16(d);</P> <P>(G) Failure to perform any of the other financial and administrative responsibilities required by this part;</P> <P>(H) Failure to properly implement and administer the day care home termination and administrative review provisions set forth at paragraph (l) of this section and § 226.16(l); or</P> <P>(I) any other action affecting the institution's ability to administer the Program in accordance with Program requirements.</P> <P>(iii) <E T="03">Serious deficiency notification procedures for renewing institutions.</E> If the State agency determines that a renewing institution has committed one or more serious deficiency listed in paragraph (c)(2)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals notice of the serious deficiency(ies) and an opportunity to take corrective action.</P> <P>(A) <E T="03">Notice of serious deficiency.</E> The State agency must notify the institution's executive director and chairman of the board of directors that the institution has been determined to be seriously deficient. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The State agency may specify in the notice different corrective action, and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) The serious deficiency(ies);</P> <P>(<E T="03">2</E>) The actions to be taken to correct the serious deficiency(ies);</P> <P>(<E T="03">3</E>) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;</P> <P>(<E T="03">4</E>) That the serious deficiency determination is not subject to administrative review.</P> <P>(<E T="03">5</E>) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the State agency's denial of the institution's application, the proposed termination of the institution's agreement (if the State agency has temporarily extended the agreement pursuant to paragraph (c)(2)(iii)(D) of this section) and the proposed disqualification of the institution and the responsible principals and responsible individuals; and</P> <P>(<E T="03">6</E>) That the institution's voluntary termination of its agreement with the State agency after having been notified that it is seriously deficient will still result in the instituion's formal termination by the State agency and placement of the institution and its responsible principals and responsible individuals on the National disqualified list.</P> <P>(B) <E T="03">Successful corrective action.</E> </P> <P>(<E T="03">1</E>) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to the State agency's satisfaction, the State agency must:</P> <P>(<E T="03">i</E>) Notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has rescinded its serious deficiency determination; and<PRTPAGE P="178"/> </P> <P>(<E T="03">ii</E>) Offer the renewing institution the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.</P> <P>(<E T="03">2</E>) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:</P> <P>(<E T="03">i</E>) continue with the actions (as set forth in paragraph (c)(2)(iii)(C) of this section) against the remaining parties;</P> <P>(<E T="03">ii</E>) at the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and</P> <P>(<E T="03">iii</E>) if the renewing institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.</P> <P>(C) <E T="03">Application denial and proposed disqualification.</E> If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution's application has been denied. At the same time the notice is issued, the State agency must update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) That the institution's application has been denied and the State agency is proposing to terminate the institution's temporarily-extended agreement and to disqualify the institution and the responsible principals and responsible individuals;</P> <P>(<E T="03">2</E>) The basis for the actions;</P> <P>(<E T="03">3</E>) That, if the institution voluntarily terminates its agreement after receiving the notice of the proposed termination, the institution and the responsible principals and responsible individuals will be disqualified;</P> <P>(<E T="03">4</E>) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications; and</P> <P>(<E T="03">5</E>) That the institution may continue to participate in the Program and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed.</P> <P>(D) <E T="03">Program payments and extended agreement.</E> If the renewing institution's agreement expires before the end of the time allotted for corrective action, and/or the conclusion of any administrative review requested by the renewing institution:</P> <P> <E T="03">(1)</E> The State agency must temporarily extend its current agreement with the renewing institution and continue to pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative expenses incurred; and</P> <P> <E T="03">(2)</E> The actions set forth in paragraph (c)(2)(iii)(D)<E T="03">(1)</E> of this section must be taken either until the serious deficiency(ies) is corrected or until the institution's agreement is terminated, including the period of any administrative review;</P> <P>(E) <E T="03">Agreement termination and disqualification.</E> When the time for requesting an administrative review expires or when the administrative review official upholds the State agency's denial of the institution's application, the proposed termination, and the proposed disqualifications, the State agency must:</P> <P>(<E T="03">1</E>) Notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the temporarily-extended agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;</P> <P>(<E T="03">2</E>) Update the State agency list at the time such notice is issued; and</P> <P>(<E T="03">3</E>) Provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.</P> <P>(3) <E T="03">Termination of a participating institution's agreement.</E> (i) <E T="03">General.</E> If the <PRTPAGE P="179"/>State agency holds an agreement with an institution operating in more than one State that has been disqualified from the Program by another State agency and placed on the National disqualified list, the State agency must terminate the institution's agreement effective no later than 45 days of the date of the institution's disqualification by the other State agency. At the same time the notice of termination is issued, the State agency must add the institution to the State agency list and indicate that the institution's agreement has been terminated and provide a copy of the notice to the appropriate FNSRO. If the State agency determines that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, the State agency must <E T="03">initiate</E> action to terminate the agreement of a participating institution and <E T="03">initiate</E> action to disqualify the institution and any responsible principals and responsible individuals.</P> <P>(ii) <E T="03">List of serious deficiencies for participating institutions.</E> The list of serious deficiencies is not identical for each category of institution (new, renewing, participating) because the type of information likely to be available to the State agency is different, depending on whether the State agency is reviewing a new or renewing institution's application or is conducting a review of a participating institution. Serious deficiencies for participating institutions are:</P> <P>(A) Submission of false information on the institution's application, including but not limited to a determination that the institution has concealed a conviction for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency;</P> <P>(B) Permitting an individual who is on the National disqualified list to serve in a principal capacity with the institution or, if a sponsoring organization, permitting such an individual to serve as a principal in a sponsored center or as a day care home;</P> <P>(C) Failure to operate the Program in conformance with the performance standards set forth in paragraph (b)(18) of this section;</P> <P>(D) Failure to comply with the bid procedures and contract requirements of applicable Federal procurement regulations;</P> <P>(E) Failure to return to the State agency any advance payments that exceeded the amount earned for serving eligible meals, or failure to return disallowed start-up or expansion payments;</P> <P>(F) Failure to maintain adequate records;</P> <P>(G) Failure to adjust meal orders to conform to variations in the number of participants;</P> <P>(H) Claiming reimbursement for meals not served to participants;</P> <P>(I) Claiming reimbursement for a significant number of meals that do not meet Program requirements;</P> <P>(J) Use of a food service management company that is in violation of health codes;</P> <P>(K) Failure of a sponsoring organization to disburse payments to its facilities in accordance with the regulations at § 226.16(g) and (h) or in accordance with its management plan;</P> <P>(L) Claiming reimbursement for meals served by a proprietary title XX child care center during a calendar month in which less than 25 percent of its enrolled children, or 25 percent of its licensed capacity, whichever is less, were title XX beneficiaries;</P> <P>(M) Claiming reimbursement for meals served by a proprietary title XIX or title XX adult day care center during a calendar month in which less than 25 percent of its enrolled adult participants were title XIX or title XX beneficiaries;</P> <P>(N) Failure by a sponsoring organization of day care homes to properly classify day care homes as tier I or tier II in accordance with § 226.15(f);</P> <P>(O) Failure by a sponsoring organization to properly train or monitor sponsored facilities in accordance with § 226.16(d);</P> <P>(P) Use of day care home funds by a sponsoring organization to pay for the <PRTPAGE P="180"/>sponsoring organization's administrative expenses;</P> <P>(Q) Failure to perform any of the other financial and administrative responsibilities required by this part;</P> <P>(R) Failure to properly implement and administer the day care home termination and administrative review provisions set forth at paragraph (l) of this section and § 226.16(l);</P> <P>(S) The fact the institution or any of the institution's principals have been declared ineligible for any other publicly funded program by reason of violating that program's requirements. However, this prohibition does not apply if the institution or the principal has been fully reinstated in, or is now eligible to participate in, that program, including the payment of any debts owed;</P> <P>(T) Conviction of the institution or any of its principals for any activity that occurred during the past seven years and that indicates a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; or</P> <P>(U) Any other action affecting the institution's ability to administer the Program in accordance with Program requirements.</P> <P>(iii) <E T="03">Serious deficiency notification procedures for participating institutions.</E> If the State agency determines that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, the State agency must use the following procedures to provide the institution and the responsible principals and responsible individuals notice of the serious deficiency(ies) and an opportunity to take corrective action. However, if the serious deficiency(ies) constitutes an imminent threat to the health or safety of participants, or the institution has engaged in activities that threaten the public health or safety, the State agency must follow the procedures in paragraph (c)(5)(i) of this section instead of the procedures below. Further, if the serious deficiency is the submission of a false or fraudulent claim, in addition to the procedures below, the State agency may suspend the institution's participation in accordance with paragraph (c)(5)(ii) of this section.</P> <P>(A) <E T="03">Notice of serious deficiency.</E> The State agency must notify the institution's executive director and chairman of the board of directors that the institution has been determined seriously deficient. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The State agency may specify in the notice different corrective action and time periods for completing the corrective action for the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must add the institution to the State agency list, along with the basis for the serious deficiency determination, and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) The serious deficiency(ies);</P> <P>(<E T="03">2</E>) The actions to be taken to correct the serious deficiency(ies);</P> <P>(<E T="03">3</E>) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;</P> <P>(<E T="03">4</E>) That the serious deficiency determination is not subject to administrative review.</P> <P>(<E T="03">5</E>) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the State agency's proposed termination of the institution's agreement and the proposed disqualification of the institution and the responsible principals and responsible individuals; and</P> <P>(<E T="03">6</E>) That the institution's voluntary termination of its agreement with the State agency after having been notified that it is seriously deficient will still result in the instituion's formal termination by the State agency and placement of the institution and its responsible principals and responsible individuals on the National disqualified list.</P> <P>(B) <E T="03">Successful corrective action.</E> </P> <P>(<E T="03">1</E>) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the <PRTPAGE P="181"/>allotted time and to the State agency's satisfaction, the State agency must:</P> <P>(<E T="03">i</E>) Notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency has rescinded its serious deficiency determination; and</P> <P>(<E T="03">ii</E>) Offer the renewing institution the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.</P> <P>(<E T="03">2</E>) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), the State agency must:</P> <P>(<E T="03">i</E>) Continue with the actions (as set forth in paragraph (c)(3)(iii)(C) of this section) against the remaining parties;</P> <P>(<E T="03">ii</E>) At the same time the notice is issued, the State agency must also update the State agency list to indicate that the serious deficiency(ies) has(ve) been corrected and provide a copy of the notice to the appropriate FNSRO; and</P> <P>(<E T="03">iii</E>) If the renewing institution has corrected the serious deficiency(ies), offer it the opportunity to resubmit its application. If the renewing institution resubmits its application, the State agency must complete its review of the application within 30 days after receiving a complete and correct application.</P> <P>(C) <E T="03">Proposed termination and proposed disqualification.</E> If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), the State agency must notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the State agency is proposing to terminate the institution's agreement and to disqualify the institution and the responsible principals and responsible individuals. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) That the State agency is proposing to terminate the institution's agreement and to disqualify the institution and the responsible principals and responsible individuals;</P> <P>(<E T="03">2</E>) The basis for the actions;</P> <P>(<E T="03">3</E>) That, if the institution voluntarily terminates its agreement after receiving the notice of proposed termination, the institution and the responsible principals and responsible individuals will be disqualified.</P> <P>(<E T="03">4</E>) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the application denial and proposed disqualifications; and</P> <P>(<E T="03">5</E>) That, unless participation has been suspended, the institution may continue to participate and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed.</P> <P>(D) <E T="03">Program payments.</E> Unless participation has been suspended, the State agency must continue to pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative expenses incurred until the serious deficiency(ies) is corrected or the institution's agreement is terminated, including the period of any administrative review.</P> <P>(E) <E T="03">Agreement termination and disqualification.</E> When the time for requesting an administrative review expires or when the administrative review official upholds the State agency's proposed termination and disqualifications, the State agency must:</P> <P>(<E T="03">1</E>) Notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution's agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;</P> <P>(<E T="03">2</E>) Update the State agency list at the time such notice is issued; and</P> <P>(<E T="03">3</E>) Provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.</P> <P>(4) <E T="03">Corrective action timeframes.</E> </P> <P>(i) <E T="03">General.</E> Except as noted in this paragraph (c)(4), the State agency is prohibited from allowing more than 90 days for corrective action from the <PRTPAGE P="182"/>date the institution receives the serious deficiency notice.</P> <P>(ii) <E T="03">Unlawful practices.</E> If the State agency determines that the institution has engaged in unlawful practices, submitted false or fraudulent claims or other information to the State agency, or been convicted of or concealed a criminal background, the State agency is prohibited from allowing more than 30 days for corrective action.</P> <P>(iii) <E T="03">Long-term changes.</E> For serious deficiencies requiring the long-term revision of management systems or processes, the State agency may permit more than 90 days to complete the corrective action as long as a corrective action plan is submitted to and approved by the State agency within 90 days (or such shorter deadline as the State agency may establish). The corrective action must include milestones and a definite completion date that the State agency will monitor. The determination of serious deficiency will remain in effect until the State agency determines that the serious deficiency(ies) has(ve) been fully and permanently corrected within the allotted time.</P> <P>(5) <E T="03">Suspension of an institution's participation.</E> A State agency is prohibited from suspending an institution's participation (including all Program payments) except for the reasons set forth in this paragraph (c)(5).</P> <P>(i) <E T="03">Public health or safety.</E> </P> <P>(A) <E T="03">General.</E> If State or local health or licensing officials have cited an institution for serious health or safety violations, the State agency must immediately suspend the institution's Program participation, initiate action to terminate the institution's agreement, and initiate action to disqualify the institution and the responsible principals and responsible individuals prior to any formal action to revoke the institution's licensure or approval. If the State agency determines that there is an imminent threat to the health or safety of participants at an institution, or that the institution has engaged in activities that threaten the public health or safety, the State agency must immediately notify the appropriate State or local licensing and health authorities and take action that is consistent with the recommendations and requirements of those authorities. An imminent threat to the health or safety of participants and engaging in activities that threaten the public health or safety constitute serious deficiencies; however, the State agency must use the procedures in this paragraph (c)(5)(i) (instead of the procedures in paragraph (c)(3) of this section) to provide the institution notice of the suspension of participation, serious deficiency, proposed termination of the institution's agreement, and proposed disqualification of the responsible principals and responsible individuals.</P> <P>(B) <E T="03">Notice of suspension, serious deficiency, proposed termination, and proposed disqualification.</E> The State agency must notify the institution's executive director and chairman of the board of directors that the institution's participation (including Program payments) has been suspended, that the institution has been determined to be seriously deficient, and that the State agency proposes to terminate the institution's agreement and to disqualify the institution and the responsible principals and responsible individuals. The notice must also identify the responsible principals and responsible individuals and must be sent to those persons as well. At the same time this notice is sent, the State agency must add the institution and the responsible principals and responsible individuals to the State agency list, along with the basis for the serious deficiency determination and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) That the State agency is suspending the institution's participation (including Program payments), proposing to terminate the institution's agreement, and proposing to disqualify the institution and the responsible principals and responsible individuals;</P> <P>(<E T="03">2</E>) The serious deficiency(ies);</P> <P>(<E T="03">3</E>) That, if the institution voluntary terminates its agreement with the State agency after having been notified of the proposed termination, the institution and the responsible principals and responsible individuals will be disqualified;<PRTPAGE P="183"/> </P> <P>(<E T="03">4</E>) That the serious deficiency determination is not subject to administrative review;</P> <P>(<E T="03">5</E>) The procedures for seeking an administrative review (consistent with paragraph (k) of this section) of the suspension, proposed termination, and proposed disqualifications; and</P> <P>(<E T="03">6</E>) That, if the administrative review official overturns the suspension, the institution may claim reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.</P> <P>(C) <E T="03">Agreement termination and disqualification.</E> When the time for requesting an administrative review expires or when the administrative review official upholds the State agency's proposed termination and disqualifications, the State agency must:</P> <P>(<E T="03">1</E>) Notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution's agreement has been terminated and that the institution and the responsible principals and responsible individuals have been disqualified;</P> <P>(<E T="03">2</E>) update the State agency list at the time such notice is issued; and</P> <P>(<E T="03">3</E>) provide a copy of the notice and the mailing address and date of birth for each responsible principal and responsible individual to the appropriate FNSRO.</P> <P>(D) <E T="03">Program payments.</E> The State agency is prohibited from paying any claims for reimbursement from a suspended institution. However, if the suspended institution prevails in the administrative review of the proposed termination, the State agency must pay any claims for reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.</P> <P>(ii) <E T="03">False or fraudulent claims.</E> </P> <P>(A) <E T="03">General.</E> If the State agency determines that an institution has knowingly submitted a false or fraudulent claim, the State agency <E T="03">may</E> initiate action to suspend the institution's participation and must <E T="03">initiate</E> action to terminate the institution's agreement and initiate action to disqualify the institution and the responsible principals and responsible individuals (in accordance with paragraph (c)(3) of this section). The submission of a false or fraudulent claim constitutes a serious deficiency as set forth in paragraph (c)(3)(ii) of this section, which lists serious deficiencies for participating institutions. If the State agency wishes to suspend the institution's participation, it must use the following procedures to issue the notice of proposed suspension of participation <E T="03">at the same time</E> it issues the serious deficiency notice, which must include the information described in paragraph (c)(3)(iii)(A) of this section.</P> <P>(B) <E T="03">Proposed suspension of participation.