1. Indiana Department of Education
School and Community Nutrition
Annual Financial Report and Non-Program Foods
November 2016

2. Annual Financial Report (AFR)
Log in to CNPweb
2016 Program Year
Claims Tab
Report covers 7/1/2015 to 6/30/2016

3. Annual Financial Report (AFR)

4. AFR – Income Section

5. AFR – Expenses Section

6. AFR - Summary
Total amount, School lunch, and School Breakfast can be negative if excess funds cover negative amount

7. Account Balance
All balances should match school business records. Popular SBOA finding
Accounts Payable – amount owed to vendors
Accounts Receivable – amount owed to the school
Balance of Accounts – amount in students account. Does not become income until paid to school

8. AFR - Summary
Please do not use “calculate” button, not working correctly
Can save using “Submit” button without checking the “I Certify” box
Once ready to Submit , check the “I Certify” box and then “Submit”

9. AFR - Resources

10. AFR - Resources

11. AFR - Worksheet

12. Common AFR Mistakes Over 3 Months average expenses
Ending Balance Negative
Indirect Cost too high
No Indirect Cost Rate
Non-Program Food Costs negative

13. Food Service Account Balance
Cannot Exceed an Average of 3 Months Operating Expenses
Total expenses/# operating months in a year x 3
Must provide a detailed plan if higher (saving for projects, purchases, etc)
Negative Balances
7 CFR (a)(1) –
We review the AFR and use the total expenses from that to calculate the average 3 months operating expenses. It is important that the Annual Financial Report reflect your actual account balances because that is how we determine an excessive balance.
If the food service account balance is higher than an average 3 months operating expenses, we will require the SFA to submit a detailed plan and timeline for the use of the excess funds. This plan will need to be approved before the AFR can be approved. The SBOA will be reviewing these plans in the future to ensure that SFAs are following the plan to reduce the cash balance.
If the food service account balance is truly negative, we will require a plan to bring the account current or could require the SFA to transfer non-federal funds to cover the negative balance.

14. Ending Negative Balance
Considerations if ending balance is negative:
Did LEA cover costs? – If yes, amount should be recorded in other income
Loan
Gift
Future plan to bring account current

15. Indirect Costs
Public Schools - LEA must have indirect cost rate calculated by IDOE School Finance in order to charge indirect costs
Private Schools – If LEA has never had a calculated indirect cost rate, the 10% De minimus rate may be charged. CFR §    
Indirect cost calculation:
Total Expenses – (Food + Equipment) * indirect cost rate = Indirect Costs

16. Non-Program Food Costs Negative
Column J on AFR
Non-Program foods consist of Ala Carte sales, Adult Meals, extra entrees, milk only, catering
Negative Column J – indicates that money was lost on non-program foods and that NSLP federal reimbursement funds are supplementing non-program foods

17. Common AFR Errors
Beginning balance does not match ending balance from last year
No Labor Expense allocated out to Non-Program Food Column J
The total in column A does not equal the sum of the numbers ($) in columns B thru J

18. Non-Program Foods

19. Revenue from Non-Program Foods
During an administrative review the field staff will review the non-program food costs and revenue.
To ensure that revenue from the sale of non-program foods generate at least the same proportion as they contribute to the food costs.
Revenue from reimbursable meals cannot support the costs of non-program foods.

20. Non-Program Foods
Non-program Foods – Foods and beverages sold in a participating school that are purchased using funds from the non-profit school food service account.
Includes a la carte items, adult meals, items purchased with non-profit food service account funds for vending machines, fundraisers, school stores and for catered or vended meals.

21. Non-Program Foods Revenue
IDOE Website

22. Non-program Revenues and Costs
Be able to distinguish between:
Food costs of reimbursable meals
Food costs of non-program foods
Revenue from non-program foods
Total revenue
Cost of Reimbursable Meal Food refers to the amount paid for food purchased to be a part of a reimbursable meal.
Cost of Nonprogram Food refers to the amount paid for food sold in a participating school other than a reimbursable meal and is purchased using funds from the school food service account of the school. This is a broad definition and includes beverages, a la carte foods, and any exta reimbursable foods that are sold such as an extra slice of pizza or carton of milk
Total Food Cost refers to the total amount paid for food for both reimbursable meals and nonprogram food purchased with the school food service account.
Total Nonprogram Food Revenue refers to all funds accumulated to the school food service account associated with the sale of nonprogram foods.
Total Revenue refers to all funds accumulated to the school food service account.
Minimum portion of revenue to nonprogram funds – Cost of Nonprogram Food/Total Food Costs

23. Non-Program Foods
IDOE field staff will review the following to determine risk and compliance:
Food costs of reimbursable meals
Food costs of non-program foods
Revenue from non-program foods
Total Revenue

24. Revenue from Non-Program Foods
Revenue Ratio –
non-program revenue
_________________________________
(program revenue + non-program food revenue)
Food Cost Ratio –
cost of non-program foods
____________________________________
(cost of program foods + cost of non-program foods)
Revenue Ratio – non-program revenue / total revenue
Food Cost Ratio – cost of non-program food / total food costs

25. Revenue from Non-Program Foods Tool
Non-program Revenue Calculator
Enter the cost for reimbursable meal, cost of nonprogram food and total revenue
Cost for Reimbursable Meal Food
Cost of Nonprogram Food
Total Food Costs $
Total Nonprogram Food Revenue
Total Revenue
Minimum portion of revenue from nonprogram funds 0%
Minimum Revenue Required from the Sale of Nonprogram Foods $
Additional Revenue Needed to Comply
Cost of Nonprogram Food/ Total Food Costs
Minimum portion of nonprogram funds
x Total Revenue
Minimum Revenue required from the Sale of Nonprogram Food - Total Nonprogram Food Revenue

26. Revenue from Non-Program Foods
Example:
Total Costs: $1,000,000 (all expenses)
Total Food Costs: $500,000
Non-program Food Costs: $50,000
Reimbursable Meals Food Costs: $450,000
Total Revenue: $1,000,000
What is the minimum non-program food revenue?

