1. Overview of Resource Management
The Administrative Review has a Resource Management section
A risk indicator tool will determine if a comprehensive review is needed
Today I will give you a brief overview of what is in the new Federal Guidelines, go over Financial Management of the Nonprofit Food Service Account and touch on the main areas of Resource Management.
The Administrative Review contains a resource management (RM) section that incorporates a systematic approach for monitoring financial requirements. This section requires SFAs to submit documentation to the Department prior to an Administrative Review. A risk indicator threshold methodology was developed to target SFAs needing a more comprehensive review. If three or more factors identified in the risk indicator tool are triggered, a comprehensive review will take place. SFAs should utilize financial management staff, when possible.
Resource Management Monitoring identifies potential problems and allows resources to be focused on SFAs most at risk of noncompliance. For the purposes of our discussion today, please note that when we talk about monitoring “resource management” or “financial management,” we are specifically referring to reviews conducted to ensure compliance with federal regulations, including 7 CFR , 220, 250 and with program guidance.

2. Here is a look at the Resource Management Tool given by the USDA that the Department follows. This tool covers all aspects of resource management.

3. Maintenance of the Nonprofit Food Service Account
Revenues and expenditures under the nonprofit food service account must be in accordance with 7 CFR
The first main area of resource management is the Maintenance of the Nonprofit Food Service Account.
Nonprofit school food service expenditures must be allowable, used only for the operation and improvement if the school food service, and net cash resources may not exceed three months’ average operating expenditures. (7 CFR ) Your account should be maintained in accordance with Federal and State rules and regulations to remain in compliance.

4. Criteria for Allowable Costs
Necessary, Reasonable, Allocable
Applied uniformly and treated consistently
Not included as a cost or matching contribution of any other grant (except where allowed)
Adequately documented
Allowable costs are a huge part of maintaining your account. 2 CFR lists factors that affect the allowability of costs.
It is the SFA’s responsibility to determine whether a cost meets the following criteria before the cost is paid from the school food service account:
Necessary ‐ In order to be allowable, a cost must be necessary for the performance or administration of the funds provided by FNS to the State agency for the SMPs. A cost is necessary if the SMPs’ authorizing statutory provisions, resulting program regulations or applicable FNS policy establish that the nonprofit school food service cannot be operated without incurring the cost. For example, a school food service cannot be operated without incurring the cost of appropriate food.
Reasonable ‐ A cost is reasonable if, in its nature and amount, it does not exceed the cost that under the same circumstances a prudent person would also pay. The cost must be the result of sound business practice and competitive prices. For example, the cost of food is a reasonable cost to operate the nonprofit school food service if incurred according to these conditions.
Allocable ‐ A cost must be assigned to the programs or activity that benefit from that cost. Each cost objective must be charged proportionate with the benefit received. Depending on which program, function, and/or activity benefit from the cost, and the extent to which each benefited, a cost may be allocated to cost objectives through direct or indirect cost allocation.

5. Documenting Allowable Costs
All purchases must be documented!
Some examples include:
Equipment & Capital Expenditures
Pre-approved SFS Capital Equipment List
Equipment Grants
Documentation must be maintained to support allowability all charges to the nonprofit school food service account. At least one of the following should be attached to purchase records:
Equipment & Capital Expenditures Prior Approval
The link to the request form is located on the Fresh From Florida website. The form can be requested via as well.
Pre-approved SFS Capital Equipment List
If the planned capital equipment purchase is included in this list, it is considered to have prior approval by FDACS. No further FDACS approval is required to proceed with purchase of the equipment.
The link to the list is located on the Fresh From Florida website. The list can be requested via as well.
Item(s) purchased, yet included in an equipment grant or corrective action plan, do not need additional approval from FDACS. It’s inclusion provides reasonable assurance that the acquisition cost is necessary for program purposes and the SFA’s nonprofit school food service account can absorb the cost. No further FDACS approval is required to proceed with these purchases.

6. Direct Costs Administrative costs may be treated as direct costs when:
Services are vital and specifically identified;
Such costs are clearly stated in the budget; and
Not also recovered as indirect costs.
If services are considered essential or fundamental to the project, they may be considered as Direct Costs. All work that is directly allocable to one award may now be charged to that award, regardless of the type of task. Specific language must be in the proposed budget justification if you require administrative and clerical support as a direct cost and you must have prior approval from the Department.
It is imperative that you do not also charge these costs to the indirect cost pool.

