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15% Cap

15% Cap. Why the Cap is Necessary. Center reimbursement covers admin. & operating costs (like school meal rates) More $ kept for admin = less $ for meals “ Retained ” means the amount of money the sponsor keeps for its admin. costs

zephr-richard
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15% Cap

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  1. 15% Cap

  2. Why the Cap is Necessary • Center reimbursement covers admin. & operating costs (like school meal rates) • More $ kept for admin = less $ for meals • “Retained” means the amount of money the sponsor keeps for its admin. costs • Audits/reviews found 25-30% approved with even more retained • 15% consistent with school meal program admin costs

  3. What the Interim Rule Does Applies cap to:  Approved budget estimate  Actual retention during the year

  4. Objective of the Interim Rule 15% 85%

  5. Cap Applies to All Types of Sponsored Centers • Nonprofit sponsors • For-profit sponsors • Public sponsors • Sponsors of unaffiliated centers • Sponsors of affiliated centers

  6. Administrative Costs Planning Organizing Managing Operating Costs Food costs Food service labor Food service supplies Administrative & Operating Costs

  7. Center Sponsor Administrative Costs • Claims preparation • F/RP eligibility determinations • Monitoring • Training Must conform to 796-2

  8. Suggestion or Goal? The cap is not a:  Suggestion Goal  Guarantee Floor (minimum)

  9. Mandate The cap is a:  Ceiling (maximum)  Applies to all administrative costs at the sponsor and sponsored center level

  10. Sponsored Center Administrative Costs Included in the cap because: • Law limits the amount of CACFP funds retained for administrative costs - not who pays the costs • Not including sponsored center admin. costs = incentive to shift costs to evade cap

  11. How the Cap Works: Budgets Sponsor must report all admin. costs on budget • Including all sponsored center administrative costs • SAs must revise application budget documents for center sponsors to capture all admin. costs

  12. How the Cap Works: Monthly Retention Three factors: • Amount of reimbursement actually earned • Annual limit of 15 percent • Cannot exceed monthly allowable costs

  13. How the Cap Works:Sponsor Responsibilities Sponsors must: • Monitor monthly retention on year-to-date basis • Monitor actual vs. projected reimbursement earnings • Adjust retention to stay within “cap”

  14. Retention Question Question: Is a sponsor prohibited from retaining more than 15% in a month? Answer: No. Sponsors can vary recovery of monthly amounts, but cannot retain more than 15% for the year.

  15. Example 1:ABC Center Sponsor Retention October (1st month budget year) Reimbursement ($13,200) earned X 15%: $ 1,980 Actual admin costs & retention: $ 4,486 Approved budget = $ 22,500 Actual expenses - $ 4,486 Available for remainder of year = $ 18,014

  16. Key Considerations • Sponsors & SA must track actual admin. costs • Time major expenditures throughout the year

  17. Mistakes, Errors & Misconduct Problem: Sponsor retains more than approved Resolution: ID causes, require corrective action • Restore funds to sponsored centers or CNP Account • Improve fiscal procedures • Escalate SA oversight Serious deficiency when appropriate

  18. Recap State agencies: • Apply 15% cap to budgets • Monitor retention practices of sponsors Center sponsors: • Prepare budgets that reflect 15% cap • Establish internal controls to ensure proper retention • Maintain records to demonstrate compliance

  19. 15% Cap

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