</E> If the State agency decides to propose to suspend an institution's participation due to the institution's submission of a false or fraudulent claim, it must notify the institution's executive director and chairman of the board of directors that the State agency intends to suspend the institution's participation (including all Program payments) unless the institution requests a review of the proposed suspension. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must identify the responsible principals and responsible individuals and must be sent to those persons as well. The notice must also specify:</P> <P>(<E T="03">1</E>) That the State agency is proposing to suspend the institution's participation;</P> <P>(<E T="03">2</E>) That the proposed suspension is based on the institution's submission of a false or fraudulent claim, as described in the serious deficiency notice;</P> <P>(<E T="03">3</E>) The effective date of the suspension (which may be no earlier than 10 days after the institution receives the suspension notice);</P> <P>(<E T="03">4</E>) The name, address and telephone number of the suspension review official who will conduct the suspension review; and</P> <P>(<E T="03">5</E>) That if the institution wishes to have a suspension review, it must request a review and submit to the suspension review official written documentation opposing the proposed suspension within 10 days of the institution's receipt of the notice.</P> <P>(C) <E T="03">Suspension review.</E> If the institution requests a review of the State <PRTPAGE P="184"/>agency's proposed suspension of participation, the suspension review must be heard by a suspension review official who must:</P> <P>(1) Be an independent and impartial person other than, and not accountable to, any person involved in the decision to initiate suspension proceedings;</P> <P>(2) Immediately notify the State agency that the institution has contested the proposed suspension and must obtain from the State agency its notice of proposed suspension of participation, along with all supporting documentation; and</P> <P>(3) Render a decision on suspension of participation within 10 days of the deadline for receiving the institution's documentation opposing the proposed suspension.</P> <P>(D) <E T="03">Suspension review decision.</E> If the suspension review official determines that the State agency's proposed suspension is not appropriate, the State agency is prohibited from suspending participation. If the suspension review official determines, based on a preponderance of the evidence, that the State agency's action was appropriate, the State agency must suspend the institution's participation (including all Program payments), effective on the date of the suspension review decision. The State agency must notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution's participation has been suspended. At the same time the notice is issued, the State agency must also update the State agency list and provide a copy of the notice to the appropriate FNSRO. The notice must also specify:</P> <P>(<E T="03">1</E>) That the State agency is suspending the institution's participation (including Program payments);</P> <P>(<E T="03">2</E>) The effective date of the suspension (the date of the suspension review decision);</P> <P>(<E T="03">3</E>) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the suspension; and</P> <P>(<E T="03">4</E>) That if the administrative review official overturns the suspension, the institution may claim reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.</P> <P>(E) <E T="03">Program payments.</E> A State agency is prohibited from paying any claims for reimbursement submitted by a suspended institution. However, if the institution suspended for the submission of false or fraudulent claims is a sponsoring organization, the State agency must ensure that sponsored facilities continue to receive reimbursement for eligible meals served during the suspension period. If the suspended institution prevails in the administrative review of the proposed termination, the State agency must pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative costs incurred during the suspension period.</P> <P>(F) <E T="03">Maximum time for suspension.</E> Under no circumstances may the suspension of participation remain in effect for more than 120 days following the suspension review decision.</P> <P>(6) <E T="03">FNS determination of serious deficiency.</E> (i) <E T="03">General.</E> FNS may determine independently that a participating institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section, which lists serious deficiencies for participating institutions.</P> <P>(ii) <E T="03">Serious deficiency notification procedures.</E> If FNS determines that an institution has committed one or more serious deficiency listed in paragraph (c)(3)(ii) of this section (the list of serious deficiencies for participating institutions), FNS will use the following procedures to provide the institution and the responsible principals and responsible individuals with notice of the serious deficiency(ies) and an opportunity to take corrective action.</P> <P>(A) <E T="03">Notice of serious deficiency.</E> FNS will notify the institution's executive director and chairman of the board of directors that the institution has been found to be seriously deficient. The notice will identify the responsible principals and responsible individuals and will be sent to them as well. FNS may specify in the notice different corrective action and time periods for completing the corrective action, for the institution and the responsible principals and responsible individuals. The notice will also specify:<PRTPAGE P="185"/> </P> <P>(<E T="03">1</E>) The serious deficiency(ies);</P> <P>(<E T="03">2</E>) The actions to be taken to correct the serious deficiency(ies);</P> <P>(<E T="03">3</E>) The time allotted to correct the serious deficiency(ies) in accordance with paragraph (c)(4) of this section;</P> <P>(<E T="03">4</E>) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time, or the institution's voluntary termination of its agreement(s) with any State agency after having been notified that it is seriously deficient, will result in the proposed disqualification of the institution and the responsible principals and responsible individuals and the termination of its agreement(s) with all State agencies; and</P> <P>(<E T="03">5</E>) That the serious deficiency determination is not subject to administrative review.</P> <P>(B) <E T="03">Suspension of participation.</E> If FNS determines that there is an imminent threat to the health or safety of participants at an institution, or that the institution has engaged in activities that threaten the public health or safety, any State agency that holds an agreement with the institution must suspend the participation of the institution. If FNS determines that the institution has submitted a false or fraudulent claim, it may require any State agency that holds an agreement with the institution to initiate action to suspend the institution's participation for false or fraudulent claims in accordance with paragraph (c)(5)(ii) of this section (which deals with an institution's suspension by a State agency for submission of false or fraudulent claims). In both cases, FNS will provide the State agency the information necessary to support these actions and, in the case of a false and fraudulent claim, will provide an individual to serve as the suspension review official if requested by the State agency.</P> <P>(C) <E T="03">Successful corrective action.</E> </P> <P>(<E T="03">1</E>) If corrective action has been taken to fully and permanently correct the serious deficiency(ies) within the allotted time and to FNS's satisfaction, FNS will notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that it has rescinded its serious deficiency determination; and</P> <P>(<E T="03">2</E>) If corrective action is complete for the institution but not for all of the responsible principals and responsible individuals (or vice versa), FNS will continue with the actions (as set forth in paragraph (c)(6)(ii)(D) of this section) against the remaining parties.</P> <P>(D) <E T="03">Proposed disqualification.</E> If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies), FNS will notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that FNS is proposing to disqualify them. The notice will also specify:</P> <P>(<E T="03">1</E>) That FNS is proposing to disqualify the institution and the responsible principals and responsible individuals;</P> <P>(<E T="03">2</E>) The basis for the actions;</P> <P>(<E T="03">3</E>) That, if the institution seeks to voluntarily terminate its agreement after receiving the notice of proposed disqualification, the institution and the responsible principals and responsible individuals will be disqualified;</P> <P>(<E T="03">4</E>) The procedures for seeking an administrative review (in accordance with paragraph (k) of this section) of the proposed disqualifications;</P> <P>(<E T="03">5</E>) That unless participation has been suspended, the institution may continue to participate and receive Program reimbursement for eligible meals served and allowable administrative costs incurred until its administrative review is completed; and</P> <P>(<E T="03">6</E>) That if the institution does not prevail in the administrative review, any State agency holding an agreement with the institution will be required to terminate that agreement and the institution is prohibited from seeking an administrative review of the termination of the agreement by the State agency(ies).</P> <P>(E) <E T="03">Disqualification.</E> When the time for requesting an administrative review expires or when the administrative review official upholds FNS's proposed disqualifications, FNS will notify the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, that the institution and the responsible principal or <PRTPAGE P="186"/>responsible individual have been disqualified.</P> <P>(F) <E T="03">Program payments.</E> If the State agency holds an agreement with an institution that FNS has determined to be seriously deficient, the State agency must continue to pay any valid unpaid claims for reimbursement for eligible meals served and allowable administrative expenses incurred until the serious deficiency(ies) is corrected or the State agency terminates the institution's agreement, including the period of any administrative review, unless participation has been suspended.</P> <P>(G) <E T="03">Required State agency action.</E> (<E T="03">1</E>) <E T="03">Disqualified institutions.</E> If the State agency holds an agreement with an institution that FNS determines to be seriously deficient and subsequently disqualifies, the State agency must terminate the institution's agreement effective no later than 45 days after the date of the institution's disqualification by FNS. As noted in paragraph (k)(3)(iv) of this section, the termination is not subject to administrative review. At the same time the notice of termination is issued, the State agency must add the institution to the State agency list and provide a copy of the notice to the appropriate FNSRO.</P> <P>(<E T="03">2</E>) <E T="03">Disqualified principals.</E> If the State agency holds an agreement with an institution whose principal FNS determines to be seriously deficient and subsequently disqualifies, the State agency must determine the institution to be seriously deficient and initiate action to terminate and disqualify the institution in accordance with the procedures in paragraph (c)(3) of this section. The State agency must initiate these actions no later than 45 days after the date of the principal's disqualification by FNS.</P> <P>(7) <E T="03">National disqualified list.</E> </P> <P>(i) <E T="03">Maintenance and availability of list.</E> FNS will maintain the National disqualified list and make it available to all State agencies and all sponsoring organizations.</P> <P>(ii) <E T="03">Effect on institutions.</E> No organization on the National disqualified list may participate in the Program as an institution. As noted in paragraph (b)(12) of this section, the State agency must deny the application of a new or renewing institution if the institution is on the National disqualified list. In addition, as noted in paragraphs (c)(3)(i) and (c)(6)(ii)(G)(<E T="03">1</E>) of this section, the State agency must terminate the agreement of any participating institution that is disqualified by another State agency or by FNS.</P> <P>(iii) <E T="03">Effect on sponsored centers.</E> No organization on the National disqualified list may participate in the Program as a sponsored center. As noted in § 226.16(b) and paragraph (b)(12) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (and a State agency is prohibited from approving such an application) if the facility is on the National disqualified list.</P> <P>(iv) <E T="03">Effect on individuals.</E> No individual on the National disqualified list may serve as a principal in any institution or facility or as a day care home provider.</P> <P>(A) <E T="03">Principal for an institution or a sponsored facility.</E> As noted in paragraph (b)(12) of this section, the State agency must deny the application of a new or renewing institution if any of the institution's principals is on the National disqualified list. As noted in paragraphs (c)(3)(ii)(B) and (c)(6)(ii)(G)(<E T="03">2</E>) of this section, the State agency must declare an institution seriously deficient and initiate action to terminate the institution's agreement and disqualify the institution if the institution permits an individual who is on the National disqualified list to serve in a principal capacity for the institution or one of its facilities.</P> <P>(B) <E T="03">Principal for a sponsored facility.</E> As noted in § 226.16(b) and paragraph (b)(12) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (or a State agency from approving such an application) if any of the facility's principals are on the National disqualified list.</P> <P>(C) <E T="03">Serving as a day care home.</E> As noted in § 226.16(b) and paragraph (b)(12) of this section, a sponsoring organization is prohibited from submitting an application on behalf of a sponsored facility (and a State agency is prohibited from approving such an application) if the facility is on the National disqualified list.<PRTPAGE P="187"/> </P> <P>(v) <E T="03">Removal of institutions, principals, and individuals from the list.</E> Once included on the National disqualified list, an institution and responsible principals and responsible individuals remain on the list until such time as FNS, in consultation with the appropriate State agency, determines that the serious deficiency(ies) that led to their placement on the list has(ve) been corrected, or until seven years have elapsed since they were disqualified from participation. However, if the institution, principal or individual has failed to repay debts owed under the Program, they will remain on the list until the debt has been repaid.</P> <P>(vi) <E T="03">Removal of day care homes from the list.</E> Once included on the National disqualified list, a day care home will remain on the list until such time as the State agency determines that the serious deficiency(ies) that led to its placement on the list has(ve) been corrected, or until seven years have elapsed since its agreement was terminated for cause. However, if the day care home has failed to repay debts owed under the Program, it will remain on the list until the debt has been repaid.</P> <P>(8) <E T="03">State agency list.</E> (i) <E T="03">Maintenance of the State agency list.</E> The State agency must maintain a State agency list (in the form of an actual paper or electronic list or retrievable paper records). The list must be made available to FNS upon request, and must include the following information:</P> <P>(A) Institutions determined to be seriously deficient by the State agency, including the names and mailing addresses of the institutions and the status of the institutions as they move through the possible subsequent stages of corrective action, proposed termination, suspension, agreement termination, and/or disqualification, as applicable;</P> <P>(B) Responsible principals and individuals who have been disqualified from participation by the State agency, including their names, mailing addresses, and dates of birth; and</P> <P>(C) Day care home providers whose agreements have been terminated for cause by a sponsoring organization in the State, including their names, mailing addresses, and dates of birth.</P> <P>(ii) <E T="03">Referral of disqualified day care homes to FNS.</E> Within 10 days of receiving a notice of termination and disqualification from a sponsoring organization, the State agency must provide the appropriate FNSRO the name, mailing address, and date of birth of each day care home provider whose agreement is terminated for cause on or after July 29, 2002.</P> <P>(iii) <E T="03">Prior lists of disqualified day care homes.</E> If on July 29, 2002 the State agency maintains a list of day care homes that have been disqualified from participation, the State agency may continue to prohibit participation by those day care homes. However, the State agency must remove a day care home from its prior list no later than the time at which the State agency determines that the serious deficiency(ies) that led to the day care home's placement on the list has(ve) been corrected or July 29, 2009 (unless the day care home has failed to repay debts owed under the Program). If the day care home has failed to repay its debt, the State agency may keep the day care home on its prior list until the debt has been repaid.</P> <P>(d) <E T="03">Licensing/approval for child care centers, outside-school-hours care centers and day care homes.</E> This section prescribes State agency responsibilities to ensure that child care centers and day care homes meet the licensing/approval criteria set forth in this part. Sponsoring organizations shall submit to the State agency documentation that facilities under their jurisdiction are in compliance with licensing/approval requirements. Independent centers shall submit such documentation to the State agency on their own behalf.</P> <P>(1) <E T="03">General.</E> Each State agency shall establish procedures to annually review information submitted by institutions to ensure that all participating child care centers, day care homes, and outside-school-hours care centers either:</P> <P>(i) Are licensed or approved by Federal, State, or local authorities, provided that institutions which are approved for Federal programs on the basis of State or local licensing shall not be eligible for the Program if their licenses lapse or are terminated; or<PRTPAGE P="188"/> </P> <P>(ii) Are complying with applicable procedures to renew licensing or approval in situations where the State agency has no information that licensing or approval will be denied; or</P> <P>(iii) Receive Title XX funds for providing child care, if licensing or approval is not available; or</P> <P>(iv) Demonstrate compliance with applicable State or local child care standards to the State agency, if licensing is not available and title XX funds are not received; or</P> <P>(v) Demonstrate compliance with CACFP child care standards to the State agency, if licensing or approval is not available and Title XX funds are not received.</P> <P>(2) <E T="03">CACFP child care standards.</E> (i) When licensing or approval is not available, independent child care centers, and sponsoring organizations on behalf of their child care centers or day care homes, may elect to demonstrate compliance, annually, with the following CACFP child care standards or other standards specified in paragraph (d)(3) of this section:</P> <P>(A) <E T="03">Staff/child ratios.</E> (<E T="03">1</E>) Day care homes provide care for no more than 12 children at any one time. One home caregiver is responsible for no more than 6 children ages 3 and above, or no more than 5 children ages 0 and above. No more than 2 children under the age of 3 are in the care of 1 caregiver. The home provider's own children who are in care and under the age of 14 are counted in the maximum ratios of caregivers to children.</P> <P>(<E T="03">2</E>) Child care centers and outside-school-hours care centers do not fall below the following staff/child ratios:</P> <P>(<E T="03">i</E>) For children under 6 weeks of age—1:1</P> <P>(<E T="03">ii</E>) For children ages 6 weeks up to 3 years—1:4</P> <P>(<E T="03">iii</E>) For children ages 3 years up to 6 years—1:6</P> <P>(<E T="03">iv</E>) For children ages 6 years up to 10 years—1:15</P> <P>(<E T="03">v</E>) For children ages 10 and above—1:20</P> <P>(B) <E T="03">Nondiscrimination.</E> Day care services are available without discrimination on the basis of race, color, national origin, sex, age, or handicap.</P> <P>(C) <E T="03">Safety and sanitation.</E> (<E T="03">1</E>) A current health/sanitation permit or satisfactory report of an inspection conducted by local authorities within the past 12 months shall be submitted.</P> <P>(<E T="03">2</E>) A current fire/building safety permit or satisfactory report of an inspection conducted by local authorities within the past 12 months shall be submitted.</P> <P>(<E T="03">3</E>) Fire drills are held in accordance with local fire/building safety requirements.</P> <P>(D) <E T="03">Suitability of facilities.</E> (<E T="03">1</E>) Ventilation, temperature, and lighting are adequate for children's safety and comfort.</P> <P>(<E T="03">2</E>) Floors and walls are cleaned and maintained in a condition safe for children.</P> <P>(<E T="03">3</E>) Space and equipment, including rest arrangements for preschool age children, are adequate for the number of age range of participating children.</P> <P>(E) <E T="03">Social services.</E> Independent centers, and sponsoring organizations in coordination with their facilities, have procedures for referring families of children in care to appropriate local health and social service agencies.</P> <P>(F) <E T="03">Health services.</E> (<E T="03">1</E>) Each child is observed daily for indications of difficulties in social adjustment, illness, neglect, and abuse, and appropriate action is initiated.</P> <P>(<E T="03">2</E>) A procedure is established to ensure prompt notification of the parent or guardian in the event of a child's illness or injury, and to ensure prompt medical treatment in case of emergency.</P> <P>(<E T="03">3</E>) Health records, including records of medical examinations and immunizations, are maintained for each enrolled child. (Not applicable to day care homes.)</P> <P>(<E T="03">4</E>) At least one full-time staff member is currently qualified in first aid, including artificial respiration techniques. (Not applicable to day care homes.)</P> <P>(<E T="03">5</E>) First aid supplies are available.</P> <P>(<E T="03">6</E>) Staff members undergo initial and periodic health assessments.</P> <P>(G) <E T="03">Staff training.</E> The institution provides for orientation and ongoing training in child care for all caregivers.</P> <P>(H) <E T="03">Parental involvement.</E> Parents are afforded the opportunity to observe their children in day care.<PRTPAGE P="189"/> </P> <P>(I) <E T="03">Self-evaluation.</E> The institution has established a procedure for periodic self-evaluation on the basis of CACFP child care standards.</P> <P>(ii) When licensing or approval is not available, independent outside-school-hours care centers, and sponsoring organizations on behalf of their outside-school-hours care centers, may elect to demonstrate compliance with child care standards developed by the State agency which shall include, as a minimum, information on: (A) Fire/safety, (B) sanitation, (C) organized activities, (D) kitchen and restroom facilities, (E) appropriateness of games and materials, (F) availability of emergency medical care, and (G) child-staff ratios as indicated in § 226.6(d)(2)(i)(A). For items (A) and (B), of this paragraph, appropriate State or local permits are required.