CACFP Administrative Manual Section 6.4

CACFP Administrative Manual
CACFP Manual Terms, Definitions, and Acronyms

Section 6: Financial Management

Section 6.4: Day Care Home Financial Management

All Day Care Home (DCH) sponsors must demonstrate that they have the necessary financial resources to cover the administrative costs of operating the Child and Adult Care Food Program (CACFP) on a routine basis. At times, the California Department of Social Services (CDSS) CACFP Branch may not be able to issue timely CACFP payments. Consequently, a sponsor must have the financial ability to cover these interruptions in CACFP payments.

CACFP reimbursement may not cover a sponsor’s full cost of operating the CACFP. As a result, sponsors should use the reimbursement in conjunction with other funding sources. In those instances when a sponsor shows a “profit” or funding excess, the sponsor must use the excess payments to improve operation of the CACFP or return unused federal administrative payments (UFAP) at the end of each program year (PY).

Sponsors receive federal reimbursement in two forms: administrative payments to operate the CACFP and meal payments for disbursement to providers. Sponsors also receive state meal reimbursement of which up to 30 percent may be retained by the sponsor and used for the administration of the CACFP.

Besides administrative and meal payments, sponsors may be eligible to receive expansion funds.

Financial Management System

Sponsors must establish a financial management system that will, at a minimum, allow the sponsor to:

  • Record the receipt, deposit, and distribution of funds, and retain information pertaining to reimbursement from federal funds, authorizations, obligations, unobligated balances, assets, liabilities, outlays, and income
  • Submit a claim to the CDSS no later than the 60 days after a claim month
  • Reimburse providers within five working days of receipt of all federal meal payments from the CDSS
  • Maintain accurate, current, and complete accounting records that conform to generally accepted accounting principles
  • Maintain effective control over, and accountability for, all funds, property, and other program assets to assure they are safeguarded and used solely for authorized purposes
  • Compare actual outlays with budgeted amounts
  • Arrange independent audits to determine the fiscal integrity of financial transactions and reports, as well as compliance with laws, regulations, and administrative requirements
  • Conduct systematic, timely, and appropriate resolutions of audit findings and recommendations

Types of Payments

Administrative Payments

Administrative payments enable sponsors to meet all the CACFP requirements and offset administrative costs. Federal reimbursement is based on the number of homes claimed times the rate established by the federal government each year, effective July 1.

Sponsors can find the current federal administrative reimbursement rate on the USDA CACFP Reimbursement Rates web page.

Each year, when completing their annual update, sponsors may choose one of three options for receiving administrative payments the upcoming PY:

  1. Receive administrative payments based on the number of approved homes multiplied by the established rate
  2. Receive administrative payments based on actual administrative costs
  3. Receive no administrative payments
Meal Payments

Meal payments provide operating funds for providers to serve meals to enrolled children. Each meal type (breakfast, lunch, supper, and snack) has an established rate that adjusts each calendar year, effective July 1.

Sponsors can find the current reimbursement rates on the USDA CACFP Reimbursement Rates web page.

Expansion Funds

Periodically, DCH sponsors have the opportunity to apply for the USDA administrative payments for outreach, recruitment, and training activities to expand participation in the CACFP in low income or rural areas. Sponsors that were awarded expansion funds in previous years must have completed all award activities and related reporting requirements by late July of previous award year. The DCH Expansion Funds Request for Application (RFA) is not a competitive bid for funding.

For more information, see the CACFP Reimbursement Claims and Grants web page.

Administrative Budgets

An institution’s CACFP expenditures must be allowable, necessary, and reasonable, and follow the cost dictates of USDA’s Food and Nutrition Service (FNS) Instruction 796-2, Revision 4. As part of the annual update process each year, sponsors must submit a budget that reflects anticipated administrative income and expenses for the upcoming PY.

Completing the Administrative Budget

The DCH Administrative Budget is intended for use by sponsors to reflect all expenses and income associated with the administration of CACFP DCH operations. A DCH sponsor that is also a CACFP child care center sponsor must not include any Center income or expenses in the DCH budget documents.

