1. School and Community Nutrition KDE

2. Paid Lunch Equity tool- The tool is to be completed yearly by sponsors that collect money from paid students. The tool is a checklist item on the application renewal each year that is due by June 15 th. Annual financial report is due August 1 of each year. The report is for all revenues and expenditures from the previous school year. The report is done online in the CNIPS module. Non –program revenue tool is to be completed each year and submitted at the same time as the annual financial report.

3. Revenues – income received in exchange for goods and services provided by school food service department. 1. Student and Adult payment for meals 2. Federal reimbursement * Severe Need * 6 cents certification * Afterschool Snack Program * FFVP * At Risk Meals 3. State Matching 4. Value of USDA donated commodities 5. A la Carte sales, catering, vending 6. Interest/dividends 7. Rebates

4. Expenditures – costs that can be identified specifically with the operation of school food service program. 1.Payroll and related employee benefits 2.Cost of food and materials 3.Equipment and Services expenditures 4.Indirect Cost

5. Use non-restricted rate or a lesser rate Apply the rate to salaries and benefits from food service employees (excluding on-behalf payments) Cannot treat something as a direct cost if it is also included in the indirect cost pool * If a cost is considered a direct cost to one federal program, it must be treated as a direct cost to ALL federal programs Example: garbage removal, custodial services

7. Fund Balance – the net cash resources available to the school foodservice operation at any given time, less payables. 1.Financial Reporting – School Food Authority reports to State Agency annually on August 1. 2.An annual report: SNP Financial Statements in CNIPS. Objective: To ensure that cash balance does not exceed three months operating balance. 3.Excess Funds – Government regulations require that no more than three months’ average expenditures may be accumulated. If the net cash resources exceed the three months’ average expenditures, the SA must require that the school district take action to reduce the excess balance.

9. Statement of Revenue and Expenditures, also known as the Profit and Loss Statement, provides three major elements of financial information. They are: the total revenue available to the program by source total expenditures by category, and net excess/deficit to the program for the period of the statement.

10. Balance Sheet – is a financial statement prepared at the end of each accounting period to reflect the financial position of the SFA at a particular point in time. Critical information such as cash balance, outstanding payables, and fund balance available for expenditures is included on this statement.

11. The Balance Sheet includes information about the program’s: Assets – current assets include inventory values, accounts receivables, funds due from federal, state, and local governments: cash on deposit; petty cash; and cashiers change cash. Liabilities – consists of obligations of the SFA on the date the balance sheet is generated that are expected to be paid by the close of the accounting period. Included are accounts payable, accrued salaries and benefits, funds due to other sources and deferred revenue. Balance Sheet, cont. **Fund Equity – consists of funds that are reserved or designated for purposes such as encumbrances and inventory and unreserved funds. Unreserved funds represent the excess of funds over liabilities that are not restricted for specific purposes.

12. The Balance Sheet includes information about the program’s: Fund Equity – consists of funds that are reserved or designated for purposes such as encumbrances, inventory and unreserved funds.

13. Cost of Food Used – Important information that is used to determine whether costs are within guidelines and funds that are available to cover costs. Cost of food used must be calculated before the school foodservice administrator can determine meal costs. A physical inventory must be taken consistently and on a regular basis (a minimum of a monthly inventory is recommended) to obtain current and accurate results.

14. Cost of Food Used Beginning Food Inventory $ 8,000 + Food Purchases $25,000 = Total Food Available $33,000 - Ending Purchased Food Inventory $ 7,000 = Cost of Food Used $26,000

15. Streamlined Food Inventory – Integration of commodity and purchased foods. When calculating the cost of food used, the value of USDA- donated commodities must be considered. Inventories of donated foods are no longer required to be separate from inventories of other foods. Commodities are now tracked with purchased foods in the food inventory with the commodity value entered as purchased price. Monthly physical inventory accounts for both the purchased and commodity food.

16. Pre-Costing of Menus Pre-costing of menus can be completed in the inTEAM Menu Compliance Tool that KDE provided to every NSLP sponsor in the fall of 2012. This tool assists the director in pre-costing (food cost) of menus and helps establish an average meal cost.

17. Meals and Non-reimbursable Food Items Reimbursable Meal Pricing Paid Lunch Equity Tool – Required by Healthy Hunger-Free Kids Act, 2010 Requires SFAs participating in the National School Lunch Program to ensure sufficient funds are provided to the nonprofit school food service account for lunches served to students not eligible for free or reduced price meals, to prevent the free and reduced reimbursement subsidizing paid lunch meals. There are two ways to meet this requirement: either through the prices charged for “paid” lunches or through other non- Federal sources provided to the nonprofit SFA account. The Paid Lunch Equity tool is completed annually and submitted with the SFA’s application and agreement.

18. Pricing of Non-reimbursable Food Items Non-program Food Revenue Tool – Required by Healthy Hunger- Free Kids Act. Objective – Ensure non-program activities are not subsidized by program revenues.