</P> <P>(3) <E T="03">Alternate approval procedures.</E> Each State agency shall establish procedures to review information submitted by institutions for centers or homes for which licensing or approval is not available in order to establish eligibility for the Program. Licensing or approval is not available when (i) no Federal, State, or local licensing/approval standards have been established for child care centers, outside-school-hours care centers, or day care homes; or (ii) no mechanism exists to determine compliance with licensing/approval standards. In these situations, independent centers, and sponsoring organizations on behalf of their facilities, may choose to demonstrate compliance with either CACFP child care standards, applicable State child care standards, or applicable local child care standards. State agencies shall provide information about applicable State child care standards and CACFP child care standards to institutions, but may require institutions electing to demonstrate compliance with applicable local child care standards to identify and submit these standards. The State agency may permit independent centers, and sponsoring organizations on behalf of their facilities, to submit self-certification forms, and may grant approval without first conducting a compliance review at the center or facility. But the State agency shall require submission of health/sanitation and fire/safety permits or certificates for all independent centers and facilities seeking alternate child care standards approval. Compliance with applicable child care standards are subject to review in accordance with § 226.6(o).</P> <P>(e) <E T="03">Licensing/approval for adult day care centers.</E> This paragraph prescribes State agency responsibilities to ensure that adult day care centers meet the licensing/approval criteria set forth in this part. Sponsoring organizations shall submit to the State agency documentation that facilities under their jurisdiction are in compliance with licensing/approval requirements. Independent adult day care centers shall submit such documentation to the State agency on their own behalf. Each State agency shall establish procedures to annually review information submitted by institutions to ensure that all participating adult day care centers either:</P> <P>(1) Are licensed or approved by Federal, State or local authorities, provided that institutions which are approved for Federal programs on the basis of State or local licensing shall not be eligible for the Program if their licenses lapse or are terminated; or</P> <P>(2) Are complying with applicable procedures to renew licensing or approval in situations where the State agency has no information that licensing or approval will be denied.</P> <P>(f) <E T="03">Annual requirements.</E> State agencies shall require institutions to comply with applicable provisions of this part. Each State agency shall annually:</P> <P>(1) Enter into and execute a written Program agreement with each institution, or renew such agreement with the written concurrence of the institution. The Program agreement shall provide that the institution shall accept final financial and administrative responsibility for management of an effective food service, comply with all requirements under this part, and comply with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975 and the Department's regulations concerning nondiscrimination (7 CFR <PRTPAGE P="190"/>parts 15, 15a and 15b), including requirements for racial and ethnic participation data collection, public notification of the nondiscrimination policy, and reviews to assure compliance with such policy, to the end that no person shall, on the grounds of race, color, national origin, sex, age, or handicap be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under the Program. The Program agreement must also notify the institution of the right of the State agency, the Department, and other State or Federal officials to make announced or unannounced reviews of their operations during the institution's normal hours of child or adult care operations and that anyone making such reviews must show photo identification that demonstrates that they are employees of one of these entities.</P> <P>(2) Require each sponsoring organization to submit a management plan with its application for review and approval. Such a plan shall include: detailed information on the organizational administrative structure; the staff assigned to Program management and monitoring; administrative budget; procedures which will be used by the sponsoring organization to administer the Program in and disburse payments to the child care facilities under its jurisdiction; and, for sponsoring organizations of day care homes, a description of the system for making tier I day care home determinations, and a description of the system of notifying tier II day care homes of their options for reimbursement. The State agency must establish factors, consistent with § 226.16(b)(1), that the State agency will consider in determining whether a sponsoring organization has sufficient staff to perform required monitoring responsibilities at all of its sponsored facilities. As part of its review of the management plan, the State agency must determine the appropriate level of staffing for each sponsoring organization, consistent with the staffing range of monitors set forth in § 226.16(b)(1) and the factors it has established. The State agency must ensure that each new sponsoring organization applying for participation after July 29, 2002 meets this requirement. The State agency must ensure that each currently participating sponsoring organization meets this requirement no later than July 29, 2003.</P> <P>(3) Require each institution to submit an administrative budget. Each sponsoring organization shall be required to incorporate this budget into its management plan. For a sponsoring organization of centers, the State agency is prohibited from approving the sponsoring organization's administrative budget, or any amendments to the budget, if the administrative budget shows that the Program will be charged for administrative costs in excess of 15 percent of the meal reimbursements estimated to be earned during the budget year. However, the State agency may waive this limit if the sponsoring organization provides justification that it requires Program funds in excess of 15 percent to pay its administrative costs and if the State agency is convinced that the institution will have adequate funding to provide meals meeting the requirements of § 226.20. The State agency must document all waiver approvals and denials in writing, and must provide a copy of all such letters to the appropriate FNSRO.</P> <P>(4) Determine that all meal procurements with food service management companies are in conformance with the bid and contractual requirements of § 226.22.</P> <P>(5) Inquire as to the preference of institutions for commodities or cash-in-lieu of commodities.</P> <P>(6) Provide institutions with information on foods available in plentiful supply, based on information provided by the Department.</P> <P>(7) Inform institutions with separate meal charges of their responsibility to ensure that free and reduced-price meals are served to participants unable to pay the full price and provide to all institutions a copy of the income standards to be used by institutions for determining the eligibility of participants for free and reduced-price meals under the Program.</P> <P>(8) Perform verification of the eligibility of participants for free and reduced-price meals in participating institutions in accordance with the procedures outlined in § 226.23(h). State <PRTPAGE P="191"/>agencies verifying the information on free and reduced-price applications shall ensure that verification activities are applied without regard to race, color, national origin, sex, age, or handicap.</P> <P>(9) Coordinate with the State agency which administers the National School Lunch Program to ensure the receipt of a list of elementary schools in the State in which at least one-half of the children enrolled are certified eligible to receive free or reduced price meals. The State agency shall provide the list to sponsoring organizations by April 1, 1997, and by February 15 of each year thereafter, unless the State agency that administers the National School Lunch Program has elected to base data for the list on a month other than October, in which case the State agency shall provide the list to sponsoring organizations within 15 calendar days of its receipt from the State agency that administers the National School Lunch Program. The State agency also shall provide each sponsoring organization with census data, as provided to the State agency by FNS upon its availability on a decennial basis, showing areas in the State in which at least 50 percent of the children are from households meeting the income standards for free or reduced price meals. In addition, the State agency shall ensure that the most recent available data is used if the determination of a day care home's eligibility as a tier I day care home is made using school or census data. Determinations of a day care home's eligibility as a tier I day care home shall be valid for one year if based on a provider's household income, three years if based on school data, or until more current data are available if based on census data. However, a sponsoring organization, the State agency, or FNS may change the determination if information becomes available indicating that a home is no longer in a qualified area. The State agency shall not routinely require annual redeterminations of the tiering status of tier I day care homes based on updated elementary school data.</P> <P>(10) Provide all sponsoring organizations of day care homes in the State with a listing of State-funded programs, participation in which by a parent or child will qualify a meal served to a child in a tier II home for the tier I rate of reimbursement.</P> <P>(11) Require each sponsoring organization of day care homes to submit the total number of tier I and tier II day care homes that it sponsors; a breakdown showing the total number of children enrolled in tier I day care homes; the total number of children enrolled in tier II day care homes; and the number of children in tier II day care homes that have been identified as eligible for free or reduced price meals.</P> <P>(g) <E T="03">Program expansion.</E> Each State agency shall take action to expand the availability of benefits under this Program. At a minimum, the State shall annually notify each nonparticipating child care center, outside-school-hours care center, and day care home within the State that is licensed, approved, registered, or receiving funds under title XX and each nonparticipating adult day care center that is licensed or approved, of the availability of the Program, the requirements for Program participation, and the application procedures to be followed in the Program. The State agency shall make the list of child care centers, adult day care centers, outside-school-hours care centers, and day care homes notified each year available to the public upon request.</P> <P>(h) <E T="03">Commodity distribution.</E> The State shall annually inquire as to the preference of each institution for commodities or cash-in-lieu of commodities. Each institution electing cash-in-lieu of commodities shall receive such payments. Each institution which elects to receive commodities shall have commodities provided to it unless the State agency, after consultation with the State commodity distribution agency, demonstrates to FNS that distribution of commodities to the number of such institutions would be impracticable. The State agency may then, with the concurrence of FNS, provide cash-in-lieu of commodities for all institutions. A State agency request for cash-in-lieu of all commodities shall be submitted to FNS not later than May 1 of the school year preceding the school year for which the request is made. The State agency shall, by June 1 of each year, submit a list of <PRTPAGE P="192"/>institutions which have elected to receive commodities to the State commodity distribution agency, unless FNS has approved a request for cash-in-lieu of commodities for all institutions. The list shall be accompanied by information on the average daily number of lunches and suppers to be served to participants by each such institution.</P> <P>(i) <E T="03">Standard contract.</E> Each State agency shall develop a standard contract in accordance with § 226.21 and provide for its use between institutions and food service management companies. The contract shall expressly and without exception stipulate:</P> <P>(1) The institution shall provide the food service management company with a list of the State agency approved child care centers, day care homes, adult day care centers, and outside-school-hours care centers to be furnished meals by the food service management company, and the number of meals, by type, to be delivered to each location;</P> <P>(2) The food service management company shall maintain such records (supported by invoices, receipts or other evidence) as the institution will need to meet its responsibilities under this part, and shall promptly submit invoices and delivery reports to the institution no less frequently than monthly;</P> <P>(3) The food service management company shall have Federal, State or local health certification for the plant in which it proposes to prepare meals for use in the Program, and it shall ensure that health and sanitation requirements are met at all times. In addition, the State agency may require the food service management company to provide for meals which it prepares to be periodically inspected by the local health department or an independent agency to determine bacteria levels in the meals being prepared. These bacteria levels shall conform to the standards which are applied by the local health authority with respect to the level of bacteria which may be present in meals prepared or served by other establishments in the locality. Results of these inspections shall be submitted to the institution and to the State agency;</P> <P>(4) The meals served under the contract shall conform to the cycle menus upon which the bid was based, and to menu changes agreed upon by the institution and food service management company;</P> <P>(5) The books and records of the food service management company pertaining to the institution's food service operation shall be available for inspection and audit by representatives of the State agency, of the Department, and of the U.S. General Accounting Office at any reasonable time and place, for a period of 3 years from the date of receipt of final payment under the contract, or in cases where an audit requested by the State agency or the Department remains unresolved, until such time as the audit is resolved;</P> <P>(6) The food service management company shall operate in accordance with current Program regulations;</P> <P>(7) The food service management company shall not be paid for meals which are delivered outside of the agreed upon delivery time, are spoiled or unwholesome at the time of delivery, or do not otherwise meet the meal requirements contained in the contract;</P> <P>(8) Meals shall be delivered in accordance with a delivery schedule prescribed in the contract;</P> <P>(9) Increases and decreases in the number of meal orders may be made by the institution, as needed, within a prior notice period mutually agreed upon in the contract;</P> <P>(10) All meals served under the Program shall meet the requirements of § 226.20;</P> <P>(11) All breakfasts, lunches, and suppers delivered for service in outside-school-hours care centers shall be unitized, with or without milk, unless the State agency determines that unitization would impair the effectiveness of food service operations. For meals delivered to child care centers and day care homes, the State agency may require unitization, with or without milk, of all breakfasts, lunches, and suppers only if the State agency has evidence which indicates that this requirement is necessary to ensure compliance with § 226.20.</P> <P>(j) <E T="03">Procurement provisions.</E> State agencies shall require institutions to adhere <PRTPAGE P="193"/>to the procurement provisions set forth in § 226.22.</P> <P>(k) <E T="03">Administrative reviews for institutions and responsible principals and responsible individuals.</E> </P> <P>(1) <E T="03">General.</E> The State agency must develop procedures for offering administrative reviews to institutions and responsible principals and responsible individuals. The procedures must be consistent with paragraph (k) of this section.</P> <P>(2) <E T="03">Actions subject to administrative review.</E> Except as provided in § 226.8(g), the State agency must offer an administrative review for the following actions:</P> <P>(i) <E T="03">Application denial.</E> Denial of a new or renewing institution's application for participation (see paragraph (b) of this section, on State agency review of an institution's application; and paragraphs (c)(1) and (c)(2) of this section, on State agency denial of a new or renewing institution's application);</P> <P>(ii) <E T="03">Denial of sponsored facility application.</E> Denial of an application submitted by a sponsoring organization on behalf of a facility;</P> <P>(iii) <E T="03">Notice of proposed termination.</E> Proposed termination of an institution's agreement (see paragraphs (c)(2)(iii)(C), (c)(3)(iii)(C), and (c)(5)(i)(B) of this section, dealing with proposed termination of agreements with renewing institutions, participating institutions, and participating institutions suspended for health or safety violations);</P> <P>(iv) <E T="03">Notice of proposed disqualification of a responsible principal or responsible individual.</E> Proposed disqualification of a responsible principal or responsible individual (see paragraphs (c)(1)(iii)(C), (c)(2)(iii)(C), (c)(3)(iii)(C), and (c)(5)(i)(B) of this section, dealing with proposed disqualification of responsible principals or responsible individuals in new, renewing, and participating institutions, and participating institutions suspended for health or safety violations);</P> <P>(v) <E T="03">Suspension of participation.</E> Suspension of an institution's participation (see paragraphs (c)(5)(i)(B) and (c)(5)(ii)(D) of this section, dealing with suspension for health or safety reasons or submission of a false or fraudulent claim);</P> <P>(vi) <E T="03">Start-up or expansion funds denial.</E> Denial of an institution's application for start-up or expansion payments (see § 226.7(h));</P> <P>(vii) <E T="03">Advance denial.</E> Denial of a request for an advance payment (see § 226.10(b));</P> <P>(viii) <E T="03">Recovery of advances.</E> Recovery of all or part of an advance in excess of the claim for the applicable period. The recovery may be through a demand for full repayment or an adjustment of subsequent payments (see § 226.10(b)(3));</P> <P>(ix) <E T="03">Claim denial.</E> Denial of all or a part of an institution's claim for reimbursement (except for a denial based on a late submission under § 226.10(e)) (see §§ 226.10(f) and 226.14(a));</P> <P>(x) <E T="03">Claim deadline exceptions and requests for upward adjustments to a claim.</E> Decision by the State agency not to forward to FNS an exception request by an institution for payment of a late claim, or a request for an upward adjustment to a claim (see § 226.10(e));</P> <P>(xi) <E T="03">Overpayment demand.</E> Demand for the remittance of an overpayment (see § 226.14(a)); and</P> <P>(xii) <E T="03">Other actions.</E> Any other action of the State agency affecting an institution's participation or its claim for reimbursement.</P> <P>(3) <E T="03">Actions not subject to administrative review.</E> The State agency is prohibited from offering administrative reviews of the following actions:</P> <P>(i) <E T="03">FNS decisions on claim deadline exceptions and requests for upward adjustments to a claim.</E> A decision by FNS to deny an exception request by an institution for payment of a late claim, or for an upward adjustment to a claim (see § 226.10(e));</P> <P>(ii) <E T="03">Determination of serious deficiency.</E> A determination that an institution is seriously deficient (see paragraphs (c)(1)(iii)(A), (c)(2)(iii)(A), (c)(3)(iii)(A), and (c)(5)(i)(B) of this section, dealing with proposed disqualification of responsible principals or responsible individuals in new, renewing, and participating institutions, and participating institutions suspended for health or safety violations);<PRTPAGE P="194"/> </P> <P>(iii) <E T="03">Disqualification and placement on State agency list and National disqualified list.</E> Disqualification of an institution or a responsible principal or responsible individual, and the subsequent placement on the State agency list and the National disqualified list (see paragraphs (c)(1)(iii)(E), (c)(2)(iii)(E), (c)(3)(iii)(E), and (c)(5)(i)(C) of this section, dealing with proposals to disqualify related to new, renewing, and participating institutions, and in institutions suspended for health or safety violations); or</P> <P>(iv) <E T="03">Termination.</E> Termination of a participating institution's agreement, including termination of a participating institution's agreement based on the disqualification of the institution by another State agency or FNS (see paragraphs (c)(3)(i) and (c)(7)(ii) of this section).</P> <P>(4) <E T="03">Provision of administrative review procedures to institutions and responsible principals and responsible individuals.</E> The State agency's administrative review procedures must be provided:</P> <P>(i) Annually to all institutions;</P> <P>(ii) To an institution and to each responsible principal and responsible individual when the State agency takes any action subject to an administrative review as described in paragraph (k)(2) of this section; and</P> <P>(iii) Any other time upon request.</P> <P>(5) <E T="03">Procedures.</E> Except as described in paragraph (k)(9) of this section, which sets forth the circumstances under which an abbreviated administrative review is held, the State agency must follow the procedures in this paragraph (k)(5) when an institution or a responsible principal or responsible individual appeals any action subject to administrative review as described in paragraph (k)(2) of this section.</P> <P>(i) <E T="03">Notice of action.</E> The institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, must be given notice of the action being taken or proposed, the basis for the action, and the procedures under which the institution and the responsible principals or responsible individuals may request an administrative review of the action.</P> <P>(ii) <E T="03">Time to request administrative review.</E> The request for administrative review must be submitted in writing not later than 15 days after the date the notice of action is received, and the State agency must acknowledge the receipt of the request for an administrative review within 10 days of its receipt of the request.</P> <P>(iii) <E T="03">Representation.</E> The institution and the responsible principals and responsible individuals may retain legal counsel, or may be represented by another person.</P> <P>(iv) <E T="03">Review of record.</E> Any information on which the State agency's action was based must be available to the institution and the responsible principals and responsible individuals for inspection from the date of receipt of the request for an administrative review.</P> <P>(v) <E T="03">Opposition.