27. Revenue from Non-Program Foods Tool
Non-program Revenue Calculator
Enter the cost for reimbursable meal, cost of nonprogram food and total revenue
Cost for Reimbursable Meal Food
Cost of Nonprogram Food
Total Food Costs
Total Nonprogram Food Revenue
Total Revenue
Minimum portion of revenue from nonprogram funds  (50,000/500,000)
Minimum Revenue Required from the Sale of Nonprogram Foods
Additional Revenue Needed to Comply $
$450,000
$50,000
$500,000
$1,000,000
Using the information from the previous screen here is a partially completed tool. If the amount in the Total Nonprogram Food Revenue box (YELLOW) is greater than the Minimum Revenue Required from the Sale of Nonprogram Foods (BLUE) then you are meeting the requirements. If it is less than the minimum then you would need additional revenue to meet the requirement (RED). That would mean you need to raise the prices of your Nonprogram Foods in order to be in compliance.
10%
$100,000 -
needs to be >

28. Revenue from Non-Program Foods
Revenue Requirement
Minimum proportion of revenue required from non-program food sales
$50,000/$500,000 = 10% revenue for non-program foods
Minimum dollar revenue required from non-program food sales
10% x $1,000,000 = $100,000
In this example if the SFA earns $100,000 in revenue from non-program food sales, it is in compliance.
So, if the SFA has less than $100,000 in revenue from non-program foods, the SFA needs to _______ non-program food prices.
Proportion of revenue for non-program foods: non-program food costs / total food costs ($50,000 / $500,000)
Multiply that percentage by the total revenue (10% x $1,000,000 = $100,000)
INCREASE

29. How to track? Point of Sale System Production Records
Add keys for additional items, extra entrees, etc
Is there a cost component? Some POS systems allow for SFA costs of items to be entered into system
Production Records
Use production records to help calculate number of extra entrees or sides
Also can be used to calculate the number of entrees sold as extras

30. How to track? Spreadsheet Description Price Our Cost 15-Aug 15-Sep
15-Oct
Total
Revenue
Costs
Profit
Milk Low Fat 8oz.
$0.50
$0.22
4,310
3,132
1,921
31,098
$15,549.00
$6,841.56
$8,707.44
Milk Low Fat Pint
$1.50
$0.72
7,542
5,419
2,495
40,053
$60,079.50
$28,838.16
$31,241.34
Bottled Water 12oz.
$0.75
$0.25
3,201
3,458
1,762
29,117
$21,837.75
$7,279.25
$14,558.50
Large Drink
$1.25
$0.74
2,492
3,412
1,902
22,185
$27,731.25
$16,416.90
$11,314.35
String Cheese
$0.40
$0.21
1,106
903
617
7,995
$3,198.00
$1,678.95
$1,519.05
DejaBlue Water
$1.00
$0.61
6,147
5,495
3,736
44,717
$44,717.00
$27,277.37
$17,439.63
Juicy Juice Box
$0.28
1,007
1,203
880
9,825
$7,368.75
$2,751.00
$4,617.75
Granola Bar Assorted
$0.29
1,047
229
153
3,979
$2,984.25
$1,153.91
$1,830.34
WG Cookie
10,725
9,896
4,602
72,988
$36,494.00
$16,057.36
$20,436.64
Fruit Snacks
$0.80
$0.52
3,802
5,237
3,246
40,212
$32,169.60
$20,910.24
$11,259.36
Assorted Large Chips
$0.27
21,770
19,963
12,181
187,595
$187,595.00
$50,650.65
$136,944.35
Ice Cream Cup
$0.31
1,492
2,104
1,187
13,816
$10,362.00
$4,282.96
$6,079.04
Large Ice Cream
$0.43
4,516
7,850
3,647
54,773
$54,773.00
$23,552.39
$31,220.61
$504,859.10
$207,690.70
$297,168.40

31. Adult Meal Prices
Adult meal prices must be high enough so they are not supported by reimbursable meal revenue as well.
Adult meals must be the same food and quanity that is included in the student meal.
A couple different approved methods to calculate the minimum adult meal price.

32. Adult Meal Prices
Free meal reimbursement + Value of USDA entitlement (per meal) + Value of any bonus USDA foods used to prepare meals $3.22 (16-17 free reimbursement rate + extra $0.06) + $0.23 (commodity value rounded up) = $3.45 (or higher if bonus USDA foods are received)

33. Adult Meal Prices Student Paid Meal Price + Paid Reimbursement +
Value of USDA entitlement (per meal) +
Value of any bonus USDA foods used to prepare meals
$2.50 (16-17 student paid lunch price) +
$0.36 (15-16 paid reimbursement rate + extra $0.06) +
$0.23 (commodity value)
= $3.09 (or higher if bonus USDA foods are received)

34. Resources
USDA Policy Memo SP  – Revised, Child Nutrition Reauthorization 2010: Guidance on paid Lunch Equity and Revenue from Non-Program Foods
USDA Policy Memo SP  – School Food Service Account Revenue from the Sale of Non-Program Foods
Guidance on Paid Lunch Equity and Revenue from Non-Program Foods

35. QUESTIONS

36. State Agency Contact
For questions about Paid Lunch Equity, or Financial Management of the Food Service Account, contact:
Tina Herzog Dani Powers
(317) (317)