1 15% Cap

2 Why the Cap is Necessary Center reimbursement covers admin. & operating costs (like school meal rates) More $ kept for admin = less $ for meals “ Retained ” means the amount of money the sponsor keeps for its admin. costs Audits/reviews found 25-30% approved with even more retained 15% consistent with school meal program admin costs

3 What the Interim Rule Does Applies cap to:  Approved budget estimate  Actual retention during the year

4 Objective of the Interim Rule 15% 85%

5 Cap Applies to All Types of Sponsored Centers Nonprofit sponsors For-profit sponsors Public sponsors Sponsors of unaffiliated centers Sponsors of affiliated centers

6 Administrative & Operating Costs Administrative Costs Planning Organizing Managing Operating Costs Food costs Food service labor Food service supplies

7 Center Sponsor Administrative Costs  Claims preparation  F/RP eligibility determinations  Monitoring  Training Must conform to 796-2

8 Suggestion or Goal? The cap is not a:  Suggestion  Goal  Guarantee  Floor (minimum)

9 Mandate The cap is a:  Ceiling (maximum)  Applies to all administrative costs at the sponsor and sponsored center level

10 Sponsored Center Administrative Costs Included in the cap because: Law limits the amount of CACFP funds retained for administrative costs - not who pays the costs Not including sponsored center admin. costs = incentive to shift costs to evade cap

11 How the Cap Works: Budgets Sponsor must report all admin. costs on budget –Including all sponsored center administrative costs –SAs must revise application budget documents for center sponsors to capture all admin. costs

12 How the Cap Works: Monthly Retention Three factors: 1.Amount of reimbursement actually earned 2.Annual limit of 15 percent 3.Cannot exceed monthly allowable costs

13 How the Cap Works: Sponsor Responsibilities Sponsors must:  Monitor monthly retention on year-to-date basis  Monitor actual vs. projected reimbursement earnings  Adjust retention to stay within “cap”

14 Retention Question Question: Is a sponsor prohibited from retaining more than 15% in a month? Answer: No. Sponsors can vary recovery of monthly amounts, but cannot retain more than 15% for the year.

15 Example 1: ABC Center Sponsor Retention October (1st month budget year) Reimbursement ($13,200) earned X 15%:$ 1,980 Actual admin costs & retention:$ 4,486 Approved budget =$ 22,500 Actual expenses -$ 4,486 Available for remainder of year = $ 18,014

16 Key Considerations Sponsors & SA must track actual admin. costs Time major expenditures throughout the year

17 Mistakes, Errors & Misconduct Problem: Sponsor retains more than approved Resolution: ID causes, require corrective action –Restore funds to sponsored centers or CNP Account –Improve fiscal procedures –Escalate SA oversight Serious deficiency when appropriate

18 Recap State agencies : –Apply 15% cap to budgets –Monitor retention practices of sponsors Center sponsors : –Prepare budgets that reflect 15% cap –Establish internal controls to ensure proper retention –Maintain records to demonstrate compliance

19 15% Cap