</E> The institution and the responsible principals and responsible individuals may refute the findings contained in the notice of action in person or by submitting written documentation to the administrative review official. In order to be considered, written documentation must be submitted to the administrative review official not later than 30 days after receipt of the notice of action.</P> <P>(vi) <E T="03">Hearing.</E> A hearing must be held by the administrative review official in addition to, or in lieu of, a review of written information only if the institution or the responsible principals and responsible individuals request a hearing in the written request for an administrative review. If the institution's representative, or the responsible principals or responsible individuals or their representative, fail to appear at a scheduled hearing, they waive the right to a personal appearance before the administrative review official, unless the administrative review official agrees to reschedule the hearing. A representative of the State agency must be allowed to attend the hearing to respond to the testimony of the institution and the responsible principals and responsible individuals and to answer questions posed by the administrative review official. If a hearing is requested, the institution, the responsible principals and responsible individuals, and the State agency must be provided with at least 10 days advance notice of the time and place of the hearing.<PRTPAGE P="195"/> </P> <P>(vii) <E T="03">Administrative review official.</E> The administrative review official must be independent and impartial. This means that, although the administrative review official may be an employee of the State agency, he/she must not have been involved in the action that is the subject of the administrative review, or have a direct personal or financial interest in the outcome of the administrative review. The institution and the responsible principals and responsible individuals must be permitted to contact the administrative review official directly if they so desire.</P> <P>(viii) <E T="03">Basis for decision.</E> The administrative review official must make a determination based solely on the information provided by the State agency, the institution, and the responsible principals and responsible individuals, and based on Federal and State laws, regulations, policies, and procedures governing the Program.</P> <P>(ix) <E T="03">Time for issuing a decision.</E> Within 60 days of the State agency's receipt of the request for an administrative review, the administrative review official must inform the State agency, the institution's executive director and chairman of the board of directors, and the responsible principals and responsible individuals, of the administrative review's outcome. This timeframe is an administrative requirement for the State agency and may not be used as a basis for overturning the State agency's action if a decision is not made within the specified timeframe.</P> <P>(x) <E T="03">Final decision.</E> The determination made by the administrative review official is the final administrative determination to be afforded the institution and the responsible principals and responsible individuals.</P> <P>(6) <E T="03">Federal audit findings.</E> FNS may assert a claim against the State agency, in accordance with the procedures set forth in § 226.14(c), when an administrative review results in the dismissal of a claim against an institution asserted by the State agency based upon Federal audit findings.</P> <P>(7) <E T="03">Record of result of administrative reviews.</E> The State agency must maintain searchable records of all administrative reviews and their disposition.</P> <P>(8) <E T="03">Combined administrative reviews for responsible principals and responsible individuals.</E> The State agency must conduct the administrative review of the proposed disqualification of the responsible principals and responsible individuals as part of the administrative review of the application denial, proposed termination, and/or proposed disqualification of the institution with which the responsible principals or responsible individuals are associated. However, at the administrative review official's discretion, separate administrative reviews may be held if the institution does not request an administrative review or if either the institution or the responsible principal or responsible individual demonstrates that their interests conflict.</P> <P>(9) <E T="03">Abbreviated administrative review.</E> The State agency must limit the administrative review to a review of written submissions concerning the accuracy of the State agency's determination if the application was denied or the State agency proposes to terminate the institution's agreement because:</P> <P>(i) The information submitted on the application was false (see paragraphs (c)(1)(ii)(A), (c)(2)(ii)(A), and (c)(3)(ii)(A) of this section);</P> <P>(ii) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities is on the national disqualified list (see paragraph (b)(12) of this section);</P> <P>(iii) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities is ineligible to participate in any other publicly funded program by reason of violation of the requirements of the program (see paragraph (b)(13) and (c)(3)(ii)(S) of this section); or</P> <P>(iv) The institution, one of its sponsored facilities, or one of the principals of the institution or its facilities has been convicted for any activity that indicates a lack of business integrity (see paragraphs (b)(14) and (c)(3)(ii)(T) of this section).</P> <P>(10) <E T="03">Effect of State agency action.</E> The State agency's action must remain in effect during the administrative review. The effect of this requirement on particular State agency actions is as follows.</P> <P>(i) <E T="03">Overpayment demand.</E> During the period of the administrative review, the State agency is prohibited from <PRTPAGE P="196"/>taking action to collect or offset the overpayment. However, the State agency must assess interest beginning with the initial demand for remittance of the overpayment and continuing through the period of administrative review unless the administrative review official overturns the State agency's action.</P> <P>(ii) <E T="03">Recovery of advances.</E> During the administrative review, the State agency must continue its efforts to recover advances in excess of the claim for reimbursement for the applicable period. The recovery may be through a demand for full repayment or an adjustment of subsequent payments.</P> <P>(iii) <E T="03">Program payments.</E> The availability of Program payments during an administrative review of the denial of a new institution's application, denial of a renewing institution's application, proposed termination of a participating institution's agreement, and suspension of an institution are addressed in paragraphs (c)(1)(iii)(D), (c)(2)(iii)(D), (c)(3)(iii)(D), (c)(5)(i)(D), and (c)(5)(ii)(E), respectively, of this section.</P> <P>(l) <E T="03">Administrative reviews for day care homes.</E> </P> <P>(1) <E T="03">General.</E> The State agency must ensure that, when a sponsoring organization proposes to terminate its Program agreement with a day care home for cause, the day care home is provided an opportunity for an administrative review of the proposed termination. The State agency may do this either by electing to offer a State-level administrative review, or by electing to require the sponsoring organization to offer an administrative review. The State agency must notify the appropriate FNSRO of its election under this option, or any change it later makes under this option, by September 25, 2002 or within 30 days of any subsequent change under this option. The State agency must make the same election with regard to who offers the administrative review to any day care home in the Program in that State. The State agency or the sponsoring organization must develop procedures for offering and providing these administrative reviews, and these procedures must be consistent with this paragraph (l).</P> <P>(2) <E T="03">Actions subject to administrative review.</E> The State agency or sponsoring organization must offer an administrative review to a day care home that appeals a notice of intent to terminate their agreement for cause or a suspension of their participation (see §§ 226.16(l)(3)(iii) and (l)(4)(ii)).</P> <P>(3) <E T="03">Actions not subject to administrative review.</E> Neither the State agency nor the sponsoring organization is required to offer an administrative review for reasons other than those listed in paragraph (l)(2) of this section.</P> <P>(4) <E T="03">Provision of administrative review procedures to day care homes.</E> The administrative review procedures must be provided:</P> <P>(i) Annually to all day care homes;</P> <P>(ii) To a day care home when the sponsoring organization takes any action subject to an administrative review as described in paragraph (l)(2) of this section; and</P> <P>(iii) Any other time upon request.</P> <P>(5) <E T="03">Procedures.</E> The State agency or sponsoring organization, as applicable (depending on the State agency's election pursuant to paragraph (l)(1) of this section) must follow the procedures in this paragraph (l)(5) when a day care home requests an administrative review of any action described in paragraph (l)(2) of this section.</P> <P>(i) <E T="03">Uniformity.</E> The same procedures must apply to all day care homes.</P> <P>(ii) <E T="03">Representation.</E> The day care home may retain legal counsel, or may be represented by another person.</P> <P>(iii) <E T="03">Review of record and opposition.</E> The day care home may review the record on which the decision was based and refute the action in writing. The administrative review official is not required to hold a hearing.</P> <P>(iv) <E T="03">Administrative review official.</E> The administrative review official must be independent and impartial. This means that, although the administrative review official may be an employee of the State agency or an employee or board member of the sponsoring organization, he/she must not have been involved in the action that is the subject of the administrative review or have a direct personal or financial interest in the outcome of the administrative review;<PRTPAGE P="197"/> </P> <P>(v) <E T="03">Basis for decision.</E> The administrative review official must make a determination based on the information provided by the sponsoring organization and the day care home and on Federal and State laws, regulations, polices, and procedures governing the Program.</P> <P>(vi) <E T="03">Time for issuing a decision.</E> The administrative review official must inform the sponsoring organization and the day care home of the administrative review's outcome within the period of time specified in the State agency's or sponsoring organization's administrative review procedures. This timeframe is an administrative requirement for the State agency or sponsoring organization and may not be used as a basis for overturning the termination if a decision is not made within the specified timeframe.</P> <P>(vii) <E T="03">Final decision.</E> The determination made by the administrative review official is the final administrative determination to be afforded the day care home.</P> <P>(m) <E T="03">Program assistance.</E> </P> <P>(1) <E T="03">General.</E> The State agency must provide technical and supervisory assistance to institutions and facilities to facilitate effective Program operations, monitor progress toward achieving Program goals, and ensure compliance with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education amendments of 1972, Section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department's regulations concerning nondiscrimination (7 CFR Parts 15, 15a, and 15b). The State agency must maintain documentation of supervisory assistance activities, including reviews conducted, corrective actions prescribed, and follow-up efforts.</P> <P>(2) <E T="03">Review priorities.</E> In choosing institutions for review, in accordance with paragraph(m)(4) of this section, the State agency must target for more frequent review institutions whose prior review included a finding of serious deficiency.</P> <P>(3) <E T="03">Review content.</E> Reviews must:</P> <P>(i) Assess institutional compliance with the provisions of this part and with any applicable instructions of FNS and the Department;</P> <P>(ii) Evaluate the documentation used by sponsoring organizations to classify their day care homes as tier I day care homes; and</P> <P>(iii) Evaluate sponsoring organizations' implementation of serious deficiency and termination procedures and, if delegated to sponsoring organizations pursuant to paragraph (l)(1) of this section, the administrative review procedures for day care homes.</P> <P>(4) <E T="03">Review frequency.</E> The State agency must annually review 33.3 percent of all institutions. At least 15 percent of the total number of facility reviews required must be unannounced. The State agency must review institutions according to the following schedule:</P> <P>(i) Independent centers and sponsoring organizations of 1-100 facilities must be reviewed at least once every three years. A review of a sponsoring organization must include 10 percent of its facilities;</P> <P>(ii) Sponsoring organizations with more than 100 facilities must be reviewed at least once every two years. These reviews must include reviews of 5 percent of the first 1,000 facilities and 2.5 percent of the facilities in excess of 1,000; and</P> <P>(iii) New institutions that are sponsoring organizations of five or more facilities must be reviewed within the first 90 days of Program operation.</P> <P>(n) <E T="03">Program irregularities.</E> Each State agency shall promptly investigate complaints received or irregularities noted in connection with the operation of the Program, and shall take appropriate action to correct any irregularities. State agencies shall maintain on file evidence of such investigations and actions. FNS and OIG may make investigations at the request of the State agency, or whenever FNS or OIG determines that investigations are appropriate.</P> <P>(o) <E T="03">Child care standards compliance.</E> The State agency shall, when conducting administrative reviews of child care centers, outside-school-hours care centers, and day care homes approved by the State agency under paragraph (d)(3) of this section, determine compliance with the child care standards used to establish eligibility, and the institution shall ensure that all violations are corrected and the State shall ensure <PRTPAGE P="198"/>that the institution has corrected all violations. If violations are not corrected within 60 calendar days of written notification to the institution, the State agency shall terminate the Program participation of the violating institution or facility. However, if the health or safety of the children is imminently threatened, the State agency may immediately terminate participation of the institution or facility. If, during an administrative review of a child care center, outside-school-hours care center, or day care home not approved by the State agency under paragraph (d)(3) of this section, the State agency observes violations of applicable health, safety, or staff-child ratio standards, or attendance in excess of licensed capacity, the State agency shall promptly refer such violations to the appropriate authority. The State agency may deny reimbursement for meals served to attending children in excess of authorized capacity.</P> <P>(p) <E T="03">Sponsoring organization agreement.</E> Each State agency shall develop and provide for the use of a standard form of agreement between each day care home sponsoring organization and all day care homes participating in the Program under such organization. The State agency must also include in this agreement its policy to restrict transfers of day care homes between sponsoring organizations. The policy must restrict the transfers to no more frequently than once per year, except under extenuating circumstances, such as termination of the sponsoring organization's agreement or other circumstances defined by the State agency. However, the State agency may, at the request of the sponsor, approve an agreement developed by the sponsor. State agencies may develop a similar form for use between sponsoring organizations and other types of facilities.</P> <P>(q) Following its reviews of institutions and facilities under §§ 226.6(m) and 226.23(h) conducted prior to July 1, 1988, the State agency shall report data on key elements of program operations on a form designated by FNS. These key elements include but are not limited to the program areas of meal requirements, determination of eligibility for free and reduced price meals, and the accuracy of reimbursement claims. These forms shall be submitted within 90 days of the completion of the data collection for the institutions except that, if the State has elected to conduct reviews of verification separate from its administrative reviews, the State shall retain data until all key elements have been reviewed and shall report all data for each institution on one form within 90 days of the completion of the data collection for all key elements for that institution. States shall ensure that all key element data for an institution is collected during a 12-month period.</P> <CITA>[47 FR 36527, Aug. 20, 1982]</CITA> <EDNOTE> <HD SOURCE="HED">Editorial Note:</HD> <P>For <E T="04">Federal Register</E> citations affecting § 226.6, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and on GPO Access.</P> </EDNOTE> </SECTION> <SECTION> <SECTNO>§ 226.7</SECTNO> <SUBJECT>State agency responsibilities for financial management.</SUBJECT> <P>(a) This section prescribes standards of financial management systems in administering Program funds by the State agency and institutions.</P> <P>(b) Each State agency shall maintain an acceptable financial management system, adhere to financial management standards and otherwise carry out financial management policies as delineated in the Uniform Federal Assistance Regulations, at 7 CFR part 3015. State agencies or FNSRO's, where applicable, shall also have a system in place for monitoring and reviewing the institutions’ documentation of their nonprofit status to ensure that all Program reimbursement funds are used: (1) Solely for the conduct of the food service operation; or (2) to improve such food service operations, principally for the benefit of the participants.</P> <P>(c) <E T="03">Management evaluations and audits.</E> State agencies shall provide FNS with full opportunity to conduct management evaluations (including visits to institutions and facilities) of all operations of the State agency under the Program and shall provide OIG with full opportunity to conduct audits (including visits to institutions and facilities) of all operations of the State agency under the Program. Within 60 calendar days of receipt of each management evaluation report, the State <PRTPAGE P="199"/>agency shall submit to FNSRO a written plan for correcting serious deficiencies, including specific timeframes for accomplishing corrective actions and initiating follow-up efforts. If a State agency makes a showing of good cause, however, FNS may allow more than 60 days in which to submit a plan. Each State agency shall make available its records, including records of the receipt and expenditure of funds, upon request by FNS or OIG. OIG shall also have the right to make audits of the records and operation of any institution.</P> <P>(d) <E T="03">Reports.</E> Each State agency shall submit to FNS the final Report of the Child and Adult Care Food Program (FNS 44) for each month which shall be limited to claims submitted in accordance with § 226.10(e) and which shall be postmarked and/or submitted no later than 90 days following the last day of the month covered by the report. States shall not receive Program funds for any month for which the final report is not submitted within this time limit unless FNS grants an exception. Upward adjustments to a State agency's report shall not be made after 90 days from the month covered by the report unless authorized by FNS. Downward adjustments shall always be made, without FNS authorization, regardless of when it is determined that such adjustments are necessary. Adjustments shall be reported to FNS in accordance with procedures established by FNS. Each State agency shall also submit to FNS a quarterly Financial Status Report (SF-269) on the use of Program funds. Such reports shall be postmarked and/or submitted no later than 30 days after the end of each fiscal year quarter. Obligations shall be reported only for the fiscal year in which they occur. A final Financial Status Report for each fiscal year shall be postmarked and/or submitted to FNS within 120 days after the end of the fiscal year. FNS shall not be responsible for reimbursing unpaid Program obligations reported later than 120 days after the close of the fiscal year in which they were incurred.</P> <P>(e) <E T="03">Annual plan.</E> Each State shall submit to the Secretary for approval by August 15 of each year an annual plan for the use of State administrative expense funds, including a staff formula for State personnel.</P> <P>(f) <E T="03">Rate assignment.</E> Each State agency shall require institutions (other than sponsoring organizations for day care homes) to submit, not less frequently than annually, information necessary to assign rates of reimbursement as outlined in § 226.9.</P> <P>(g) <E T="03">Administrative budget approval.</E> The State agency shall approve institution administrative budgets, and shall limit allowable administrative costs claimed by each sponsoring organization for day care homes to administrative costs approved in its annual budget. The State agency may establish such administrative costs limits for other institutions. For sponsoring organizations of centers, the State agency is prohibited from approving the sponsoring organization's administrative budget, or any amendments to the budget, if the administrative budget shows the Program will be charged for administrative costs in excess of 15 percent of the meal reimbursements estimated to be earned during the budget year. However, the State agency may waive this limit if the sponsoring organization provides justification that it requires Program funds in excess of 15 percent to pay its administrative costs and if the State agency is convinced that the institution will have adequate funding to provide meals meeting the requirements of § 226.20. Administrative budget levels may be adjusted to reflect changes in Program activities.</P> <P>(h) <E T="03">Start-up and expansion payments.</E> Each State agency shall establish procedures for evaluating requests for start-up and expansion payments, issuing these payments to eligible sponsoring organizations, and monitoring the use of these payments.</P> <P>(i) <E T="03">Advance payments.</E> Each State agency shall establish procedures for issuing advance payments by the first day of each month and comparing these payments with earned reimbursement on a monthly basis. The State agency shall maintain on file a statement of the State's law and policy governing the use of interest earned on advanced funds by sponsors, institutions, child care facilities and adult day care facilities.<PRTPAGE P="200"/> </P> <P>(j) <E T="03">Recovery of overpayments.</E> Each State agency shall establish procedures to recover outstanding start-up, expansion and advance payments from institutions which, in the opinion of the State agency, will not be able to earn these payments.</P> <P>(k) <E T="03">Claims processing.