CACFP allowable costs that are reimbursable must:

  • Be necessary and reasonable for the administration of CACFP
  • Conform to the limitations or exclusions set forth in all relevant federal and state laws, regulations, policies, and procedures
  • Adhere to those policies and procedures that apply uniformly to both federally financed and other activities of the sponsoring organization
  • Be properly documented and charged according to generally accepted accounting principles
  • Not be included as a cost, or used to meet sharing or matching requirements, of any other federal, state, or local government financed program in either the current or prior fiscal year
  • Be prorated if it is shared with other programs within the sponsoring organization

Not all administrative expenses are allowable costs. Sponsors must ensure that unallowable costs are not charged to the CACFP or claimed for reimbursement. The sponsor’s accounting records must segregate, account for, and identify all unallowable costs. Sponsors must also include unallowable costs when developing any cost allocation plan, and unallowable costs must be attributed a fair and equitable share of the institution’s indirect costs. Institutions must fund unallowable costs from non-CACFP sources of income.

Sponsors must use the administrative budget form and instructions that will be provided to them during the annual update. Sponsors can find additional guidance on allowable and unallowable costs in the FNS Instruction 796-2, Revision 4. All administrative budgets and supporting documentation must be sent electronically to the sponsor’s assigned CACFP DCH Specialist.

Revising the Administrative Budget

Sponsors may revise their administrative budget only once per quarter. Sponsors must use the Administrative Budget Revision form to submit their revision. Specific Prior Written Approval Request form and appropriate supporting documentation must be submitted 30 calendar days in advance of the incurrence of any expected expenditures. All expenses must be preapproved; therefore, all budget revisions must be submitted before the month in which the expense is incurred.

Reporting Actual Administrative Expenses

Sponsors must regularly compare actual expenditures against the approved budget amounts on an on-going basis to monitor their budget status and amend line items when appropriate.

The Actual Cost Quarterly Report (ACQR) in the Child Nutrition information and Payment System (CNIPS) is a tool that allows sponsors to comply with the requirement to regularly track expenditures against the approved budget. Sponsors may use the ACQR or use their own system that tracks or reconciles actual expenditures to budgeted amounts, at appropriate intervals. Sponsors are required to update their ACQR quarterly in the CNIPS to ensure program costs are meeting projected budgets.

Sponsors must have the completed ACQRs, or other internal reporting, on file and available for an audit or administrative review. Sponsors must retain all records for a minimum of three years after the end of the PY to which they pertain, or until audit and administrative review issues are resolved.

As part of a sponsor’s claim for reimbursement each month, the sponsor is required to report actual administrative expenses incurred during the claim month. The reported expenses must be accurate, as this information is used to verify the amount of UFAP a sponsor may be eligible to carry over into the next PY.

Carry Over of Administrative Payments

If a sponsor has UFAP at the end of the PY, the sponsor may request to carryover up to 10 percent of the total UFAP to the next PY. Any UFAP not carried over, or any unused payments carried over and in excess of 10 percent, must be returned to the CDSS by December 10 each year.

To ensure carryover funds are used for CACFP administrative costs in the following PY, DCH sponsors should use approved carried over funds on a “first-in-first-out” basis.

Nonprofit Food Service

A sponsor, whether it is public or nonprofit, must operate a nonprofit food service. This means that all CACFP reimbursement must be used solely for CACFP expenses that are allowable, reasonable, and necessary.

If a sponsor’s accounting system shows an excess of administrative payments, that excess cannot at any time be greater than six months’ average expenses. If a sponsor’s administrative fund balance exceeds this excess balance threshold, the sponsor must develop a corrective action plan for proper use of the excess funds. Excess funds must be used to benefit program participants through improvement or expansion of the nonprofit food service program.

References: 7 CFR , Sections 226.6(b)(1)(xviii)(A)( 2 ), 226.6(b)(2)(vii)(A)( 2 ), 226.15(e)(6), 226.10(e), 226.16(g), 226.9(a), 226.2, Administrative costs , 226.12(a), 226.12(b), 226.2, Expansion payments , 226.7(h), 226.7(g), 226.10(c), MB CNP-04-2019 Transferring Excess Funds between Child Nutrition Programs; USDA FNS Instruction 796-2, Revision 4, and USDA Guidance for Management Plans and Budgets Handbook.

Questions:A list of program specialists that can assist is found on the CACFP Contact List.

This institution is an equal opportunity provider.
Esta institución es un proveedor que ofrece igualdad de oportunidades.

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CDSS Child and Adult Care Food Program
744 P Street, MS 9-13-290
Sacramento, CA 95814

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