R esource Management Comprehensive Review Process

1. Resource Management Comprehensive Review Process July 2014 National School Lunch Program

2. NSLP – Resource Management Comprehensive Review Process PROCESS

3. NSLP – Resource Management Comprehensive Review Process Overview • The following items will be reviewed in detail if the Arizona Department of Education (ADE) is conducting a comprehensive review of the resource management portion of the National School Lunch Program(NSLP). • This information is broken down into four (4) key sections for easier reviewing. You will be requested to provide data for each section to assist ADE in determining if your school is following and meeting Federal guidelines specific to the maintenance and operation of the NSLPand requirements of the non-profit school food service account.

4. NSLP – Resource Management Comprehensive Review Process Overview • The goal of the reviewers will be to complete all sections of the review concurrently since a couple of the sections require a Microsoft Excel file referred to as a “tool” to be utilized to capture some of the data requested. Once all the data requested is received, it will be reviewed by ADE staff and additional data will most likely be requested to support any findings or questioned costs.

5. NSLP – Resource Management Comprehensive Review Process Overview • If ADE is conducting a comprehensive review, the school will most likely be asked to respond to specific questions regarding expenditures and revenue in the food service account over the previously closed out school year or fiscal year. The School Food Authority (SFA) will also be asked to provide a general overview of the food service operations for the school.

6. NSLP – Resource Management Comprehensive Review Process Items reviewed • Maintenance of the Non-profit food service account • Paid Lunch Equity (PLE) & Tool • Revenue from Non-program Foods & Tool • Indirect Costs (IDC) For additional information please refer to the National School Lunch portion of the ADE website located at: http://www.azed.gov/grants-management/federal-fiscal-monitoring/fiscal-monitoring-national-school-lunch-program/

7. NSLP – Resource Management Comprehensive Review Process Food Service Account • Maintenance of the Non-profit food service account • Maintenance of the Non-profit Food Service Account is reviewed for compliance with the provisions of CFR 210.2, 210.14(a), 210.14(b), and 210.19(a)(1). • SFA’s should become familiar with the above-referenced Federal regulations as well as their own school’s accounting procedures specific to the maintenance of the Non-profit Food Service Account.

8. NSLP – Resource Management Comprehensive Review Process Food Service Account • In most cases, ADE will review expenditure reports and select itemized costs and ask that the school provide further documentation to support the itemized costs. • Typically, the school will be provided with a binder to assemble the itemized cost support documentation. • ADE will then follow up with an on-site visit to offer technical assistance and review the binder and verify the itemized costs support documentation submitted.

9. NSLP – Resource Management Comprehensive Review Process Food Service Account • Please note any expenses or contributions that are not part of the non-profit food service account that contribute to the school lunch program. • ADE will also verify the data used to complete the “Paid Lunch Equity Tool”, and “Non-program Foods Revenue Tool”.

10. NSLP – Resource Management Comprehensive Review Process Food Service Account • Specific to 7 CFR 210.14(b), net cash resources will be reviewed to verify if the school is meeting the requirement to limit its net cash resources to an amount that does not exceed three months of average expenditures. • Excess revenue must be used in support of the operation or improvement of the non-profit food service. • Please provide a clear record of where excess revenues are being utilized • If there is a shortage of funding please identify additional resources used

11. NSLP – Resource Management Comprehensive Review Process Paid Lunch Equity Tool • Paid Lunch Equity Tool • This tool data is required if ADE is conducting a comprehensive review of the resource management portion of NSLP. • This tool is used by school food authorities to determine compliance with the paid lunch equity provision found in 7 CFR 210.14(e). • If Federal requirements are not met, the school must raise their paid lunch prices or add money from a non-Federal source to the school food service account.

12. NSLP – Resource Management Comprehensive Review Process Paid Lunch Equity Tool • This tool could/should be used on an annual basis to verify if the SFA is charging enough for paid lunches compared with Federal paid and free reimbursement rates. • The tool and associated monitoring are intended to ensure support for paid lunches is in compliance with Section 205 of the Healthy, Hunger-Free Kids Act of 2010.

13. NSLP – Resource Management Comprehensive Review Process Paid Lunch Equity Tool • The tool utilizes lunch pricing from October of the previous school year and from the prior school year weighted average price. • Please note that a new version of the tool is updated every year. There are alternate methods to verify the requirement. • The tool can be downloaded from the ADE website with NEW additional instructions and should be used for lunch pricing of the new school year.