</E> Each State agency shall establish procedures for institutions to properly submit claims for reimbursement. All valid claims shall be paid within 45 calendar days of receipt. Within 15 calendar days of receipt of any incomplete or incorrect claim which must be revised for payment, the State agency shall notify the institution as to why and how such claim must be revised. If the State agency disallows partial or full payment for a claim for reimbursement, it shall notify the institution which submitted the claim of its right to appeal under § 226.6(k). State agencies may permit disallowances to be appealed separately from claims for reimbursement.</P> <P>(l) <E T="03">Participation controls.</E> The State agency may establish control procedures to ensure that payment is not made for meals served to participants attending in excess of the authorized capacity of each independent center, adult day care facility or child care facility.</P> <P>(m) <E T="03">Financial management system.</E> Each State agency shall establish a financial management system in accordance with the Uniform Federal Assistance Regulations, 7 CFR part 3015, and FNS guidance to identify allowable Program costs and establish standards for institutional recordkeeping and reporting. These standards shall (1) prohibit claiming reimbursement for meals provided by a participant's family, except as authorized by § 226.18(e) and (2) allow the cost of meals served to adults who perform necessary food service labor under the Program, except in day care homes. The State agency shall provide guidance on financial management requirements to each institution.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983; Amdt. 5, 49 FR 18988, May 4, 1984; 50 FR 8580, Mar. 4, 1985; 50 FR 26975, July 1, 1985; 53 FR 52589, Dec. 28, 1988; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 63 FR 9728, Feb. 26, 1998; 67 FR 43490, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.8</SECTNO> <SUBJECT>Audits.</SUBJECT> <P>(a) Unless otherwise exempt, audits at the State and institution levels shall be conducted in accordance with the Office of Management and Budget's Circulars A-128 and A-110 and the Department's Uniform Federal Assistance Regulations (7 CFR part 3015). Title XIX and title XX proprietary institutions not subject to organization-wide audits shall be audited by the State agency at least once every two years.</P> <P>(b) The funds provided to the State agency under § 226.4(h) may be made available to institutions to fund a portion of organization-wide audits, provided that the organization-wide audit includes tests of the CACFP in accordance with section 10.558 of the Compliance Supplement to OMB Circular A-128. The funds provided to an institution for an organization-wide audit shall not exceed the portion of the audit's cost equal to the CACFP's portion of the total Federal grant.</P> <P>(c) Funds provided under § 226.4(h) may be used by the State agency to conduct program-specific audits of institutions not subject to organization-wide audits, or for which the State agency considers program specific audits to be needed. The State agency may use any funds remaining after all required program-specific audits have been performed to conduct administrative reviews of institutions.</P> <P>(d) Funds provided under § 226.4(h) may only be obligated during the fiscal year for which those funds are allocated. If funds provided under § 226.4(h) are not sufficient to meet the requirements of this section, the State agency may then use available State administrative expense funds to conduct audits, provided that the State agency is arranging for the audits and has not passed the responsibility down to the institution.</P> <P>(e) In conducting management evaluations or audits for any fiscal year, FNS or OIG may disregard any overpayment which does not exceed $100. In conducting State agency sponsored audits in State administered programs, the State agency may disregard any overpayment which does not exceed the amount established by State law, regulations or procedures as a minimum for which claims will be made for State <PRTPAGE P="201"/>losses generally. No overpayment shall be disregarded, however, where there are unpaid claims of the same fiscal year from which the overpayment can be deducted, or where there is evidence of violation of criminal law or civil fraud statutes.</P> <P>(f) While OIG shall rely to the fullest extent feasible upon State sponsored audits, OIG may, whenever it considers necessary:</P> <P>(1) Make audits on a statewide basis;</P> <P>(2) Perform on-site test audits;</P> <P>(3) Review audit reports and related working papers of audits performed by or for State agencies.</P> <P>(g) State agencies are not required to provide a hearing to an institution for State actions taken on the basis of a Federal audit determination. If a State agency does not provide a hearing in such situations, FNS will provide a hearing, upon request, in accordance with procedures set forth in § 226.6(k).</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 50 FR 8580, Mar. 4, 1985; 51 FR 4295, Feb. 4, 1986; 52 FR 5526, Feb. 25, 1987; 53 FR 52590, Dec. 28, 1988; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 67 FR 43490, June 27, 2002]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart D—Payment Provisions</HD> <SECTION> <SECTNO>§ 226.9</SECTNO> <SUBJECT>Assignment of rates of reimbursement for centers.</SUBJECT> <P>(a) The State agency shall assign rates of reimbursement, not less frequently than annually, on the basis of family-size and income information reported by each institution. Assigned rates of reimbursement may be changed more frequently than annually if warranted by changes in family-size and income information. Assigned rates of reimbursement shall be adjusted annually to reflect changes in the national average payment rates.</P> <P>(b) The State agency shall either:</P> <P>(1) Require that institutions submit each month's figures for meals served daily to participants from families meeting the eligibility standards for free meals, to participants from families meeting the eligibility standards for reduced-price meals, and to participants from families not meeting such guidelines; or</P> <P>(2) Establish claiming percentages, not less frequently that annually, for each institution on the basis of the number of enrolled participants eligible for free, reduced-price, and paid meals; or</P> <P>(3) Determine a blended per-meal rate of reimbursement, not less frequently than annually, by adding the products obtained by multiplying the applicable national average payment rate of reimbursement for each category (free, reduced-price, paid) by the claiming percentage for that category.</P> <P>(c) States have two methods of reimbursing institutions. The method chosen by the State agency must be applied to all institutions participating in the Program in that State. These methods are:</P> <P>(1) Meals times rates payment, which involves reimbursing an institution for meals served at the assigned rate for each meal. This method entails no comparison to the costs incurred by the institution for the meal service; and,</P> <P>(2) Meals times rates or actual costs, whichever is the lesser, which involves reimbursing an institution for meals served at the assigned rate for each meal or at the level of the costs actually incurred by the institution for the meal service. This method does entail a comparison of the costs incurred to the meal rates, with the costs being a limiting factor on the level of reimbursement an institution may receive.</P> <P>(d) In those States where the State agency has chosen the option to implement a meals times rates payment system State-wide, the State agency may elect to pay an institution's final claim for reimbursement for the fiscal year at higher reassigned rates of reimbursement for lunches and suppers; however, the reassigned rates may not exceed the applicable maximum rates of reimbursement established under § 210.11(b) of the National School Lunch Program regulations. In those States which use the method of comparing meals times rates or actual costs, whichever is lesser, the total payments made to an institution shall not exceed the total net costs incurred for the fiscal year.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983; 53 FR 52590, Dec. 28, 1988; Amdt. 22, 55 FR 1378, Jan. 14, 1990]</CITA> </SECTION> <SECTION> <PRTPAGE P="202"/> <SECTNO>§ 226.10</SECTNO> <SUBJECT>Program payment procedures.</SUBJECT> <P>(a) By the first day of each month of operation, the State agency shall provide an advance payment to each institution electing to receive such payments, in accordance with § 226.6(b)(10). Advance payments shall equal the full level of claims estimated by the State agency to be submitted in accordance with paragraph (c) of this section, considering prior reimbursement claims and other information such as fluctuations in enrollment. The institution may decline to receive all or any part of the advance.</P> <P>(b) For each fiscal year, the amount of payment made, including funds advanced to an institution, shall not exceed the amount of valid reimbursement claimed by that institution. To ensure that institutions do not receive excessive advance payments, the State agency shall observe the following procedures:</P> <P>(1) After three advance payments have been made to an institution, the State agency shall ensure that no subsequent advance is made until the State agency has validated the institution's claim for reimbursement for the third month prior to the month for which the next advance is to be paid.</P> <P>(2) If the State agency has audit or monitoring evidence of extensive program deficiencies or other reasons to believe that an institution will not be able to submit a valid claim for reimbursement, advance payments shall be withheld until the claim is received or the deficiencies are corrected.</P> <P>(3) Each month the State agency shall compare incoming claims against advances to ensure that the level of funds authorized under paragraph (a) of this section does not exceed the claims for reimbursement received from the institution. Whenever this process indicates that excessive advances have been authorized, the State agency shall either demand full repayment or adjust subsequent payments, including advances.</P> <P>(4) If, as a result of year end reconciliation as required by the Department's Uniform Federal Assistance Regulations (7 CFR part 3015), the State agency determines that reimbursement earned by an institution during a fiscal year is less than the amount paid, including funds advanced to that institution, the State agency shall demand repayment of the outstanding balance or adjust subsequent payments.</P> <P>(c) Claims for Reimbursement shall report information in accordance with the financial management system established by the State agency, and in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the final Report of the Child and Adult Care Food Program (FNS 44) required under § 226.7(d). In submitting a Claim for Reimbursement, each institution shall certify that the claim is correct and that records are available to support that claim. Independent proprietary title XX child care centers shall submit the number and percentage of the enrolled participants, or the licensed capacity receiving title XX benefits for the month claimed for months in which not less than 25 percent of the enrolled children or 25 percent of licensed capacity, whichever is less, were title XX beneficiaries. Sponsoring organizations of such child care centers shall submit the number and percentage of the enrolled children or licensed capacity, whichever is less, receiving title XX benefits for each center for the claim. Sponsoring organizations of such centers shall not submit claims for child care centers in which less than 25 percent of the enrolled children and licensed capacity were title XX beneficiaries for the month claimed. Independent proprietary title XIX or title XX adult day care centers shall submit the percentages of enrolled adult participants receiving title XIX or title XX benefits for the month claimed for months in which not less than 25 percent of enrolled adult participants were title XIX or title XX beneficiaries. Sponsoring organizations of such adult day care centers shall submit the percentage of enrolled adult participants receiving title XIX or title XX benefits for each center for the claim. Sponsoring organizations of such centers shall not submit claims for adult day care centers in which less than 25 percent of enrolled adult participants were title XIX or title XX beneficiaries for the month claimed.<PRTPAGE P="203"/> </P> <P>(d) All records to support the claim shall be retained for a period of three years after the date of submission of the final claim for the fiscal year to which they pertain, except that if audit findings have not been resolved, the records shall be retained beyond the end of the three year period as long as may be required for the resolution of the issues raised by the audit. All accounts and records pertaining to the Program shall be made available, upon request, to representatives of the State agency, of the Department, and of the U.S. General Accounting Office for audit or review, at a reasonable time and place.</P> <P>(e) Unless otherwise approved by FNS, the Claim for Reimbursement for any month shall cover only Program operations for that month except if the first or last month of Program operations in any fiscal year contains 10 operating days or less, such month may be added to the Claim for Reimbursement for the appropriate adjacent month; however, Claims for Reimbursement may not combine operations occurring in two fiscal years. A final Claim for Reimbursement shall be postmarked and/or submitted to the State agency not later than 60 days following the last day of the full month covered by the claim. State agencies may establish shorter deadlines at their discretion. Claims not postmarked and/or submitted within 60 days shall not be paid with Program funds unless FNS determines that an exception should be granted. The State agency shall promptly take corrective action with respect to any Claim for Reimbursement as determined necessary through its claim review process or otherwise. In taking such corrective action, State agencies may make upward adjustments in Program funds claimed on claims filed within the 60 day deadline if such adjustments are completed within 90 days of the last day of the claim month and are reflected in the final Report of the Child and Adult Care Food Programs (FNS-44) for the claim month which is required under 226.7(d). Upward adjustments in Program funds claimed which are not reflected in the final FNS-44 for the claim month shall not be made unless authorized by FNS. Downward adjustments in Program funds claimed shall always be made without FNS authorization regardless of when it is determined that such adjustments are necessary.</P> <P>(f) If a State agency has reason to believe that an institution or food service management company has engaged in unlawful acts with respect to Program Operations, evidence found in audits, investigations or other reviews shall be a basis for non-payment of claims for reimbursement.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended by Amdt. 5, 49 FR 18988, May 4, 1984; 50 FR 26975, July 1, 1985; 53 FR 52590, Dec. 28, 1988; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 62 FR 23618, May 1, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.11</SECTNO> <SUBJECT>Program payments for child care centers, adult day care centers and outside-school-hours care centers.</SUBJECT> <P>(a) Payments shall be made only to institutions operating under an agreement with the State agency for the meal types specified in the agreement served at approved child care centers, adult day care centers and outside-school-hours care centers. A State agency may make payment for meals served in accordance with provisions of the Program in the calendar month preceding the calendar month in which the agreement is executed.</P> <P>(b) Each child care institution shall report each month to the State agency the total number of meals, by type (breakfasts, lunches, suppers, and supplements), served to children, except that such reports shall be made for a proprietary title XX center only for calendar months during which not less than 25 percent of enrolled children, or 25 percent of licensed capacity, whichever is less, were title XX beneficiaries. Each adult day care institution shall report each month to the State agency the total number of meals, by type (breakfasts, lunches, suppers, and supplements), served to adult participants, except that such reports shall be made for a proprietary title XIX or title XX center only for calendar months during which no less than 25 percent of enrolled adult participants were title XIX or title XX beneficiaries.<PRTPAGE P="204"/> </P> <P>(c) Each State agency shall base reimbursement to each child care institution on the number of meals, by type, served to children multiplied by the assigned rates of reimbursement, except that reimbursement shall be payable to proprietary title XX child care centers only for calendar months during which not less than 25 percent of enrolled children, or 25 percent of licensed capacity, whichever is less, were title XX beneficiaries. Each State agency shall base reimbursement to each adult day care institution on the number of meals, by type, served to adult participants multiplied by the assigned rates of reimbursement, except that reimbursement shall be payable to proprietary title XIX and title XX adult day care centers only for calendar months during which not less than 25 percent of enrolled adult participants were title XIX or Title XX beneficiaries. In computing reimbursement, the State agency shall either:</P> <P>(1) Base reimbursement to institutions on actual daily counts of meals served, and multiply the number of meals, by type, served to participants eligible to receive free meals, served to participants eligible to receive reduced-price meals, and served to participants from families not meeting such standards by the applicable national average payment rate; or</P> <P>(2) Apply the applicable claiming percentage or percentages to the total number of meals, by type, served to participants and multiply the product or products by the assigned rate of reimbursement for each meal type; or</P> <P>(3) Multiply the assigned blended per meal rate of reimbursement by the total number of meals, by type, served to participants.</P> <P>(d) If the State agency elects to reimburse its institutions according to the lesser of rates or actual costs, total Program payments to an institution during any fiscal year, including any cash payments in lieu of commodities, shall not exceed allowable Program operating and administrative costs, less income to the Program. The State agency may limit payments for administrative costs to the amount approved in the annual administrative budget of the institution. The State agency may prohibit an institution from using payments for operating costs to pay for administrative expenses.</P> <P>(e) Each institution shall maintain records as prescribed by the State agency's financial management system.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983; 52 FR 36907, Oct. 2, 1987; 53 FR 52590, Dec. 28, 1988; 62 FR 23618, May 1, 1997]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.12</SECTNO> <SUBJECT>Administrative payments to sponsoring organizations for day care homes.</SUBJECT> <P>(a) <E T="03">General.</E> Sponsoring organizations for day care homes shall receive payments for administrative costs. During any fiscal year, administrative costs payments to a sponsoring organization may not exceed the lesser of (1) actual expenditures for the costs of administering the Program less income to the Program, or (2) the amount of administrative costs approved by the State agency in the sponsoring organization's budget, or (3) the sum of the products obtained by multiplying each month the sponsoring organization's:</P> <P>(i) Initial 50 day care homes by 42 dollars;</P> <P>(ii) Next 150 day care homes by 32 dollars;</P> <P>(iii) Next 800 day care homes by 25 dollars; and</P> <P>(iv) Additional day care homes by 22 dollars. </P> <FP>During any fiscal year, administrative payments to a sponsoring organization may not exceed 30 percent of the total amount of administrative payments and food service payments for day care home operations.</FP> <P>(b) <E T="03">Start-up and expansion payments</E>. (1) Prospective sponsoring organizations of day care homes, participating sponsoring organizations of child care centers or outside-school-hours care centers, independent centers, and participating sponsoring organizations of less than 50 homes which meet the criteria in paragraph (b)(2) of this section shall be entitled to receive start-up payments to develop or expand successful Program operations in day care homes. Participating sponsoring organizations of day care homes which meet the criteria in paragraph (b)(2) of this section shall be entitled to receive <PRTPAGE P="205"/>expansion payments to initiate or expand Program operations in day care homes in low-income or rural areas. The State agency shall approve start-up payments only once for any eligible sponsoring organization, but may approve expansion payments for any eligible sponsoring organization more than once, provided that: the request must be for expansion into an area(s) other than that specified in their initial or prior request; and 12 months has elapsed since the sponsoring organization has satisfied all obligations under its initial or prior expansion agreement. Eligible sponsoring organizations which have received start-up payments shall be eligible to apply for expansion payments at a date no earlier than 12 months after it has satisfied all its obligations under its start-up agreement with the State agency.</P> <P>(2) Sponsoring organizations which apply for start-up or expansion payments shall evidence:</P> <P>(i) Public status or tax exempt status under the Internal Revenue Code of 1986;</P> <P>(ii) An organizational history of managing funds and ongoing activities (i.e., administering public or private programs);</P> <P>(iii) An acceptable and realistic plan for recruiting day care homes to participate in the Program (such as the method of contacting providers), which may be based on estimates of the number of day care homes to be recruited and information supporting their existence, and in the case of sponsoring organizations applying for expansion payments, documentation that the day care homes to be recruited are located in low-income or rural areas; and</P> <P>(iv) An acceptable preliminary sponsoring organization management plan including, but not limited to, plans for preoperational visits and training.</P> <P>(3) The State agency shall deny start-up and expansion payments to applicant sponsoring organizations which fail to meet the criteria of paragraph (b)(2) of this section or which have not been financially responsible in the operation of other programs funded by Federal, State, or local governments. The State agency shall notify the sponsoring organization of the reasons for denial and allow the sponsoring organization full opportunity to submit evidence on appeal as provided for in § 226.6(k). Any sponsoring organization applying for start-up or expansion funds shall be notified of approval or disapproval by the State agency in writing within 30 calendar days of filing a complete and correct application. If a sponsoring organization submits an incomplete application, the State agency shall notify the sponsoring organization within 15 calendar days of receipt of the application and shall provide technical assistance, if necessary, to the sponsoring organization for the purpose of completing its application.