Annual Food Service Director’s Training Meeting Food Service Funds in New Construction/Renovation Projects

1. Annual Food Service Director’s Training MeetingFood Service Funds in New Construction/Renovation Projects May 16, 2013 Presenter: Greg Dunbar Manager KDE District Facilities Branch

2. Food Service Funds in New Construction/Renovation Projects For new construction and renovation it has been common practice to utilize Food Service Funds to purchase kitchen equipment in new construction and renovation projects and in some cases to renovate kitchen spaces Recent review of the practices by KDE has caused a reevaluation of how this process is to be undertaken!

3. Food Service Funds in New Construction/Renovation Projects “The Healthy, Hunger-Free Kids Act of 2010 (the Act), Public Law 111-296 and Child Nutrition Reauthorization 2010: Indirect Cost Guidance” http://www.fns.usda.gov/cnd/Governance/Policy-Memos/2011/SP41-2011 os.pdf

4. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. The use of these funds must be clearly noted on the BG-1 as a fund source under “Other” and noted as “Food Service Cash”. “CASH” because you cannot commit these funds to an annual bond payments

5. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. These funds cannot simply be lumped into the funding mix These are subject to bidding requirements that do not necessarily apply to other parts of the project that utilize State of local funding

6. Food Service Funds in New Construction/Renovation Projects Project costs are broken down on the BG-1 as noted below.

7. Food Service Funds in New Construction/Renovation Projects The sources of the money that will be used for the Project varies also

8. Funding for School Construction Restricted Funds Used for “Capital” construction or “major” renovation, come from multiple sources and include; Student Population Based Capital Outlay Funds Property Assessment Based Building Funds and Growth levies Facilities Support Program of KY Qualified Needs Based KY School Facilities Construction Commission Urgent-Needs Grants QZABs

9. Funding for School Construction Student PopulationBasedFunding Capital Outlay Funds are included in the “SEEK” formula. These are calculated at $100 multiplied by a district’s ADA. These monies can be used for direct construction costs. Since these funds are yearly-generated funds, they can be used to pay for direct debt on bonds that can be issued on the behalf of local school districts (80% of the total funds calculated can be used for debt service).

10. Funding for School Construction PropertyAssessmentBasedFunding Local BuildingFunds Five cents of every one hundred dollars ($100) of a local government’s property tax revenuesisgrantedtothe local schooldistricttopayfor capital constructionprojects. Thismoneymay be saved and useddirectlyor, sinceitis a yearly-generated sum, it can be usedtopaythedebtonbondsthat can be issuedonthebehalf of local schooldistricts. Thisissometimescalledthe “local nickel”. Thesefunds can only be usedonpriorityprojects and can be selectedbythe LEA in anyorderdesired, subjecttotheapproval of theDivision of Facilities Management. FacilitiesSupportProgram of Kentucky (FSPK) The Facilities Support Program of Kentucky (FSPK) funds are included in the “SEEK” formula. These funds are used to equalize funding for districts with low property assessments as a percentage of the Average Daily Attendance. These funds can only be used on priority projects and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities Management

11. Funding for School Construction QualifiedNeedBasedFunding Kentucky “SchoolFacilitiesConstructionCommissionFunds” (SFCC) The Kentucky School Facilities Construction Commission (SFCC) is a separate state agency that provides funding to districts based on the unmet facility need as identified in the District Facilities Planning process. Funding for this program is requested from the General Assembly by the Commission every two (2) years. The unmet need is calculated during the District Facilities Planning process. The “unmet need” of all of the districts in the State is combined to create the State unmet need. A portion of the total is funded by the General Assembly and each district is allocated money based on their percentage share of the total fund. These funds can only be used on priority projects, based on their priority order; for example, priority 1 projects shall be completed prior to priority 2 projects. All projects within a numbered category (i.e., 1a through 1d) are considered equivalent and can be selected by the LEA in any order desired, subject to the approval of the Division of Facilities Management.

12. Food Service Funds in New Construction/Renovation Projects The sources of the money that will be used for the Project varies also

13. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. 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

14. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. Renovation • Costs of normal repairs and alterations is allowable so long as they: • keep property in an efficient operating condition; • (2) do not add to the permanent value of the property or appreciably prolong its intended life • (3) are not otherwise included in rental costs or other charges for space.

15. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. Renovation FSFs have been allowed for renovations within the inside perimeter of a kitchen/cafeteria space EXAMPLE; cutting away a wall to allow room for a walk‐in refrigerator would be an allowable expense because it is necessary to accommodate increased participation of students in the SMPs. It would be unallowable if it was purely an aesthetic matter

16. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. Food service funds are to be used only for the operation or improvement of such food service. Food service funds shall not be used to purchase land or buildings, or to construct buildings, New Construction

17. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. The costs of building a kitchen, just as the school building and its contents, should be shall be borne by the school district using funds other than Food Service New Construction

18. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. Food service equipment can be purchased with Food Service Cash PROVIDED: New Construction

19. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. • Equipment must be bid separately from the bidding of the rest of the project; • Labor for installation must use wage rates as outlined under provisions of the Davis-Bacon Act • Bidding shall comply with other Federal guidelines as required. New Construction

20. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. • Bid Food Service Equipment as an “Alternate” • Clearly outline in the contract documents the terms under which this equipment is to be bid New Construction

21. Food Service Funds in New Construction/Renovation Projects These are Federal Funds and must be spent as such. Cost contracts and cooperative purchase agreements can only be used if they were procured using the Federal Guidelines noted herein New Construction

22. Food Service Funds in New Construction/Renovation Projects Don’tgetstrongarmedintocommitting Federal Money onitemsthat are inappropriateforthesefunds.

23. Future Challenges for KY Schools Over 40% of the School Districts in the Commonwealth will experience a decline in enrollment in the next 25 years while at the same time some school districts will experience tremendous enrollment increases. At the same time all of the School Districts in the Commonwealth will experience an increase in their over 65 population that will double the population in this age group. SEEK Funds may diminish. Building space inventories may increase, if inventories are not controlled. Citizens with no children in school will make up the bulk of taxpayers. Local funding may become more critical. Establishing a revenue stream to provide an adequate/sustainable infrastructure to support a modern educational program with the latest technology is crucial. How will we continue to maintain our building inventory with fewer resources?

24. Continue to work as professionals with • your district • design consultants • legislators • the general public To educate them on the funding and resources that are available and appropriate to the situation. “Focus on the Kids”