14. NSLP – Resource Management Comprehensive Review Process Paid Lunch Equity Tool • You will be asked for a completed Paid Lunch Equity Tool or similar along with a COPY of the data used to complete the tool. A specific list of data requested and required to complete the tool is as follows; • 2a. Pricing & number of all paid lunches from October 2013 • 2b. Pricing & number of all paid lunches from October 2010 • 2c. Total number of paid lunches for the 2012-13 School Year • 2d. Total number of non-Federal source funds contributed in SY 2011-12, SY 2012-13, SY 2013-14

15. NSLP – Resource Management Comprehensive Review Process Paid Lunch Equity Tool • It is in the LEA’s best interest to establish a tracking mechanism to capture the required data on a monthly and annual basis. Failure to do this may result in future review findings that could possibly lead to Federal funds being withheld. • Please download the current version of the tool & instructions to become familiar with the tool and the data required. • http://www.azed.gov/grants-management/federal-fiscal-monitoring/fiscal-monitoring-national-school-lunch-program/

16. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool 3. Non-program Food Revenue Tool • The tool is used to verify the requirements in Section 206 of the Healthy, Hunger-Free Kids Act of 2010 to ensure that the revenue generated from the sale of non-program foods complies with the requirements in 7 CFR 210.14(f). • The tool data is requiredif ADE is conducting a comprehensive review of the resource management portion of the National School Lunch Program.

17. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool • This tool should be used to verify if the local school food authority is pricing non-program and a la carte items sufficiently enough. • Please note that USDA – Food and Nutrition Services (FNS) defines non-program foods “as those foods and beverages sold in a participating school other than reimbursable meals and meal supplements that are purchased using funds from the non-profit school food service account. Non-program foods include a la carte items and adult meals. They also include items purchased with non-profit school food service account funds for vending machines, fundraisers, school stores and for catered and vended meals.”

18. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool • You will be asked for a completed Non-program Revenue Tool or similar along with a COPY of the data used with the tool. A specific list of data requested and required to complete the tool is as follows; • Cost of food for reimbursable meals in the previously closed out school year • Cost of food for non-program food in the previously closed out school year • All revenue from the sale of non-program food for the previously closed out school year • Total revenue from the previously closed out school year

19. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool • Please set up a tracking mechanism to capture the data required to complete the tool on an annual basis. • It is important to stress that program food costs must be tracked separately from non-program food costs. • Revenue from the sale of non-program foods must also be tracked separately as well.

20. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool • This requirement appears to be a new procedure for many food service accounts. Please note that this specific data will be requested in the future. The data is very difficult to isolate after the fact and we strongly encourage you to establish a system that works best for your food program/s, accounting procedures and accounting software. Failure to do this may result in future review findings that could possibly lead to Federal funds being withheld.

21. NSLP – Resource Management Comprehensive Review Process Non-program Revenue Tool • Please download the current version of the tool to become familiar with the tool and the data required. • http://www.azed.gov/grants-management/federal-fiscal-monitoring/fiscal-monitoring-national-school-lunch-program/

22. NSLP – Resource Management Comprehensive Review Process Indirect Costs • Indirect Costs • Indirect costs may be charged to a food service account as long as certain requirements and processes are met. • SFAs are encouraged to become familiar with indirect cost agreements and how they are applied within their organization.

23. NSLP – Resource Management Comprehensive Review Process Indirect Costs A few general guidance items to consider are; • The SFA must have an approved indirect cost rate agreement on file with ADE in order to apply an indirect cost rate • Ensure that the indirect cost charged to the non-profit school food service account is consistent with the approved indirect cost rate to the direct cost base found in the ADE approved indirect cost rate agreement.

24. NSLP – Resource Management Comprehensive Review Process Indirect Costs A few general guidance items to consider are; • Application of indirect cost rates must be consistent in all activities of the SFA • Ensure that the non-profit food service account was not billed for indirect costs previously paid for with general funds in one or more prior years. • Costs to the food service account must be consistently treated as direct or indirect without double dipping

25. NSLP – Resource Management Comprehensive Review Process Indirect Costs • It is important to note that if during a review it has been determined that the SFA incorrectly calculated or applied the indirect costs rate then the SFA must recalculate the charge and correct the food service account. Failure to do this may result in future review findings that could possibly lead to Federal funds being withheld. • ADE will ask for support documentation detailing how your indirect cost rate was applied

26. NSLP – Resource Management Comprehensive Review Process Adult Meals • USDA guidance on adult meals is very clear and states that “meals served to adults who are directly involved in the operation and administration of the school nutrition programs may, at the discretion of the school food authority, be furnished at no charge.” • All other adult meals must be charged and recorded as non-program revenue and have a few requirements to adhere to.

27. NSLP – Resource Management Comprehensive Review Process Adult Meals Items to note and be considered are; • Adult meals are not eligible for reimbursement and they do not earn donated food assistance for the school food authority • Food service revenues do not subsidize program meals served to adults • The current per-meal value of entitlement and/or bonus donated foods must be accounted for in adult meal pricing

28. NSLP – Resource Management Comprehensive Review Process Adult Meals Items to note and be considered are; • Pricing should also include any other source designated specifically to support the adult meal price (such as local fringe benefits, payroll benefits, or other funding). • All other adult meal funding resources must be tracked in the food service account. An example would be payroll funds shown as revenue to support the cost of the adult meal. • All sources of revenue must be sufficient enough to cover the cost of the adult meal

29. NSLP – Resource Management Comprehensive Review Process Questions? Additional information can be found at: • http://www.azed.gov/grants-management/federal-fiscal-monitoring/fiscal-monitoring-national-school-lunch-program/