</P> <P>(4) Sponsoring organizations which apply for and meet the criteria for start-up or expansion payments shall enter into an agreement with the State agency. The agreement shall specify:</P> <P>(i) Activities which the sponsoring organization will undertake to initiate or expand Program operations in day care homes;</P> <P>(ii) The amount of start-up or expansion payments to be issued to the sponsoring organization, together with an administrative budget detailing the costs which the sponsoring organization shall incur, document, and claim;</P> <P>(iii) The time allotted to the sponsoring organization for the initiation or expansion of Program operations in family day care homes;</P> <P>(iv) The responsibility of the applicant sponsoring organization to repay, upon demand by the State agency, start-up or expansion payments not expended in accordance with the agreement.</P> <P>(5) Upon execution of the agreement, the State agency shall issue a start-up or expansion payment to the sponsoring organization in an amount equal to not less than one, but not more than two month's anticipated administrative reimbursement to the sponsoring organization as determined by the State agency. However, no sponsoring organization may receive start-up or expansion payments for more than 50 day care homes. Eligible sponsoring organizations with fewer than 50 homes under their jurisdiction at the time of application for start-up payments may receive such payments for up to 50 homes, less the number of homes under <PRTPAGE P="206"/>their jurisdiction. Eligible sponsoring organizations applying for expansion funds may receive at a maximum such payments for up to 50 homes at the currently assigned administrative payment for the first 50 homes. In determining the amount of start-up or expansion payments to be made to a sponsoring organization, the State agency shall consider the anticipated level of start-up or expansion costs to be incurred by the sponsoring organization and alternate sources of funds available to the sponsoring organization.</P> <P>(6) Upon expiration of the time allotted to the sponsoring organization for initiating or expanding Program operations in day care homes, the State agency shall obtain and review documentation of activities performed and costs incurred by the sponsoring organization under the terms of the start-up or expansion agreement. If the sponsoring organization has not made every reasonable effort to carry out the activities specified in the agreement, the State agency shall demand repayment of all or part of the payment. The sponsoring organization may retain start-up or expansion payments for all day care homes which initiate Program operations. However, no sponsoring organization may retain any start-up or expansion payments in excess of its actual costs for the expenditures specified in the agreement.</P> <CITA>[47 FR 36527, Aug. 20, 1982; 47 FR 46072, Oct. 15, 1982, as amended at 53 FR 52590, Dec. 28, 1988; 63 FR 9728, Feb. 26, 1998; 67 FR 43490, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.13</SECTNO> <SUBJECT>Food service payments to sponsoring organizations for day care homes.</SUBJECT> <P>(a) Payments shall be made only to sponsoring organizations operating under an agreement with the State agency for the meal types specified in the agreement served to enrolled nonresident children and eligible enrolled children of day care home providers, at approved day care homes.</P> <P>(b) Each sponsoring organization shall report each month to the State agency the total number of meals, by type (breakfasts, lunches, suppers, and supplements) and by category (tier I and tier II), served to children enrolled in approved day care homes.</P> <P>(c) Each sponsoring organization shall receive payment for meals served to children enrolled in approved day care homes at the tier I and tier II reimbursement rates, as applicable, and as established by law and adjusted in accordance with § 226.4. However, the rates for lunches and suppers shall be reduced by the value of commodities established under § 226.5(b) for all sponsoring organizations for day care homes which have elected to receive commodities. For tier I day care homes, the full amount of food service payments shall be disbursed to each day care home on the basis of the number of meals served, by type, to enrolled children. For tier II day care homes, the full amount of food service payments shall be disbursed to each day care home on the basis of the number of meals served to enrolled children by type, and by category (tier I and tier II) as determined in accordance with paragraphs (d)(2) and (d)(3) of this section. However, the sponsoring organization may withhold from Program payments to each home an amount equal to costs incurred for the provision of Program foodstuffs or meals by the sponsoring organization on behalf of the home and with the home provider's written consent.</P> <P>(d) As applicable, each sponsoring organization for day care homes shall:</P> <P>(1) Require that tier I day care homes submit the number of meals served, by type, to enrolled children.</P> <P>(2) Require that tier II day care homes in which the provider elects not to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals submit the number of meals served, by type, to enrolled children.</P> <P>(3) Not more frequently than annually, select one of the methods described in paragraphs (d)(3) (i)-(iii) of this section for all tier II day care homes in which the provider elects to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals. In such homes, the sponsoring organization shall either:</P> <P>(i) Require that such day care homes submit the number and types of meals <PRTPAGE P="207"/>served each day to each enrolled child by name. The sponsoring organization shall use the information submitted by the homes to produce an actual count, by type and by category (tier I and tier II), of meals served in the homes; or</P> <P>(ii) Establish claiming percentages, not less frequently than semiannually, for each such day care home on the basis of one month's data concerning the number of enrolled children determined eligible for free or reduced-price meals. Sponsoring organizations shall obtain one month's data by collecting either enrollment lists (which show the name of each enrolled child in the day care home), or attendance lists (which show, by days or meals, the rate of participation of each enrolled child in the day care home). The State agency may require a sponsoring organization to recalculate the claiming percentage for any of its day care homes before the required semiannual calculation if the State agency has reason to believe that a home's percentage of income-eligible children has changed significantly or was incorrectly established in the previous calculation. Under this system, day care homes shall be required to submit the number of meals served, by type, to enrolled children; or</P> <P>(iii) Determine a blended per-meal rate of reimbursement, not less frequently than semiannually, for each such day care home by adding the products obtained by multiplying the applicable rates of reimbursement for each category (tier I and tier II) by the claiming percentage for that category, as established in accordance with paragraph (d)(3)(ii) of this section. The State agency may require a sponsoring organization to recalculate the blended rate for any of its day care homes before the required semiannual calculation if the State agency has reason to believe that a home's percentage of income-eligible children has changed significantly or was incorrectly established in the previous calculation. Under this system, day care homes shall be required to submit the number of meals served, by type, to enrolled children.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 62 FR 903, Jan. 7, 1997; 62 FR 5519, Feb. 6, 1997; 63 FR 9105, Feb. 24, 1998]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.14</SECTNO> <SUBJECT>Claims against institutions.</SUBJECT> <P>(a) State agencies shall disallow any portion of a claim for reimbursement and recover any payment to an institution not properly payable under this part. State agencies may consider claims for reimbursement not properly payable if an institution does not comply with the recordkeeping requirements contained in this part. The State agency may permit institutions to pay overclaims over a period of one or more years. However, the State agency must assess interest beginning with the initial demand for remittance. Further, when an institution requests and is granted an administrative review of the State agency's overpayment demand, the State agency is prohibited from taking action to collect or offset the overpayment until the administrative review is concluded. The State agency must maintain searchable records of funds recovery activities. If the State agency determines that a sponsoring organization of centers has spent more than 15 percent of its meal reimbursements for a budget year for administrative costs (or more than any higher limit established pursuant to a waiver granted under § 226.6(f)(3)), the State agency must take appropriate fiscal action. In addition, except with approval from the appropriate FNSRO, State agencies shall consider claims for reimbursement not payable when an institution fails to comply with the recordkeeping requirements that pertain to records directly supporting claims for reimbursement. Records that directly support claims for reimbursement include, but are not limited to, daily meal counts, menu records, and enrollment and attendance records, as required by § 226.15(e). State agencies shall assert overclaims against any sponsoring organization of day care homes which misclassifies a day care home as a tier I day care home unless the misclassification is determined to be inadvertent under guidance issued by FNS. However, the State agency shall notify the institution of the reasons for any disallowance or demand for repayment, and allow the institution full opportunity to submit evidence on appeal as provided for in § 226.6(k). Miminum <PRTPAGE P="208"/>State agency collection procedures for unearned payments shall include:</P> <P>(1) Written demand to the institution for the return of improper payments; (2) if, after 30 calendar days, the institution fails to remit full payment or agree to a satisfactory repayment schedule, a second written demand for the return of improper payments sent by certified mail return receipt requested; and (3) if, after 60 calendar days, the institution fails to remit full payment or agree to a satisfactory repayment schedule, the State agency shall refer the claim against the institution to appropriate State or Federal authorities for pursuit of legal remedies.</P> <P>(b) In the event that the State agency finds that an institution which prepares its own meals is failing to meet the meal requirements of § 226.20, the State agency need not disallow payment or collect an overpayment arising out of such failure if the institution takes such other action as, in the opinion of the State agency, will have a corrective effect. However, the State agency shall not disregard any overpayments or waive collection action arising from the findings of Federal audits.</P> <P>(c) If FNS does not concur with the State agency's action in paying an institution or in failing to collect an overpayment, FNS shall notify the State agency of its intention to assert a claim against the State agency. In all such cases, the State agency shall have full opportunity to submit evidence concerning the action taken. The State agency shall be liable to FNS for failure to collect an overpayment, unless FNS determines that the State agency has conformed with this part in issuing the payment and has exerted reasonable efforts to recover the improper payment.</P> <CITA>[47 FR 36527, Aug. 20, 1982; 47 FR 46072, Oct. 15, 1982, as amended at 50 FR 8580, Mar. 4, 1985; 53 FR 52590, Dec. 28, 1988; 62 FR 903, Jan. 7, 1997; 64 FR 72260, Dec. 27, 1999; 67 FR 43490, June 27, 2002]</CITA> </SECTION> </SUBPART> <SUBPART> <HD SOURCE="HED">Subpart E—Operational Provisions</HD> <SECTION> <SECTNO>§ 226.15</SECTNO> <SUBJECT>Institution provisions.</SUBJECT> <P>(a) <E T="03">Tax exempt status.</E> Except for proprietary title XIX and title XX centers, and sponsoring organizations of such centers, institutions must be public, or have tax exempt status under the Internal Revenue Code of 1986.</P> <P>(b) <E T="03">New applications and renewals.</E> Each institution must submit to the State agency with its application all information required for its approval as set forth in §§ 226.6(b) and 226.6(f). Such information must demonstrate that the institution has the administrative and financial capability to operate the Program in accordance with this part and with the performance standards set forth at § 226.6 (b)(18). The State agency must deny the application of any institution that does not demonstrate in its application that it is administratively and financially capable of operating the Program in accordance with this part, and may approve only those applicant institutions that meet the performance standards. No institution may submit an application if the institution or any of its principals is on the National disqualified list, and no sponsoring organization may submit an application on behalf of a facility if the facility or any of its principals is on the National disqualified list. At a minimum, such information must include:</P> <P>(1) Except for proprietary title XIX and title XX centers and sponsoring organizations or proprietary title XIX and title XX centers, evidence of nonprofit status, in accordance with § 226.15(a).</P> <P>(2) An application for participation, or application renewal materials, accompanied by all necessary supporting documentation;</P> <P>(3) An administrative budget;</P> <P>(4) If an independent child care center or independent outside-school-hours care center, documentation that it meets the licensing/approval requirements of § 226.6(d)(1); or, if an independent adult day care center, the licensing/approval requirements of § 226.19a(b)(3).</P> <P>(5) A nondiscrimination and free and reduced-price policy statement, and information regarding a public release, in accordance with § 226.23;</P> <P>(6) For each proprietary title XX child care center, documentation that it provides nonresidential day care <PRTPAGE P="209"/>services for which it receives compensation under title XX of the Social Security Act, and certification that not less than 25 percent of the enrolled children, or 25 percent of the licensed capacity, whichever is less, during the most recent calendar month were title XX beneficiaries. For each proprietary title XIX or title XX adult day care center, documentation that it provides nonresidential day care services for which it receives compensation under title XIX or title XX of the Social Security Act, and certification that not less than 25 percent of the adult participants enrolled during the most recent calendar month were title XIX or title XX beneficiaries. Sponsoring organizations shall provide documentation and certification for each proprietary title XIX or title XX center under its jurisdiction;</P> <P>(7) A list of the publicly funded programs in which the institution and its principals have participated in the past seven years and a certification that, during the preceding seven years, neither the institution nor any of its principals has been declared ineligible to participate in any publicly funded program by reason of violating that program's requirements. Instead of such a certification, the institution may submit documentation that the institution or the principal previously declared ineligible was later fully reinstated in, or determined eligible for, the program, including the payment of any debts owed;</P> <P>(8) A statement certifying that neither the institution nor any of its principals has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency; and</P> <P>(9) A statement certifying that all information on the application is true and correct, along with the name, mailing address, and date of birth of the institution's executive director and chairman of the board of directors.</P> <P>(c) <E T="03">Responsibility.</E> Each institution shall accept final administrative and financial responsibility for Program operations. No institution may contract out for management of the Program.</P> <P>(d) <E T="03">Staffing.</E> Each institution shall provide adequate supervisory and operational personnel for management and monitoring of the Program.</P> <P>(e) <E T="03">Recordkeeping.</E> Each institution shall establish procedures to collect and maintain all program records required under this part, as well as any records required by the State agency. Failure to maintain such records shall be grounds for the denial of reimbursement for meals served during the period covered by the records in question and for the denial of reimbursement for costs associated with such records. At a minimum, the following records shall be collected and maintained:</P> <P>(1) Copies of all applications and supporting documents submitted to the State agency;</P> <P>(2) Documentation of the enrollment of each participant at child care centers, adult day care centers and outside-school-hours care centers including information used to determine eligibility for free or reduced price meals in accordance with § 226.23(e)(1).</P> <P>(3) Documentation of: The enrollment of each child at day care homes; information used to determine the eligibility of enrolled providers’ children for free or reduced price meals; information used to classify day care homes as tier I day care homes, including official source documentation obtained from school officials when the classification is based on elementary school data; and information used to determine the eligibility of enrolled children in tier II day care homes that have been identified as eligible for free or reduced price meals in accordance with § 226.23(e)(1).</P> <P>(4) Daily records indicating the number of participants in attendance and the number of meals, by type (breakfast, lunch, supper, and supplements), served to participants.</P> <P>(5) For child care centers and outside-school-hours care centers claiming reimbursement for two meals and two <PRTPAGE P="210"/>supplements or three meals and one supplement per child per day, either:</P> <P>(i) Documentation of total time-in-attendance for each child at the center for each day for which the fourth meal service was claimed, including a time-in/time-out form which records time-in-attendance for each child at the center; or, at the discretion of the State agency,</P> <P>(ii) Documentation which demonstrates that at least eight hours elapse between the end of the first meal service and the beginning of the fourth meal service on any day in which reimbursement is claimed for a fourth meal; service.</P> <P>(6) Except at day care homes, daily records indicating the number of meals, by type, served to adults performing labor necessary to the food service;</P> <P>(7) Copies of invoices, receipts, or other records required by the State agency financial management instruction to document:</P> <P>(i) Administrative costs claimed by the institution;</P> <P>(ii) Operating costs claimed by the institution except sponsoring organizations of day care homes; and</P> <P>(iii) Income to the Program.</P> <P>(8) Copies of all claims for reimbursement submitted to the State agency;</P> <P>(9) Receipts for all Program payments received from the State agency;</P> <P>(10) If applicable, information concerning the dates and amounts of disbursement to each child care facility or adult day care facility under its auspices;</P> <P>(11) Copies of menus, and any other food service records required by the State agency;</P> <P>(12) If applicable, information concerning the location and dates of each child care or adult day care facility review, any problems noted, and the corrective action prescribed and effected;</P> <P>(13) Information on training session date(s) and location(s), as well as topics presented and names of participants; and</P> <P>(14) Documentation of nonprofit food service to ensure that all Program reimbursement funds are used: (i) Solely for the conduct of the food service operation; or (ii) to improve such food service operations, principally for the benefit of the enrolled participants.</P> <P>(f) <E T="03">Day care home classifications.</E> Each sponsoring organization of day care homes shall determine which of the day care homes under its sponsorship are eligible as tier I day care homes. A sponsoring organization may use current school or census data provided by the State agency or free and reduced price applications collected from day care home providers in making a determination for each day care home. When using elementary school or census data for making tier I day care home determinations, a sponsoring organization shall first consult school data, except in cases in which busing or other bases of attendance, such as magnet or charter schools, result in school data not being representative of an attendance area's household income levels. In these cases, census data should generally be consulted instead of school data. A sponsoring organization may also use census data if, after reasonable efforts are made, as defined by the State agency, the sponsoring organization is unable to obtain local elementary school attendance area information. A sponsoring organization may also consult census data after having consulted school data which fails to support a tier I day care home determination for rural areas with geographically large elementary school attendance areas, for other areas in which an elementary school's free and reduced price enrollment is above 40 percent, or in other cases with State agency approval. However, if a sponsoring organization believes that a segment of an otherwise eligible elementary school attendance area is above the criteria for free or reduced price meals, then the sponsoring organization shall consult census data to determine whether the homes in that area qualify as tier I day care homes based on census data. If census data does not support a tier I classification, then the sponsoring organization shall reclassify homes in segments of such areas as tier II day care homes unless the individual providers can document tier I eligibility on the basis of their household income. When making tier I day care home determinations based on school data, a sponsoring organization <PRTPAGE P="211"/>shall use attendance area information that it has obtained, or verified with appropriate school officials to be current, within the last school year. Determinations of a day care home's eligibility as a tier I day care home shall be valid for one year if based on a provider's household income, three years if based on school data, or until more current data are available if based on census data. However, a sponsoring organization, State agency, or FNS may change the determination if information becomes available indicating that a home is no longer in a qualified area. The State agency shall not routinely require annual redeterminations of the tiering status of tier I day care homes based on updated elementary school data.</P> <P>(g) <E T="03">Claims submission.</E> Each institution shall submit claims for reimbursement to the State agency in accordance with § 226.10.</P> <P>(h) <E T="03">Program agreement.</E> Each institution shall enter into a Program agreement with the State agency in accordance with § 226.6(f)(1).</P> <P>(i) <E T="03">Commodities.</E> Each institution receiving commodities shall ensure proper commodity utilization.</P> <P>(j) <E T="03">Special Milk Program.</E> No institution may participate in both the Child and Adult Care Food Program and the Special Milk Program at the same time.</P> <P>(k) <E T="03">Elderly feeding programs.