7. Indirect Costs
Costs incurred for a common or joint purpose and not readily assignable to benefiting cost objectives
Must be adequately documented and treated consistently
Examples include:
Fringe Benefits
Accounting
Payroll
Utilities
The Department must ensure that SFAs follow fair and consistent methodologies to identify and allocate allowable indirect costs to school food service accounts.
The U.S. Department of Education requires Lead Education Agencies (LEAs) charging indirect costs to programs to obtain a federally approved indirect cost rate. Please make sure you are applying the correct indirect cost rate established. Both the indirect cost rate and the direct cost base can be found in your Indirect Cost Rate Agreement.
Indirect costs are incurred for a common or joint purpose and not readily assignable to benefiting cost objectives. (2 CFR )
Indirect costs typically support administrative overhead functions such as fringe benefits, accounting, payroll, purchasing, facilities management, utilities while direct costs are incurred specifically for the food service only and not shared across other programs or functions.
Indirect costs are determined by applying the approved indirect cost rate to the school food service’s direct cost base.

8. Indirect Costs: Distorting Items
Capital Expenditures
Contract Costs
Food Costs
Unallowable indirect costs
Must be refunded to the school food service account.
You must remove all distorting items from the direct costs before applying the approved indirect cost rate.
A capital expenditure is the cost of acquiring a capital asset. This benefit is measured by annual depreciation expense and is the reason why only a year’s depreciation expense can be included in indirect cost computation.
The cost of administering a procurement contract is substantially the same, whether the value of the contract is $100,000 or $100 million. The cost is presumed not to exceed $25,000 per contract. Therefore, the value of each contract beyond the first $25,000 must be excluded.
Like capital expenditures and contract costs, food purchases require minimal administrative support; therefore, they are excluded.
Payments made for costs determined to be unallowable by either the Federal awarding agency, cognizant agency for indirect costs, or pass-through entity, either as direct or indirect costs, MUST be refunded to the Federal nonprofit school food service account.

9. General Fund Recovery
For the general fund to properly recover indirect costs from the nonprofit school food service account, school food service should be presented with the Indirect Cost Bill before payment is made.
The Indirect Cost Bill should display the approved indirect cost rate and itemized costs included in the direct cost base.
In the example above, the general fund paid the indirect costs. The general fund determined the amount billed by applying the approved indirect cost rate to the school food service’s direct cost base, then billed the school district. The school district turned the bill over to school food service who then reimbursed the general fund.

10. Equipment and Capital Expenditures
Threshold: $5,000 or more
School Food Authorities (SFAs) are required to obtain prior written approval for items not on the pre-approved list
Guidance can be found in §
School Food Authorities (SFAs) are required to obtain the prior written approval of its state agency before incurring the cost of a capital expenditure and equipment.
2 CFR lists costs that require prior written approval. It is the SFA’s responsibility to determine whether a cost meets the following criteria before the cost is paid from the school food service account.
Prior approval is specifically required for allowability as described under § Equipment and § Equipment and other capital expenditures.
USDA policy memo SP allowed state agencies to develop an approved list and criteria for capital expenditure purchases that are routinely purchased by the SFA.
The pre-approved list should be retained with the purchase records.

11. Paid Lunch Equity Overview
The PLE tool helps SFAs calculate:
Weighted Average price across the SFA
Non-Federal source contribution amount
Maximum required increase is 10 cents
Regulation 7 CFR (e) and Section 205 of the Healthy Hunger Free Kids Act requires SFAs to charge students for paid meals at a price that is on average equal to the difference between free meal reimbursement and paid meal reimbursement. In a nutshell, schools that currently charge less than USDA’s target paid lunch price are required to gradually increase their prices each year until they meet the requirement. The tool can be found on the FNS website.
For SFAs in strong financial standing, FNS Memo SP , provides guidance for requesting an exemption to the Paid Lunch Equity requirement. If a SFA wishes to apply for an exemption, a written letter requesting the PLE exemption must be submitted to the Department. If approved, the waiver will exempt the SFA from increasing the paid lunch price. However, it is important to note that the waiver does not exempt the SFA from calculating the PLE. SFAs must still comply with the USDA PLE Requirements.
Although the maximum required annual increase in a school’s paid lunch price is 10 cents, schools are allowed to establish a higher increase if they like.
Currently the PLE Tool and any exemption requests are being uploaded into FANS and reviewed/approved by Kaylla Fryar. This tool must be updated annually.
Since the requirement is based on the average weighted price, schools have the flexibility to adjust the price of their paid lunches so that the prices charged at some schools, such as at the elementary school level, may be less than what is charged at the high school level.

