FINANCIAL MANAGEMENT SUMMER TRAINING FFY2011

1. FINANCIAL MANAGEMENTSUMMER TRAINING FFY2011 Sponsors and Independent Child and Adult Care Centers CACFP Summer Training - 2011

2. FINANCIAL MANAGEMENT AGENDA • Federal Financial Management Requirements • DPI Financial Management Requirements • Accounting System • Budget • Nonprofit Food Service Financial Report • DPI Detailed Financial Review • Other CACFP financial reviews

3. Frequently Used Terms • Agency: The organization name on the CACFP Application. Same as the name on the federal tax-exempt status (non-profit) or the legal name of the agency (for-profit). • Child and Adult Care Food Program (CACFP): Federally funded program through USDA and administered in WI by the Department of Public Instruction. Provides reimbursement for eligible meals served to enrolled participants. Sometimes referred to as the “Food Program”. • Nonprofit Food Service Financial Report (NPFS): DPI form required from all participating agencies (for-profit and non-profit) that is used to report actual food program expenditures and earned food program revenue. Annually = Independent and Quarterly = Sponsors.

4. Frequently Used Terms (cont.) • United States Department of Agriculture (USDA): The federal branch of government that oversees and regulates the CACFP administered to State Agencies. • Department of Public Instruction (DPI): The Department in the State of WI that administers the CACFP to participating institutions. • Institution: A licensed center that contracts with the DPI to administer the CACFP to it’s enrolled participants. Also referred to as an “Agency”. Two types: • Independent: One site participating in the CACFP. • Sponsoring Organization (SO): Two or more sites participating in the CACFP. • Affiliated - same legal entity as the Institution/Agency. • Unaffiliated – no affiliation with Sponsor – SO must be non-profit

5. Child and Adult Care Food Program IS NOT “Free” money Funding for personal expenses To purchase soda/coffee for teachers, non-healthy and/or not enough food and snacks for participants Entitlement Program For the disorganized IS • Federally Funded • Passed through DPI • a FOOD Program • Healthy meals to eligible participants • Optional Program • Except in Head Start • Heavily Administered • Detailed program requirements.

6. FEDERAL FINANCIAL MANAGEMENT REQUIREMENTS

7. FINANCIAL VIABILITY • Appropriate practices for recruiting facilities. [7 CFR 226.6(b)(2)(vii)(A)(1)] • Adequate financial resources to operate the CACFP on a daily basis. [7 CFR 226.6(b)(2)(vii)(A)(2)] • Other Sources of funding • During interruptions in program payments • Fiscal claims against the agency • Unallowable program costs • Documentation: • Financial Statements • Audit Reports • Budgets [7 CFR 226.6(b)(2)(vii)(A)(3)] • Costs must be necessary, reasonable, allowable and appropriately documented.

8. Nonprofit Food Service [7 CFR 226.6(e)(13)] • CACFP funds used solely for operation of food service for enrolled participants. • Cannot make a profit on Federal food program • No more than 3 month operating balance per program year • Documentation to support actual costs • Must have other source of income • Costs Not Covered • Temporary interruptions in program payments • Unallowable program costs

9. Nonprofit Food Service Operation • CACFP is like a separate nonprofit business within your business • Must show how you spend CACFP reimbursement in an allowable way • Required for ALL types of agency’s even for-profits

10. DPI FINANCIAL MANAGEMENT REQUIREMENTS

11. MEASUREMENTS OF FINANCIAL VIABILITY 1. Accounting System • Does your agency have one? • If so is it in compliance to GAAP? 2. Approved Budget • Amended Budget 3. Incurred Costs (Actual Costs) • Reported annually (Independent) and Quarterly (Sponsors) on the Nonprofit Food Service Financial Report

12. Accounting System • Cash/Accrual/Modified Accrual • Cash System: Recognizes revenues and costs when cash is received and bills are paid. • Accrual System: Recognizes revenues and costs when costs are incurred and uses a payable and receivable system. • Modified Accrual System: Certain expenses are reported on an accrual basis. • Compliance with Generally Accepted Accounting Principles (GAAP) • Rules for the accounting of costs and revenues • Resource: http://www.fasab.gov/accepted.html or Ask your staff Accountant • Items should not be purchased with CASH. • Financial Reports • General Ledger / Check Register • Profit/Loss Statement • Balance Sheet • Co-mingled CACFP funds with Agency funds • Method of separation (ie. independent account codes) • Approved allocation plan for shared costs