</E> Institutions which are school food authorities (as defined in part 210 of this chapter) may use facilities, equipment and personnel supported by funds provided under this part to support a nonprofit nutrition program for the elderly, including a program funded under the Older Americans Act of 1965 (42 U.S.C. 3001 <E T="03">et seq.</E>).</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 48 FR 21530, May 13, 1983; 50 FR 8580, Mar. 4, 1985; 52 FR 15298, Apr. 28, 1987; 52 FR 36907, Oct. 2, 1987; 53 FR 52590, Dec. 28, 1988; 54 FR 26724, June 26, 1989; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 56 FR 58174, Nov. 16, 1991; 61 FR 25554, May 22, 1996; 62 FR 903, Jan. 7, 1997; 62 FR 23619, May 1, 1997; 63 FR 9105, Feb. 24, 1998; 64 FR 72260, Dec. 27, 1999; 67 FR 43490, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.16</SECTNO> <SUBJECT>Sponsoring organization provisions.</SUBJECT> <P>(a) Each sponsoring organization shall comply with all provisions of § 226.15.</P> <P>(b) A sponsoring organization is prohibited from submitting an application on behalf of a facility if either the facility or any of its principals is on the National disqualified list. Each sponsoring organization shall submit to the State agency all information required for its approval and the approval of all child care and adult day care facilities under its jurisdiction, including:</P> <P>(1) A sponsoring organization management plan and administrative budget, in accordance with § 226.6(f)(2), which includes information sufficient to document the sponsoring organization's compliance with the performance standards set forth at § 226.6(b)(18). As part of its management plan, a sponsoring organization of day care homes must document that, to perform monitoring, it will employ the equivalent of one full-time staff person for each 50 to 150 day care homes it sponsors. As part of its monitoring plan, a sponsoring organization of centers must document that, to perform monitoring, it will employ the equivalent of one full-time staff person for each 25 to 150 centers it sponsors. It is the State agency's responsibility to determine the appropriate level of staffing for monitoring for each sponsoring organization, consistent with the specified ranges and the factors established by the State agency in accordance with § 226.6(f)(2). The monitoring staff equivalent may include the employee's time spent on scheduling, travel time, review time, follow-up activity, and report writing. Sponsoring organizations that are participating in the Program on July 29, 2002 must submit a management plan or plan amendment that meets the monitoring staffing requirement no later than July 29, 2003. For sponsoring organizations of centers, the portion of the administrative costs to be charged to the Program as shown on the administrative budget and the actual administrative costs charged to the Program may not exceed 15 percent of the meal reimbursements estimated or actually earned during the budget year, unless the State agency grants a <PRTPAGE P="212"/>waiver in accordance with § 226.6(f)(3). A sponsoring organization of centers must include in its administrative budget all administrative costs, whether incurred by the sponsoring organization or its sponsored centers. If at any point a sponsoring organization determines that the meal reimbursements estimated to be earned during the budget year will be lower than that estimated in its administrative budget, the sponsoring organization must amend its administrative budget to stay within the 15 percent limitation (or any higher limit established pursuant to a waived granted under § 226.6(f)(3)) or seek a waiver. Failure to do so will result in appropriate fiscal action in accordance with § 226.14(a).</P> <P>(2) An application for participation, or renewal materials, for each child care and adult day care facility accompanied by all necessary supporting documentation;</P> <P>(3) Timely information concerning the eligibility status of child care and adult day care facilities (such as licensing/approval actions);</P> <P>(4) For sponsoring organizations applying for initial participation on or after June 20, 2000, if required by State law, regulation, or policy, a bond in the form prescribed by such law, regulation, or policy;</P> <P>(5) A copy of the sponsoring organization's notice to parents, in a form and, to the maximum extent practicable, language easily understandable by the participant's parents or guardians. The notice must inform them of their facility's participation in CACFP, the Program's benefits, the name and telephone number of the sponsoring organization, and the name and telephone number of the State agency responsible for administration of CACFP;</P> <P>(6) If the sponsoring organization chooses to establish procedures for determining a day care home seriously deficient that supplement the procedures in paragraph (l) of this section, a copy of those supplemental procedures. If the State agency has made the sponsoring organization responsible for the administrative review of a proposed termination of a day care home's agreement for cause, pursuant to § 226.6(l)(1), a copy of the sponsoring organization's administrative review procedures. The sponsoring organization's supplemental serious deficiency and administrative review procedures must comply with paragraph (l) of this section and § 226.6(l);</P> <P>(7) A copy of their outside employment policy. The policy must restrict other employment by employees that interferes with an employee's performance of Program-related duties and responsibilities, including outside employment that constitutes a real or apparent conflict of interest; and</P> <P>(8) For sponsoring organizations of day care homes, the name, mailing address, and date of birth of each provider.</P> <P>(c) Each sponsoring organization shall accept final administrative and financial responsibility for food service operations in all child care and adult day care facilities under its jurisdiction.</P> <P>(d) Each sponsoring organization must provide adequate supervisory and operational personnel for the effective management and monitoring of the program at all facilities it sponsors. Each sponsoring organization must employ monitoring staff sufficient to meet the requirements of paragraph (b)(1) of this section. At a minimum, Program assistance must include:</P> <P>(1) Pre-approval visits to each child care and adult day care facility for which application is made to discuss Program benefits and verify that the proposed food service does not exceed the capability of the child care facility;</P> <P>(2) Staff training for all child care and adult day care facilities in Program duties and responsibilities prior to beginning Program operations;</P> <P>(3) Additional training sessions, to be provided not less frequently than annually; and</P> <P>(4) Reviews of food service operations to assess compliance with meal pattern, recordkeeping, and other Program requirements.</P> <P>(i) <E T="03">Reviews of sponsored centers.</E> Reviews must be made at least three times each year at each center. In addition:</P> <P>(A) At least two of the three reviews must be unannounced;</P> <P>(B) At least one unannounced review must include observation of a meal service;<PRTPAGE P="213"/> </P> <P>(C) At least one review must be made during the center's first six weeks of Program operation; and</P> <P>(D) Not more than six months may elapse between reviews.</P> <P>(ii) <E T="03">Reviews of day care homes.</E> Reviews must be made at least three times each year at each day care home, except as described at paragraph (d)(4)(iii) of this section. In addition:</P> <P>(A) At least two of the three reviews must be unannounced;</P> <P>(B) At least one unannounced review must include observation of a meal service;</P> <P>(C) At least one review must be made during the day care home's first four weeks of Program operation; and</P> <P>(D) Not more than six months may elapse between reviews.</P> <P>(iii) <E T="03">Variation for sponsoring organizations of day care homes.</E> If the State agency believes that improved efficiency and more effective management will result, and subject to FNSRO approval, the State agency may allow a sponsoring organization to conduct reviews an <E T="03">average</E> of at least three times each year per day care home, provided that:</P> <P>(A) Each day care home receives at least two unannounced reviews;</P> <P>(B) At least one review is made during each day care home's first four weeks of Program operations; and</P> <P>(C) No more than six months elapse between reviews;</P> <P>(iv) <E T="03">Follow-up reviews.</E> If, in a review of a facility, a sponsoring organization detects one or more serious deficiency, the next review of that facility must be unannounced. Serious deficiencies are those set forth at paragraph (l)(2) of this section, regardless of the type of sponsored facility.</P> <P>(v) <E T="03">Notification.</E> Sponsoring organizations must provide each sponsored center written notification of the right of the sponsoring organization, the State agency, the Department, and other State and Federal officials to make announced or unannounced reviews of their operations during the center's normal hours of child or adult care operations, and must also notify sponsored centers that anyone making such reviews must show photo identification that demonstrates that they are employees of one of these entities. For sponsored centers participating July 29, 2002, the sponsoring organization must provide this notice sent no later than August 29, 2002. For sponsored centers that are approved after July 29, 2002, the sponsoring organization must provide the notice before meal service under the Program begins. Sponsoring organizations must provide day care homes notification of unannounced visits in accordance with § 226.18(b)(1).</P> <P>(vi) <E T="03">Other requirements pertaining to unannounced reviews.</E> Unannounced reviews must be made only during the facility's normal hours of child or adult care operations, and monitors making such reviews must show photo identification that demonstrates that they are employees of the sponsoring organization.</P> <P>(e) Each sponsoring organization shall comply with the recordkeeping requirements established in § § 226.10(d) and 226.15(e) and any recordkeeping requirements established by the State agency in order to justify the administrative payments made in accordance with § 226.12(a). Failure to maintain such records shall be grounds for the denial of reimbursement.</P> <P>(f) The State agency may require a sponsoring organization to enter into separate agreements for the administration of separate types of facilities (child care centers, day care homes, adult day care centers, and outside-school-hours care centers).</P> <P>(g) Each sponsoring organization electing to receive advance payments of program funds for day care homes shall disburse the full amount of such payments within five working days of receipt from the State agency. If the sponsor requests the full operating advance to which it is entitled, the advances to day care homes shall be the full amount which the sponsor expects the home to earn based on the number of meals projected to be served to enrolled children during the period covered by the advance multiplied by the applicable payment rate as specified in § 226.13(c). If a sponsor elects to receive only a part of the operating advance to which it is entitled, or if the full operating advance is insufficient to provide a full advance to each home, the advance shall be disbursed to its homes in a manner and an amount the sponsor <PRTPAGE P="214"/>deems appropriate. Each sponsor shall disburse any reimbursement payments for food service due to each day care home within five working days of receipt from the State agency. Such payment shall be based on the number of meals served to enrolled children at each day care home, less any payments advanced to such home. However, the sponsoring organization may withhold from Program payments to each home an amount equal to food service operating costs incurred by the sponsoring organization in behalf of the home and with the home provider's written consent. If payments from the State agency are not sufficient to provide all day care homes under the sponsoring organization's jurisdiction with advance payments and reimbursement payments, available monies shall be used to provide all due reimbursement payments before advances are disbursed.</P> <P>(h) Sponsoring organizations shall make payments of program funds to child care centers, adult day care centers or outside-school-hours care centers within five working days of receipt from the State agency, on the basis of the management plan approved by the State agency, and may not exceed the Program costs documented at each facility during any fiscal year; except in those States where the State agency has chosen the option to implement a meals times rates payment system. In those States which implement this optional method of reimbursement, such disbursements may not exceed the rates times the number of meals documented at each facility during any fiscal year.</P> <P>(i) Disbursements of advance payments may be withheld from child and adult day care facilities which fail to submit reports required by § 226.15(e).</P> <P>(j) A for-profit organization shall be eligible to serve as a sponsoring organization for proprietary title XIX or title XX centers which have the same legal identity as the organization, but shall not be eligible to sponsor proprietary title XIX or title XX centers which are legally distinct from the organization, day care homes, or public or private nonprofit centers.</P> <P>(k) Before sponsoring organizations expend administrative funds to assist family day care homes in becoming licensed, they shall obtain the following information from each such home: a completed free and reduced price application which documents that the provider meets the Program's income standards; evidence of its application for licensing and official documentation of the defects that are impeding its licensing approval; and a completed CACFP application. These funding requests are limited to $300 per home and are only available to each home once.</P> <P>(l) <E T="03">Termination of agreements for cause.</E> (1) <E T="03">General.</E> The sponsoring organization must initiate action to terminate the agreement of a day care home for cause if the sponsoring organization determines the day care home has committed one or more serious deficiency listed in paragraph (l)(2) of this section.</P> <P>(2) <E T="03">List of serious deficiencies for day care homes.</E> Serious deficiencies for day care homes are:</P> <P>(i) Submission of false information on the application;</P> <P>(ii) Submission of false claims for reimbursement;</P> <P>(iii) Simultaneous participation under more than one sponsoring organization;</P> <P>(iv) Non-compliance with the Program meal pattern;</P> <P>(v) Failure to keep required records;</P> <P>(vi) Conduct or conditions that threaten the health or safety of a child(ren) in care, or the public health or safety;</P> <P>(vii) A determination that the day care home has been convicted of any activity that occurred during the past seven years and that indicated a lack of business integrity. A lack of business integrity includes fraud, antitrust violations, embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property, making false claims, obstruction of justice, or any other activity indicating a lack of business integrity as defined by the State agency, or the concealment of such a conviction; or</P> <P>(viii) Any other circumstance related to non-performance under the sponsoring organization-day care home agreement, as specified by the sponsoring organization or the State agency.<PRTPAGE P="215"/> </P> <P>(3) <E T="03">Serious deficiency notification procedures.</E> If the sponsoring organization determines that a day care home has committed one or more serious deficiency listed in paragraph (l)(2) of this section, the sponsoring organization must use the following procedures to provide the day care home notice of the serious deficiency(ies) and offer it an opportunity to take corrective action. However, if the serious deficiency(ies) constitutes an imminent threat to the health or safety of participants, or the day care home has engaged in activities that threaten the public health or safety, the sponsoring organization must follow the procedures in paragraph (l)(4) of this section instead of those in this paragraph (l)(3).</P> <P>(i) <E T="03">Notice of serious deficiency.</E> The sponsoring organization must notify the day care home that it has been found to be seriously deficient. The sponsoring organization must provide a copy of the serious deficiency notice to the State agency. The notice must specify:</P> <P>(A) The serious deficiency(ies);</P> <P>(B) The actions to be taken by the day care home to correct the serious deficiency(ies);</P> <P>(C) The time allotted to correct the serious deficiency(ies) (as soon as possible, but not to exceed 30 days);</P> <P>(D) That the serious deficiency determination is not subject to administrative review.</P> <P>(E) That failure to fully and permanently correct the serious deficiency(ies) within the allotted time will result in the institution's proposed termination of the day care home's agreement and the proposed disqualification of the day care home and its principals; and</P> <P>(F) That the day care home's voluntary termination of its agreement with the institution after having been notified that it is seriously deficient will still result in the day care home's formal termination by the State institution and placement of the day care home and its principals on the National disqualified list.</P> <P>(ii) <E T="03">Successful corrective action.</E> If the day care home corrects the serious deficiency(ies) within the allotted time and to the sponsoring organization's satisfaction, the sponsoring organization must notify the day care home that it has rescinded its determination of serious deficiency. The sponsoring organization must also provide a copy of the notice to the State agency.</P> <P>(iii) <E T="03">Proposed termination of agreement and proposed disqualification.</E> If timely corrective action is not taken to fully and permanently correct the serious deficiency(ies) cited, the sponsoring organization must issue a notice proposing to terminate the day care home's agreement for cause. The notice must explain the day care home's opportunity for an administrative review of the proposed termination in accordance with § 226.6(l). The sponsoring organization must provide a copy of the notice to the State agency. The notice must:</P> <P>(A) Inform the day care home that it may continue to participate and receive Program reimbursement for eligible meals served until its administrative review is concluded;</P> <P>(B) Inform the day care home that termination of the day care home's agreement will result in the day care home's termination for cause and disqualification; and</P> <P>(C) State that if the day care home seeks to voluntarily terminate its agreement after receiving the notice of intent to terminate, the day care home will still be placed on the National disqualified list.</P> <P>(iv) <E T="03">Program payments.</E> The sponsoring organization must continue to pay any claims for reimbursement for eligible meals served until the serious deficiency(ies) is corrected or the day care home's agreement is terminated, including the period of any administrative review.</P> <P>(v) <E T="03">Agreement termination and disqualification.</E> The sponsoring organization must immediately terminate the day care home's agreement and disqualify the day care home when the administrative review official upholds the sponsoring organization's proposed termination and proposed disqualification, or when the day care home's opportunity to request an administrative review expires. At the same time the notice is issued, the sponsoring organization must provide a copy of the termination and disqualification letter to the State agency.<PRTPAGE P="216"/> </P> <P>(4) <E T="03">Suspension of participation for day care homes.</E> </P> <P>(i) <E T="03">General.</E> If State or local health or licensing officials have cited a day care home for serious health or safety violations, the sponsoring organization must immediately suspend the home's CACFP participation prior to any formal action to revoke the home's licensure or approval. If the sponsoring organization determines that there is an imminent threat to the health or safety of participants at a day care home, or that the day care home has engaged in activities that threaten the public health or safety, and the licensing agency cannot make an immediate onsite visit, the sponsoring organization must immediately notify the appropriate State or local licensing and health authorities and take action that is consistent with the recommendations and requirements of those authorities. An imminent threat to the health or safety of participants and engaging in activities that threaten the public health or safety constitute serious deficiencies; however, the sponsoring organization must use the procedures in this paragraph (l)(4) (and not the procedures in paragraph (l)(3) of this section) to provide the day care home notice of the suspension of participation, serious deficiency, and proposed termination of the day care home's agreement.</P> <P>(ii) <E T="03">Notice of suspension, serious deficiency, and proposed termination.</E> The sponsoring organization must notify the day care home that its participation has been suspended, that the day care home has been determined seriously deficient, and that the sponsoring organization proposes to terminate the day care home's agreement for cause, and must provide a copy of the notice to the State agency. The notice must:</P> <P>(A) Specify the serious deficiency(ies) found and the day care home's opportunity for an administrative review of the proposed termination in accordance with § 226.6(l);</P> <P>(B) State that participation (including all Program payments) will remain suspended until the administrative review is concluded;</P> <P>(C) Inform the day care home that if the administrative review official overturns the suspension, the day care home may claim reimbursement for eligible meals served during the suspension;</P> <P>(D) Inform the day care home that termination of the day care home's agreement will result in the placement of the day care home on the National disqualified list; and</P> <P>(E) State that if the day care home seeks to voluntarily terminate its agreement after receiving the notice of proposed termination, the day care home will still be terminated for cause and disqualified.</P> <P>(iii) <E T="03">Agreement termination and disqualification.</E> The sponsoring organization must immediately terminate the day care home's agreement and disqualify the day care home when the administrative review official upholds the sponsoring organization's proposed termination, or when the day care home's opportunity to request an administrative review expires.</P> <P>(iv) <E T="03">Program payments.</E> A sponsoring organization is prohibited from making any Program payments to a day care home that has been suspended until any administrative review of the proposed termination is completed. If the suspended day care home prevails in the administrative review of the proposed termination, the sponsoring organization must reimburse the day care home for eligible meals served during the suspension period.</P> <CITA>[47 FR 36527, Aug. 20, 1982; 47 FR 46072, Oct. 15, 1982, as amended at 48 FR 21530, May 13, 1983; 50 FR 8580, Mar. 4, 1985; 50 FR 26975, July 1, 1985; 53 FR 52591, Dec. 28, 1988; 63 FR 9729, Feb. 26, 1998; 64 FR 72260, Dec. 27, 1999; 67 FR 43490, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.17</SECTNO> <SUBJECT>Child care center provisions.