12. Paid Lunch Equity Provision
To date the price requirement for SY has not been released from the USDA
Paid lunch prices must be evaluated annually
PLE is required even if the food service account has a excess funding
The intent of PLE is to ensure that sufficient funds are provided to the nonprofit school food service account for paid lunches. In order to remain in compliance, paid lunch prices must be evaluated annually by all SFAs to ensure there are adequate funds. You must use your unrounded adjusted average paid lunch price requirement from SY when calculating the weighted average lunch price increase for SY Lunch price increases may be rounded down to the nearest 5 cents.
Unless the SFA charges more than the current PLE Rate, you are required to complete and submit the PLE tool regardless if your food service account has a surplus.
This provision applies only to student paid lunch prices in the National School Lunch Program. This requirement does NOT apply if you do not have any paid students, such as with some Residential Child Care Institutions and schools that participate in Community Eligibility Provision (CEP).
As soon as the new PLE Tool and memo are released, they will be sent to you!

13. Revenue from Non-program Food
Ensures that SFA’s charge prices for non-program food sufficient to cover the costs of those non-program foods.
The requirement for revenue from non-program food ensures that revenues from the sales of non-program foods generate at least the same
proportion of revenues as they contribute to food costs. The Non-program Food Revenue Tool was created to help SFAs calculate the amount of revenue required to meet the requirements of Section 206 of the Healthy, Hunger Free Kids Act.
If the ratio of non-program revenue to total is less than the ratio of non-program food cost to total food cost then you are out of compliance.
Non-program Revenue
Total Revenue
<
Non-program Food Cost
Total Food Cost
OUT OF COMPLIANCE

14. Revenue from Non-program Food
Must identify the percentage of total food costs attributed to non-program foods
Revenues must be tracked separately from all other revenues
The definition of a non-program food is a food (including beverages) that is sold in a participating school other than a reimbursable meal and is purchased with funds from the school food service account. Some examples include: a-la-carte items and adult meals.
This provision is to ensure that foods sold outside of a reimbursable meal are priced at an amount that will cover the cost of the food item.
SFAs are responsible for tracking the revenues from non-program foods separately from all other revenues.

15. Net Cash Resources Should not exceed 3 months average expenditures
Should be used to improve program operations
SFAs must submit a spending plan to reduce excess net cash
Let’s talk a little bit about the review of net cash resources. The intent of monitoring a SFA’s net cash resources is to ensure that the SFA is limiting its net cash resources to an amount that does not exceed 3 months’ average expenditures, as required under 7 CFR
The purpose for limiting the size of net cash resources to 3 months’ average is to ensure that funds in the nonprofit school food service account are being expended in a timely manner to improve program operations and meal quality. The review of net cash resources gives us an opportunity to work together on action plans to prevent trends of large surplus or deficit.
In the event that net cash resources exceed 3 months’ average or such other amount as may be approved, improve food quality, purchase equipment, upgrade foods served (serve more fresh fruits and vegetables which may be more expensive) or take other action designed to improve the school food service CFR (a)

16. Federal Single Audit $750,000
Federal Awarding Agency United States Department of Agriculture
Pass-Through Entity
Florida Department of Agriculture and Consumer Services
CFDA No.
National School Lunch Program CFDA#
School Breakfast Program CFDA#
Summer Food Service Program CFDA#
Special Milk Program CFDA#
Fresh Fruit and Vegetable Program CFDA#
Agreement No.
If your organization expends $750,000 or more in TOTAL federal funds a single or program specific audit must be submitted to the Department per CFR You will need to maintain the following information for financial reporting purposes. Your audit must be submitted no later than nine months after your fiscal year end.

17. Child Nutrition Program Regulations
2 CFR 200 Uniform Grant Guidance
7 CFR 210 National School Lunch Program
7 CFR 215 Special Milk Program for Children
7 CFR 220 School Breakfast Program
7 CFR 225 Summer Food Service Program
Here are a few links that outline Rules and Regulations around the National School Lunch Program. We will make these documents available for you as well.

18. Questions? Kaylla Fryar Tiffany K. Thompson
Direct (850) Fax (850)
Tiffany K. Thompson
Direct (850) Fax (850)
If you have any questions please contact Kaylla Fryar or Tiffany Thompson.