13. Accounting System • Consistent with all programs • Written Procedures • Process of Payments, Deposit of funds and Payroll • Single Audit Reports (non-profits only) • A-133 report required if expend over $500,000/year in federal dollars (non-profits only) • Single Audit Clearinghouse http://harvester.census.gov/sac/index.html • Less than $500,000 - Annual report/review from outside party should be conducted annually. • Copy sent to DPI within 9 months from end of agency’s FY if CACFP is major program. • For-profits: Compliance review by outside accountant • Annual Report • Should be completed when Federal taxes are completed. • Good resource: www.irs.gov

14. Accounting System Summary DPI Requirements: • CACFP vs. Other agency activities • Operational and Administrative Costs • Support NPFS reports submitted to SA • Consistent with other agency operations

15. Accounting Systems Acceptable • Center credit card • Center checking account • Charge Account at local store • Invoice or COD • Food delivery vendor Unacceptable • Cash • Including cash-back • Third party checks • Food Stamps * Information per GAAP

16. CACFP BUDGET • Budget Summary submitted with online application • Projection – • “Road Map” of Upcoming Program Year • All Expenses • Allowable, Reasonable, in accordance to FNS Instruction • All Revenue Available • CACFP Meal Reimbursement • CACFP Cash-in-lieu reimbursement • Interest earned on CACFP funds and/or other FS income • “Other” Non-CACFP Income • Unfunded/Unallowable Costs • SA Overclaims • Interruption in Program Payments • Ex. Child Care Fees, Tuition, Headstart, W-2, Donations

17. Review Online CACFP Budget

18. FFY2012 CACFP Application/Budget • Available online at: http://fns.dpi.wi.gov/fns_cacfpapps • Click on first dot point: “CACFP Internet Application Manual” • Instructions for online application • FFY2012 Online Application (second dot point) • Renewing – all material will carry-over just make updates and submit a new online budget summary. • All NEW Sponsoring Organizations must submit a completed Attachment G.

19. FFY2012 Budget • Project Food Program Costs & Revenue • Costs: Regardless if paid with CACFP reimbursement • How much will it cost your agency to administer the food program from October 1, 2011 – September 30, 2012 • Revenue: All sources and amounts available to fund food program expenses. • Not covered • Unallowable • Pay Overclaims • Costs not approved are unallowable • Cannot be funded with CACFP funds

20. What do I put in my budget?

21. Administrative Monitoring Claim Compiling Submitting Reconciling Accounting / Bookkeeping Operational Kitchen Meals Preparation Delivery Menus Purchasing / Vended Meals Administrative & Operational Costs

22. Frequent Allowable CACFP Costs(lists are not all inclusive) Allowable • Food (consumable) • Kitchen Supplies/Nonfood • Contract / Vended Meals • Food Program Personnel • Admin & Operational • Audit Services • CACFP Portion • Employee CACFP Travel • e.g. Grocery shopping, DPI training • Equipment Purchase/Rental

23. Food Costs • Costs in purchasing ingredients for menu items (Food Supplies) AND/OR the cost of purchasing itemized CACFP meals from an outside vendor (Contracted Service) that are served to the participants • At least 50% of budget • For healthy, reimbursable meals at least ½ of reimbursement on food costs.

24. Food Supplies • Consumable food products used to create menu items served to program participants. • Costs can include delivery costs. • Taxes must be paid with non-CACFP funds (tax-exempt). • Report on the Food Supplies/Food Costs line on budget and NPFS.

25. Food Vendors • Outside food service, not related to agency. • Contract approved with DPI • Provide all CACFP components. • Report as Contracted Services on CACFP Budget and Financial Report

26. Contracted/Vended Meals • Costs of purchased, prepared meals are contracted service costs • Contract must be signed prior to beginning date (contracted service) • The vendor must keep production records(a record of quantityof food prepared)

27. Food Service Labor All wages, salaries, employee benefits, and the share of the employee taxes paid by the agency.

28. Operational Food Service Labor • Menu planning • Production Records • Food purchasing • Cooking • Serving the food • Cleaning-up after the meal • Meal Attendance

29. Food Service Labor is also… • Time spent completing required records • HSIR and HSIS • Monthly claim • Financial reports • Supervision of day-to-day food service operations These are Administrative costs

30. Administrative Costs • Sponsors: No more than 15% of CACFP meal reimbursement can be spent on administrative costs without State Agency waiver. • Independent Centers: Not an issue because CACFP meal reimbursement is usually spent on operational costs, any leftover should be less than 15%.