</SUBJECT> <P>(a) Child care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; provided, however, that public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Child care centers participating as independent centers shall comply with the provisions of § 226.15.</P> <P>(b) All child care centers, independent or sponsored, shall meet the following requirements<PRTPAGE P="217"/> </P> <P>(1) Child care centers shall have Federal, State, or local licensing or approval to provide day care services to children. Child care centers which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates that renewal will be denied. If licensing or approval is not available, a center may participate if:</P> <P>(i) It receives title XX funds for child care; or</P> <P>(ii) It demonstrates compliance with the CACFP child care standards or any applicable State or local child care standards to the State agency.</P> <P>(2) Except for proprietary title XX centers, child care centers shall be public, or have tax exempt status under the Internal Revenue Code of 1986.</P> <P>(3) Each child care center participating in the Program shall serve one or more of the following meal types: (i) Breakfast, (ii) lunch, (iii) supper, and (iv) supplemental food. Reimbursement shall not be claimed for more than two meals and one supplement provided daily to each child, except that reimbursement may be claimed for two meals and two supplements or three meals and one supplement served to a child for each day in which that child is maintained in care for eight or more hours.</P> <P>(4) Each child care center participating in the Program shall claim only the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. Reimbursement may not be claimed for meals served to children who are not enrolled, or for meals served to children at any one time in excess of the child care center's authorized capacity, or for any meal served at a proprietary title XX center during a calendar month when less than 25 percent of enrolled children or 25 percent of licensed capacity, whichever is less, were title XX beneficiaries. Menus and any other nutritional rec-ords required by the State agency shall be maintained to document compliance with such requirements.</P> <P>(5) A child care center with pre-school children may also be approved to serve a breakfast, supplement, and supper to school-age children enrolled in an outside-school-hours care program meeting the criteria of § 226.19(b) which is distinct from its day care program for preschool-age children. The State agency may authorize the service of lunch to such enrolled children who attend a school which does not offer a lunch program provided the limit of not more than two meals and one supplement per child per day is not exceeded. If the majority of children served by the center are participating in an outside-school-hours care program, the center shall comply with reporting requirements of § 226.19 and, if it is a facility, shall be monitored by the sponsoring organization at the frequency specified in § 226.16(d)(4)(iii).</P> <P>(6) A child care center may utilize existing school food service facilities or obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the child care center and school. The center shall maintain responsibility for all Program requirements set forth in this part.</P> <P>(7) Child care centers shall collect and maintain documentation of the enrollment of each child, including information used to determine eligibility for free and reduced price meals in accordance with § 226.23(e)(1). In addition, Head Start participants need only have a Head Start statement of income eligibility, or a statement of Head Start enrollment from an authorized Head Start representative, to be eligible for free meal benefits under the CACFP.</P> <P>(8) Each child care center shall maintain daily records of the number of meals by type (breakfast, lunch, supper, and supplements) served to enrolled children, and to adults performing labor necessary to the food service.</P> <P>(c) Each child care center shall comply with the recordkeeping requirements established in § 226.10(d), in paragraph (b) of this section and, if applicable, in § 226.15(e). Failure to maintain such records shall be grounds for the denial of reimbursement.</P> <P>(d) If so instructed by its sponsoring organization, a sponsored center must distribute to parents a copy of the <PRTPAGE P="218"/>sponsoring organization's notice to parents.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 52 FR 36907, Oct. 2, 1987; 53 FR 52591, Dec. 28, 1988; 54 FR 26724, June 26, 1989; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 61 FR 25554, May 22, 1996; 62 FR 23619, May 1, 1997; 63 FR 9729, Feb. 26, 1998; 64 FR 72261, Dec. 27, 1999; 67 FR 43493, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.18</SECTNO> <SUBJECT>Day care home provisions.</SUBJECT> <P>(a) Day care homes shall have current Federal, State or local licensing or approval to provide day care services to children. Day care homes which cannot obtain their license because they lack the funding to comply with licensing standards may request a total limit per home of $300 in administrative funds from a sponsoring organization to assist them in obtaining their license. Day care homes that, at the option of their sponsoring organization, receive administrative funds for licensing-related expenses must complete documentation requested by their sponsor as described in § 226.16(k) prior to receiving any funds. The agreement must be signed by the sponsoring organization and the provider and must include the provider's full name, mailing address, and date of birth. Day care homes which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates that renewal will be denied. If licensing or approval is not available, a day care home may participate in the Program if:</P> <P>(1) The right of the sponsoring organization, the State agency, the Department, and other State and Federal officials to make announced or unannounced reviews of the day care home's operations and to have access to its meal service and records during its normal hours of child care operations. For day care homes participating July 29, 2002, the sponsoring organization must amend the current agreement no later than August 29, 2002;</P> <P>(2) It demonstrates compliance with CACFP child care standards or applicable State or local child care standards to the State agency.</P> <P>(b) Day care homes participating in the program shall operate under the auspices of a public or private nonprofit sponsoring organization. Sponsoring organizations shall enter into a written agreement with each sponsored day care home which specifies the rights and responsibilities of both parties. This agreement shall be developed by the State agency, unless the State agency elects, at the request of the sponsor, to approve an agreement developed by the sponsor. At a minimum, the agreement shall embody:</P> <P>(1) The right of the sponsoring organization, the State agency, and the Department to visit the day care home and review its meal service and records during its hours of child care operations;</P> <P>(2) The responsibility of the sponsoring organization to train the day care home's staff in program requirements;</P> <P>(3) The responsibility of the day care home to prepare and serve meals which meet the meal patterns specified in § 226.20;</P> <P>(4) The responsibility of the day care home to maintain records of menus, and of the number of meals, by type, served to enrolled children;</P> <P>(5) The responsibility of the day care home to promptly inform the sponsoring organization about any change in the number of children enrolled for care or in its licensing or approval status;</P> <P>(6) The meal types approved for reimbursement to the day care home by the State agency;</P> <P>(7) The right of the day care home to receive in a timely manner the full food service rate for each meal served to enrolled children for which the sponsoring organization has received payment from the State agency. However, if, with the home provider's consent, the sponsoring organization will incur costs for the provision of program foodstuffs or meals in behalf of the home, and subtract such costs from Program payments to the home, the particulars of this arrangement shall be specified in the agreement;</P> <P>(8) The right of the sponsoring organization or the day care home to terminate the agreement for cause or, subject to stipulations by the State agency, convenience;<PRTPAGE P="219"/> </P> <P>(9) A prohibition of any sponsoring organization fee to the day care home for its Program administrative services;</P> <P>(10) If the State agency has approved a time limit for submission of meal records by day care homes, that time limit shall be stated in the agreement;</P> <P>(11) The responsibility of the sponsoring organization to inform tier II day care homes of all of their options for receiving reimbursement for meals served to enrolled children. These options include: electing to have the sponsoring organization attempt to identify all income-eligible children enrolled in the day care home, through collection of free and reduced price applications and/or possession by the sponsoring organization or day care home of other proof of a child or household's participation in a categorically eligible program, and receiving tier I rates of reimbursement for the meals served to identified income-eligible children; electing to have the sponsoring organization identify only those children for whom the sponsoring organization or day care home possess documentation of the child or household's participation in a categorically eligible program, under the expanded categorical eligibility provision contained in § 226.23(e)(1), and receiving tier I rates of reimbursement for the meals served to these children; or receiving tier II rates of reimbursement for all meals served to enrolled children;</P> <P>(12) The responsibility of the sponsoring organization, upon the request of a tier II day care home, to collect applications and determine the eligibility of enrolled children for free or reduced price meals;</P> <P>(13) The State agency's policy to restrict transfers of day care homes between sponsoring organizations;</P> <P>(14) The responsibility of the day care home to notify their sponsoring organization in advance whenever they are planning to be out of their home during the meal service period. The agreement must also state that, if this procedure is not followed and an unannounced review is conducted when the children are not present in the day care home, claims for meals that would have been served during the unannounced review will be disallowed;</P> <P>(15) The day care home's opportunity to request an administrative review if a sponsoring organization issues a notice of proposed termination of the day care home's Program agreement, or if a sponsoring organization suspends participation due to health and safety concerns, in accordance with § 226.6(1)(2); and</P> <P>(16) If so instructed by its sponsoring organization, the day care home's responsibility to distribute to parents a copy of the sponsoring organization's notice to parents.</P> <P>(c) Each day care home shall serve one or more of the following meal types:</P> <P>(1) Breakfast,</P> <P>(2) Lunch,</P> <P>(3) Supper and</P> <P>(4) Supplemental food.</P> <FP>Reimbursement shall not be claimed for more than two meals and one supplement provided daily to each child.</FP> <P>(d) Each day care home participating in the program shall serve the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. Menu records shall be maintained to document compliance with these requirements. Meals shall be served at no separate charge to enrolled children;</P> <P>(e) Each day care home shall maintain daily records of the number of children in attendance and the number of meals, by type, served to enrolled children. Each tier II day care home in which the provider elects to have the sponsoring organization identify enrolled children who are eligible for free or reduced price meals, and in which the sponsoring organization employs a meal counting and claiming system in accordance with § 226.13(d)(3)(i), shall maintain and submit each month to the sponsoring organization daily records of the number and types of meals served to each enrolled child by name. Payment may be made for meals served to the provider's own children only when (1) such children are enrolled and participating in the child care program during the time of the meal service, (2) enrolled nonresident children are present and participating in the child care program and (3) providers’ children are eligible to receive <PRTPAGE P="220"/>free or reduced-price meals. Reimbursement may not be claimed for meals served to children who are not enrolled, or for meals served at any one time to children in excess of the home's authorized capacity or for meals served to providers’ children who are not eligible for free or reduced-price meals.</P> <P>(f) The State agency may not require a day care home or sponsoring organization to maintain documentation of home operating costs.</P> <P>(g) Each day care home shall comply with the recordkeeping requirements established in § 226.10(d) and in this section. Failure to maintain such records shall be grounds for the denial of reimbursement.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended by Amdt. 5, 49 FR 18989, May 4, 1984; 50 FR 8580, Mar. 4, 1985; 52 FR 36907, Oct. 2, 1987; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 61 FR 25554, May 22, 1996; 62 FR 903, Jan. 7, 1997; 63 FR 9105, Feb. 24, 1998; 63 FR 9729, Feb. 26, 1998; 64 FR 72261, Dec. 27, 1999; 67 FR 43493, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.19</SECTNO> <SUBJECT>Outside-school-hours care center provisions.</SUBJECT> <P>(a) Outside-school-hours care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; <E T="03">Provided, however,</E> That public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Outside-school-hours care centers participating as independent centers shall comply with the provisions of § 226.15.</P> <P>(b) All outside-school-hours care centers, independent or sponsored, shall meet the following requirements:</P> <P>(1) Outside-school-hours care centers shall have current Federal, State or local licensing or approval to provide organized child care services to enrolled school-age children outside of school hours. The main purpose of the Program shall be the care and supervision of children. Outside-school-hours care centers which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates the renewal will be denied. If licensing or approval is not available, an outside-school-hours care center may participate in the Program if:</P> <P>(i) It receives title XX funds for providing child care; or</P> <P>(ii) It demonstrates compliance with CACFP child care standards or any applicable State or local child care standards to the State agency.</P> <P>(2) Except for proprietary title XX centers, outside-school-hours care centers shall be public, or have tax-exempt status under the Internal Revenue Code of 1986.</P> <P>(3) Nonresidential public or private nonprofit schools which provide organized child care programs for school children may participate in the Program as outside-school-hours care centers if:</P> <P>(i) Children are enrolled in a regularly scheduled child care program which meets the criteria of paragraph (b)(1) of this section. The program is organized for the purpose of providing child care services and is distinct from any extracurricular programs organized primarily for scholastic, cultural, and athletic purposes; and</P> <P>(ii) Separate Program records are maintained.</P> <P>(4) Outside-school-hours care centers shall be eligible to serve one or more of the following meal types: breakfasts, supplements and suppers. In addition, outside-school-hours care centers shall be eligible to serve lunches to enrolled children during periods of school vacation, including weekends and holidays, and to enrolled children attending schools which do not offer a lunch program. Notwithstanding the eligibility of outside-school-hours care centers to serve Program meals to children on school vacation, including holidays and weekends, such centers shall not operate under the Program on weekends only.</P> <P>(5) Each outside-school-hours care center participating in the Program shall claim only the meal types specified in its approved application and served in compliance with the meal pattern requirements of § 226.20. Reimbursement shall not be claimed for more than two meals and one supplement provided daily to each child, except that reimbursement may be <PRTPAGE P="221"/>claimed for two meals and two supplements or three meals and one supplement served to a child for each day in which that child is maintained in care for eight or more hours. In addition, reimbursement shall not be claimed for meals served to children who are not enrolled, for meals served to children at any one time in excess of authorized capacity, or for any meal served at a proprietary title XX center during a calendar month when less than 25 percent of enrolled children or 25 percent of licensed capacity, whichever is less, were title XX beneficiaries.</P> <P>(6) Three hours shall elapse between the beginning of one meal service and the beginning of another, except that 4 hours shall elapse between the service of a lunch and supper when no supplement is served between lunch and supper. The service of a supper shall begin no later than 7 p.m. and end no later than 8 p.m. The duration of the meal service shall be limited to 2 hours for lunches and supper and 1 hour for other meals.</P> <P>(7) Each outside-school-hours care center shall ensure that each meal service is supervised by an adequate number of operational personnel trained in Program requirements. Operational personnel shall ensure that:</P> <P>(i) Meals are served only to children enrolled for care and adults who perform necessary food service labor; (ii) meals served to children meet the meal pattern requirements specified in § 226.20; (iii) each meal service is consistent with the meal time requirements of paragraph (b)(7) of this section; (iv) meals served are consumed on the premises of the centers; (v) accurate records are maintained; and (vi) the number of meals prepared or ordered is promptly adjusted on the basis of participation trends.</P> <P>(8) Each outside-school-hours care center shall accurately maintain the following records:</P> <P>(i) Documentation of enrollment for all children, including information used to determine eligibility for free or reduced price meals in accordance with § 226.23(e)(1);</P> <P>(ii) Number of meals prepared or delivered for each meal service;</P> <P>(iii) Daily menu records for each meal service;</P> <P>(iv) Number of meals served to enrolled children at each meal service;</P> <P>(v) Number of enrolled children in attendance during each meal service;</P> <P>(vi) Number of meals served to adults performing necessary food service labor for each meal service; and</P> <P>(vii) All other records required by the State agency financial management system.</P> <P>(9) An outside-school-hours care center may utilize existing school food service facilities or obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the outside-school-hours care center and the school. The center shall maintain responsibility for all Program requirements set forth in this part.</P> <P>(c) Each outside-school-hours care center shall comply with the recordkeeping requirements established in § 226.10(d), in paragraph (b) of this section and, if applicable, in § 226.15(e). Failure to maintain such records shall be grounds for the denial of reimbursement.</P> <CITA>[47 FR 36527, Aug. 20, 1982, as amended at 52 FR 36907, Oct. 2, 1987; 54 FR 26724, June 26, 1989; Amdt. 22, 55 FR 1378, Jan. 14, 1990; 56 FR 58175, Nov. 16, 1991; 61 FR 25554, May 22, 1996; 62 FR 23619, May 1, 1997; 64 FR 72261, Dec. 27, 1999; 67 FR 43493, June 27, 2002]</CITA> </SECTION> <SECTION> <SECTNO>§ 226.19a</SECTNO> <SUBJECT>Adult day care center provisions.</SUBJECT> <P>(a) Adult day care centers may participate in the Program either as independent centers or under the auspices of a sponsoring organization; provided, however, that public and private nonprofit centers shall not be eligible to participate in the Program under the auspices of a for-profit sponsoring organization. Adult day care centers participating as independent centers shall comply with the provisions of § 226.15.</P> <P>(b) All adult day care centers, independent or sponsored, shall meet the following requirements:</P> <P>(1) Adult day care centers shall provide a community-based group program designed to meet the needs of functionally impaired adults through an individual plan of care. Such a program <PRTPAGE P="222"/>shall be a structured, comprehensive program that provides a variety of health, social and related support services to enrolled adult participants.</P> <P>(2) Adult day care centers shall provide care and services directly or under arrangements made by the agency or organization whereby the agency or organization maintains professional management responsibility for all such services.</P> <P>(3) Adult day care centers shall have Federal, State or local licensing or approval to provide day care services to functionally impaired adults (as defined in § 226.2) or individuals 60 years of age or older in a group setting outside their home or a group living arrangement on a less than 24-hour basis. Adult day care centers which are complying with applicable procedures to renew licensing or approval may participate in the Program during the renewal process, unless the State agency has information which indicates that renewal will be denied.</P> <P>(4) Except for proprietary title XIX or title XX centers, adult day care centers shall be public, or have tax-exempt status under the Internal Revenue Code of 1986.</P> <P>(5) Each adult day care center participating in the Program shall serve one or more of the following meal types:</P> <P>(i) Breakfast,</P> <P>(ii) Lunch,</P> <P>(iii) Supper, and</P> <P>(iv) Supplemental food.</P> <FP>Reimbursement shall not be claimed for more than two meals and one supplement provided daily to each adult participant.</FP> <P>(6) Each adult day care center participating in the Program shall claim only the meal types specified in its approved application in accordance with the meal pattern requirements specified in § 226.20. Participating centers may not claim CACFP reimbursement for meals claimed under part C of title III of the Older Americans Act of 1965. Reimbursement may not be claimed for meals served to persons who are not enrolled, or for meals served to participants at any one time in excess of the center's authorized capacity, or for any meal served at a proprietary title XIX or title XX center during a calendar month when less than 25 percent of enrolled participants were title XIX or title XX beneficiaries. Menus and any other nutritional records required by the State agency shall be maintained to document compliance with such requirements.</P> <P>(7) An adult day care center may obtain meals from a school food service facility, and the pertinent requirements of this part shall be embodied in a written agreement between the center and school. The center shall maintain responsibility for all Program requirements set forth in this part.</P> <P>(8) Adult day care centers shall collect and maintain documentation of the enrollment of each adult participant including information used to determine eligibility for free and reduced price meals in accordance with § 226.23(e)(1).</P> <P>(9) Each adult day care center shall maintain daily records of the number of meals by type (breakfast, lunch, supper, and supplements) served to enrolled participants, and to adults performing labor necessary to the food service.</P>