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Public Law 106-224 [1 of 4]

Nutrition Services Division Management Bulletin

To: Public and Private Agencies Participating in the Child and Adult Care Food Program

Number: 00-210

Attention: Agency Directors

Date: February 2001

Subject: Public Law 106-224 [1 of 4]

Reference: United States Department of Agriculture APB: CAC-00-13

This Management Bulletin discusses the anticipated operationaland eligibility changes to the Child and Adult Care Food Program(CACFP) that are the result of The Agricultural Risk ProtectionAct of 2000 (ARPA) or Public Law 106-224. It is the firstof four management bulletins that will convey the recentchanges to the federal law that authorizes the CACFP.

Two terms, "institution" and "sponsoring organization," appear throughout the texts of the managementbulletins. According to the CACFP regulations, 7 Code of Federal Regulations (7 CFR ) 226.2, aninstitution is defined as a "sponsoringorganization, child care center, outside-school-hours care centeror adult day care center which enters into an agreement with theState agency to assume final administrative and financial responsibility"for the operation of the CACFP. In other words, institution isthe general term used in the regulations for participants in theCACFP. Sponsoring organization has a more specific definition.According to the CACFP regulations, 7 CFR 226.2, a sponsoring organization is a public or private nonprofit agencythat is "entirely responsible for the administration of thefood program in:

  1. One or more day care homes;
  2. a child care center, outside-school-hours care center, oradult day care center which is a legally distinct entity fromthe sponsoring organization;
  3. two or more child care centers, outside-school-hours centers,or adult day care centers; or
  4. any combination of child care centers, adult day care centers,day care homes, and outside-school-hours care centers."

Operational Changes

Program Monitors

Forthcoming CACFP regulations will contain programstaffing standards. The standards will require that sponsoringorganizations (sponsor) employ a minimum number of monitors forthe oversight of their sponsored day care homes or centers orboth.

Monitoring Requirements

ARPA requires a sponsor to annually make at leastone scheduled visit to its homes or centers. A sponsor also willbe required to conduct a certain number of unscheduled or unannouncedvisits to its homes or centers. These new monitoring provisionsmust be implemented no later than October 1, 2000, which is thebeginning of both a new program year and a new monitoring cycle.The specifics of the new monitoring requirements will be discussedat a later date, once the regulations that address these new requirementsare issued.

In addition, state agencies now must conduct a compliancereview of every CACFP sponsor at least one every three years.As noted, the regulations that address these new requirementswill be forthcoming.

Administrative Expenses

Effective October 1, 2000, a center sponsor mayretain no more than fifteen percent of its CACFP meal reimbursementfor administrative expenses. The California Department of Education (CDE) currently limits a sponsor ofindependent centers to fifteen percent of its reimbursement foradministration. Now, all center sponsors must operate under thesame limitation.

In conjunction with this new requirement and withthe increased emphasis on program integrity, ARPA instructed theUnited States Department of Agriculture (USDA) to develop a listof allowable administrative expenses. Toward this end, USDA isin the process of revising FNS Instruction 796-2 (Financial Management-CACFP),which is based upon the USDA Uniform Federal Assistance Regulations(7 CFR Part 3016 and 3019) and Office of Management and BudgetCirculars (particularly A-87 and A-122).

Family Day Care Home Transfers

According to ARPA, a family day care home may transferfrom one sponsor to another only once during a program year. CDEmay permit more frequent transfers for valid reasons, such asthe closure of a sponsor.

Outside Employment of CACFP Employees

Effective immediately, sponsors must develop personnelpolicies that speak to the outside employment of their CACFP employees.In doing so, sponsors must bear in mind that outside employmentshould not interfere with CACFP responsibilities, nor raise ethicalconcerns or questions of conflict of interest.

Program Eligibility

Certification of Eligibility

Effective immediately, any institution that appliesor reapplies for participation must certify to CDE that it hasnot been disqualified from any publicly-funded program for violationof program requirements. A publicly-funded program encompassesany program or grant that is funded by federal, state, or localgovernment.

CDE will advise current CACFP participants as tothe process for certification.

Financial Viability, Administrative Capability,and Internal Controls

According to ARPA, in order for a new institutionto be approved to participate in the CACFP, it must be financiallyviable and administratively capable and have internal controlsin place that will ensure program accountability. The law suggeststhat an agency should be considered administratively capable ifit has the requisite business experience and appropriate managementplans in place for the successful operation of the CACFP.

State agencies have received guidance and trainingfrom USDA on procedures for evaluating applicants as to theirreadiness for participation in the CACFP.

Tax Exemption

Effective June 20, 2000, a private agency that applies for participationin the CACFP must either:

  • Have tax-exempt status, as defined under the Internal RevenueCode of 1986;
  • Operate a federal program that requires nonprofit status toparticipate; or,
  • Receive Title XX compensation for at least twenty-five percentof the participants enrolled in the child or adult care centeror twenty-five percent of the center’s licensed capacity,whichever is less.

Previously, an agency that was "moving towardtax exempt status" was allowed to participate in the CACFPfor a specified period of time (at first, it was one year andthen more recently, 180 days), before securing the tax-exemptdesignation. ARPA eliminates this interim period.

Questions:   Nutrition Services Division | 800-952-5609

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