19. National School Lunch Program School Breakfast Program After- School Snacks Special Milk Program Fresh Fruit and Vegetable Program Adult Meals Catered Meals A la Carte Sales

20. Obtain an average reimbursable meal cost for Breakfast, Lunch, ASCP Multiply the average meal cost by the number of meals served in a month Equals one month’s food cost for reimbursable meals Subtract calculated cost for reimbursable meals from total food cost Equals non- program food cost

21. Gather the following information: Food costs of reimbursable meals (Munis code 0630, CACFP 0630C) Food costs of non-program foods (Munis code 0630N) Revenue from non-program foods (Munis code 1620) Total revenue

23. Factors that Influence Food Service Budget Development Historical trends Participation rates Federal and State subsidies Operational and/or program changes Increased or decreased program costs Change in meal prices

24. Program Regulations for Procurement: National School Lunch Program: 7 CFR 210.21 School Breakfast Program: 7 CFR 220.16 Special Milk Program: 7 CFR Part 215 Food Distribution: 7 CFR Part 250 Uniform Administrative Requirements for Procurement: State/local governments: 7 CFR 3016 Non-profits: 7 CFR 3019

25. Government-wide Federal Regulations OMB Circulars A-87 – Allowable costs A-102, A-110 A-122 State and Local Laws, Regulations, and Policies that are not in conflict with Federal Requirements.

26. Public School Food Authorities (SFAs) may use their own procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal laws and standards identified in 7 CFR Part 3016.36 and Part 3016.60. SFAs must compare their state and local requirements against the federal requirements and follow the most restrictive! Public School Food Authorities

27. Renovating a School Kitchen 2 CFR Part 225, Appendix B, section 25, Maintenance, operations and repairs, identifies costs of normal repairs and alterations as allowable so long as they: (1) keep property in an efficient operating condition; (2) do not add to the permanent value of the property or appreciably prolong its intended life; and (3) are not otherwise included in rental costs or other charges for space. Based on these principles, FNS has allowed limited renovations within the inside perimeter of a kitchen/cafeteria space with the required prior SA approval. For example, renovating a kitchen by cutting away a portion of the wall to allow room for a walk ‐ in refrigerator and related electrical wiring would be an allowable expense if the renovation is necessary to accommodate increased participation of students in the School Meal Programs. However, it would be an unallowable expense if renovation of the kitchen was purely an aesthetic matter. Finally, the SFA cannot charge normal maintenance costs directly to the nonprofit school food service account if such costs are included in the school district’s indirect cost pool.

28. Building a School Kitchen SMPs regulations in 7 CFR Parts 210.14 and 220.7(e)(1) require that revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenue shall not be used to purchase land or buildings, or to construct buildings, unless otherwise approved by the FNS. Historically, FNS has not approved the cost of building purchases because program funds are made available to help support the costs of nutritional benefits for children in school settings and not to construct school related facilities. The goal is to ensure that an SFA maintains the necessary funding to operate the program as required by the SMPs’ authorizing legislation and regulations, and that the nonprofit school food service account is not used to cover major expenses that should be borne by the school district’s general funds (i.e., capital infrastructure costs). The costs of building a kitchen are analogous to the costs of constructing school buildings, which historically have been borne by the school district with general or capital improvement funds. Similarly, such capital infrastructure costs should be borne by the school district just as the school building and its contents should be.

29. Equipment Purchases If food service equipment is to be purchased with Food Service Cash, this equipment must be bid separately from the bidding of the rest of the project using wage rates as outlined under provisions of the Davis-Bacon Act and bidding provisions outlined in the Office of Management and Budget Circular A-87 and in 7 CFR 3016 for the expenditure of these monies. This can be undertaken by bidding Food Service Equipment as an “Alternate” and clearly outlining in the contract documents the terms under which this equipment is to be bid. Cost contracts and cooperative purchase agreements can only be used if they were procured using the Federal Guidelines noted herein. Please note that State and Local Equipment Cost Contracts are NOT valid unless they have been procured through the federal provisions noted above and these bids must be undertaken for EACH project. When submitting the BG1 to Facilities Management at KDE for approval, it must state that Fund 51 will pay for the equipment if allocated as such.

30. Per FNS memo SP31-2014, all equipment purchases over $5,000 must be approved by the State Agency unless the equipment is on the state approved equipment list (available on the SCN website and sent to all directors). All equipment must be purchased using federal procurement procedures.

31. Requirement 7 CFR Part 3016 – (Public) 7 CFR Part 3019 – (Non-Profit) Competition in all procurements3016.36(c)3019.43 Award only to responsible & responsive vendors 3016.36 (b) (8)3019.44(d) Written selection procedures3016.36(c)(3)3019.44(a)(3) Code of Conduct3016.36(b)(3)3019.42 Recordkeeping3016.36(b)(9)3019.46 Contract Administration System3016.36(b)(2)3019.41 Prohibition on geographic preference, unless specifically permitted by Federal law (such as 2008 Farm Bill) 3016.60 and 3016.36(c)(2) Not addressed

32. 7 CFR Part 210 and 220 ALL funds received by the non profit school food account must be used to obtain food and other goods and services for use in the Child Nutrition Program (CNP). Purchase food, supplies, equipment required for meal prep and service; Purchase prepared meals from vendors; Pay Food Service Management Company to operate their food service; Pay for labor and operational costs; Pay indirect costs

33. http://www.fns.usda.gov www.nfsmi.org For more information please contact your Program Consultant or Deborah Thompson Child Nutrition Program Consultant Programmatic Delivery Section School and Community Nutrition Kentucky Dept. of Education deborah.thompson@education.ky.gov