31. Administrative Costs • CACFP Administrative Costs should never be higher then CACFP Operational Costs. • It should cost an agency more to prepare and serve the meals then doing the paperwork and monitoring of the program.

32. Frequent Allowable CACFP Costs(list is not all inclusive) Allowable • Food (consumable) • Kitchen Supplies/Nonfood • Contract / Vended Meals • Food Program Personnel • Admin & Operational • Audit Services • CACFP Portion • Employee Travel • e.g. Grocery shopping, DPI training • Equipment Purchase/Rental

33. Frequent Unallowable CACFP Costs(lists are not all inclusive) Unallowable • Bad Debts, Fines, Penalties • Non food program food costs • Coffee, non-CACFP personnel meals (i.e. driver, maintenance, non-employee/family member) • Entertainment • “Family Night”, catering costs • Purchase of food for personal use • Money received must be kept in food program account. Must have strict internal policy.

34. Resources for Allowable/Unallowable Costs • Guidance Memorandum #11 • Child Care: http://fns.dpi.wi.gov/fns_centermemos • Adult Care: http://fns.dpi.wi.gov/fns_adultmemos • “Standards for Allowable Costs” • User friendly, searchable, Excel reference • FNS Instruction 796-2 (rev. 3) • Electronic copy available on our website. • Derived from OMB Circulars and Federal Regulations. • USDA website for OMB Circulars: http://www.fns.usda.gov/fm/FeaturedAreas_menus/FA_Reference.html

35. STRETCH TIME Stretch your mind, body and CACFP dollars

36. How am I going to pay for this program?

37. CACFP Reimbursement • CACFP Reimbursement is based upon: • Number of meals you serve • Eligibility of the participants • The funds you receive will not cover all of yourallowable FP costs.

38. Remember! The CACFP funds are replacing funds you are now spending

39. Other Source of Income • CACFP is part of your overall organization. • Funds received to run organization must also be available to fund CACFP costs not covered by reimbursement. • Examples: Headstart, Tuition, W-2, Fundraising, Private Donations • Food Stamps is not another source of income for the center. • Report projected Source and Amount on Budget

40. Best use of your CACFP Reimbursement Plan, budget, and organize the funds available will help you to maximize your CACFP reimbursement. No planning, using funds on non-program needs, no accountability of funds spent will result in loss of funding and/or participation

41. All Food Program Costs Paid with CACFP Reimbursement must have received PRIOR DPI approval

42. I need to change my budget!

43. Amending Budgets • DPI Policy: CACFP funds can only be used for approved food program line items on annual budget. • Notify DPI of any budget omissions. • When in doubt contact DPI for approval.

44. How would DPI know what I spent my CACFP reimbursement on? • Review of NPFS Reports • On-Site Financial Reviews

45. Nonprofit Food Service Financial Report (NPFS) • Form PI-1463 (Independent) and PI-1463-A (Sponsors) • Report of all ACTUAL CACFP expenditures during the reporting period. • Costs should equal expenditures charged to food service program plus any additional expenses covered with non-CACFP funds. • Amounts must be supported by actual documentation – NO ESTIMATES • Forms can be found under Guidance Memo 11

46. Nonprofit Food Service Financial Report (NPFS) All Food Program Costs: • Actual Expenditures • Not Estimates • Support Documentation • Only report CACFP % • Shared costs • Amount net credits • Allowable and Approved • FNS 796-2 (rev.3) • CACFP Budget

47. Nonprofit Food Service Financial Report (NPFS) • CACFP revenue should be reported using the accrual method (as earned, not received). • Additional program income must be reported (e.g. interest income, rebates) • Additional non-program income must be reported • Total Costs less Program income = non-program income

48. Nonprofit Food Service Financial Report (NPFS) Due Dates Independent • Annual Report • Reporting period: October 1 – September 30 • Due Date: November 1st • Submit via: • E-mail: cari.muggenburg@dpi.wi.gov • Fax: (608) 267-0363 • Regular Mail E-mail or call if need extension

49. Nonprofit Food Service Financial Reports (NPFS) Due Dates Sponsoring Organization • 1st Quarter • Reporting period: October 1 – December 31 • Due Date: March 1st • 2nd Quarter • Reporting period: January 1 – March 31 • Due Date: June 1st • 3rd Quarter • Reporting period: April 1 – June 30 • Due Date: September 1st • 4th Quarter • Reporting period: July 1 – September 30 • Due Date: December 1st PI-1463-A (front page)

50. CACFP Financial Reviews • State Agency (SA) • USDA • OIG